‘It’s almost like a transfer market’ — Premier League clubs scramble for sponsorship deals

The theory goes that the biggest deals of the football season have been done and the chaos of the transfer market can be put back in its box until summer.

However, the reality is clubs need to concentrate on another area of their business to ensure there will be sufficient money to do it all again.

Premier League clubs are working on commercial deals, none of which will set pulses racing like the capture of a new centre forward, but they matter a lot in a world where cash is king.

As many as 10 top-flight sides are yet to confirm their principle commercial partner for 2023-24.

Chelsea, the biggest spenders in January, have neither a front-of-shirt nor a sleeve sponsor for next season. That represents a £60million ($73m) void.

Manchester United are in the market for a shirt sponsor after it was announced in December that the club and TeamViewer, the German software firm, had agreed to curtail a deal due to run until 2026.

An arrangement worth £47million a season to United will continue if a suitable replacement cannot be found but, like Chelsea, a new partner is being sought.

Manchester City are in the same boat. Etihad, the UAE-based airline, is expected to continue its long partnership as shirt sponsor if something more lucrative cannot be found, but the water is being tested by the Premier League champions.

Then there is Newcastle United, without a sponsor confirmed for 2023-24. The marketing world expects a backer with links to Saudi Arabia after the Public Investment Fund takeover transformed life at St James’ Park, creating an untapped source of revenue for a club that trailed its rivals by a distance under Mike Ashley.

Brentford, Fulham and Wolverhampton Wanderers are also due to see shirt sponsorship agreements expire at the end of this season.

Nottingham Forest, meanwhile, are still attempting to find a deal, having been left without a commercial sponsor this season.

A place in the Premier League continues to be the greatest driver of income — a minimum of £106million this season — but the commercial deals are vital in an age of financial fair play (FFP).

Deloitte’s Money League, an annual report published last week, was a timely reminder that commercial income is big business.

The average sum from that revenue stream across the top 20 clubs in Europe was £170million in 2021-22, with Paris Saint-Germain leading the way with £341million. That represented over half of the French club’s total revenue.

Manchester City, another state-owned club, was second with £333million of commercial revenue.

Those figures will be viewed through cynical eyes by the European football establishment, but the pressure is on to maximise their own income. Placed alongside the largely static matchday revenue and a share of broadcasting rights, commercial money has the potential to markedly shift the needle on a club’s annual turnover.

“If you look at the Deloitte Money League pie charts, commercial should be taking 35 per cent really,” says Dan Haddad, head of commercial strategy at Octagon, a sports, music and entertainment agency.

“Between commercial and media, you’re looking at 80-85 per cent of turnover. A £40million deal might be 10 per cent of the club’s annual turnover, but it’s probably also 25 or 30 per cent of sponsorship turnover.

“They’re very big holes to fill. The cornerstone of a healthy portfolio of sponsors are your major assets that you want locked in for the long-term at premium value. You don’t want a gun to your head when you’re selling them. You want time on your side to maximise your chances of finding the brand that’s going to give you the largest cheque for the longest amount of time.”

Chelsea are in a position they would presumably prefer not to be in. The upheaval of the last 12 months has hindered their plans to find a long-term replacement for 3, the UK telecommunications company that has adorned the club’s shirts since 2020. That WhaleFin, the crypto company, has served notice to end its five-year deal as sleeve sponsors inside the first 12 months only heightens their problems.

Those two partners are worth £60million a season to Chelsea, which equates to about 12 per cent of the club’s annual turnover in 2021-22. By no means loose change given the need to meet FFP requirements after spending £290million in the January window.

“It’s always more difficult to sell shirt and sleeve sponsor at the same time,” says Haddad. “You don’t want front of shirt, sleeve and training kit all expiring within 12 months.”

He added: “Chelsea will probably get the two deals done, but will they get maximum value? They might need to be creative in how they wrap those up, perhaps go with short-term deals.

“The benchmark they’re chasing is £60million. They won’t want to lock in £60million again for the next five years because that’s just flat growth. They’ll be wanting to grow that £60million to £70million or £80million. But doing those deals at the same time places a hell of a strain on the commercial team.”

The competition in the market is unlikely to help. Manchester United’s deal with TeamViewer — which replaced Chevrolet before the 2021-22 season — was worth more than Chelsea’s arrangement with 3, and there will be ambitions to see greater sums recouped with a new long-term partnership.

Shirt sponsorships for the so-called ‘Big Six’ generally cost in the region of £40million to £50million per season, but Manchester City, whose commercial income was the highest in the Premier League, bring in £67.5million from Etihad — a package that also includes sponsorship of their home stadium and training ground.

Newcastle, on track to qualify for the Champions League this season, are the club eager to make up lost ground. Last year they negotiated an early exit from their deal with Fun88, the Chinese betting firm, to provide the chance for a more lucrative partner for next season. Fun88 was thought to bring in just £7million a year.

Noon.com, the e-commerce platform owned by PIF, became sleeve sponsor last season and further commercial links to Saudi Arabia have not been dismissed. Peter Silverstone, formerly of Arsenal, was appointed Newcastle’s chief commercial officer in October and is tasked with finding a partnership that closes the gap on the elite.

“These clubs look at one another and it’s almost like a transfer market where one deal can shift the expectations of all the other clubs,” says Haddad.

“When Real Madrid do a big deal with Emirates, the commercial team at a club like Man United are likely to see that as their benchmark.

“There’s never a scenario when these clubs find no interested parties, but it’s a matter of what price they’re going to get. The cost base for these clubs is going up and up, so sponsorship is one of the areas they target to find gains.”

There is a clear commercial divide in the Premier League: the haves and have-nots.

A ‘Big Six’ club might aim to bring in a minimum of £40million a season for shirt sponsorships — Liverpool and Standard Chartered is thought to be worth £50million — but for most below, there is a very different expectation.

Somewhere between £8million and £12million is the average for most of the Premier League, as well as the potential for up to £4million for a sleeve sponsor, and it is in that market that partnerships typically change most frequently.

Looking beyond Brighton & Hove Albion, whose long-running partnership with American Express extends to 2027, there are eight clubs due to see shirt sponsorships end this summer or next.

Others, like Crystal Palace and Everton, call their sponsorship arrangements “multi-year” to indicate an element of flexibility.

It is in the bottom half of the Premier League where partnerships with gambling firms figure most prominently. Eight top-flight clubs have shirt sponsors that are betting sites, despite campaigners calling for an end to such advertising in professional football. Those deals, though, are ordinarily the most lucrative on offer to clubs outside of the ‘Big Six’.

Everton courted controversy when teaming up with Stake in the summer, while Aston Villa have had a backlash from supporters after a proposed deal with online casino BK8 — which was axed by Norwich in 2021 over sexually provocative adverts — became public earlier this month. Villa are seeking a replacement for Cazoo after the online car retailer confirmed last month it would not be extending its deal. Leeds, meanwhile, are expected to continue their multi-year deal with SBOTOP.

Premier League survival also has the potential to make or break deals, with the value of shirt sponsorship plummeting if clubs fall into the Championship and miss out on global exposure.

“Those clubs outside of the big six tend to do short-term, two- or three-year deals,” says Haddad.

“To those clubs, the shirt sponsor probably represents 60 or 70 per cent of all sponsorship revenue, so they’re going from deal to deal trying to max the value every time. There’s limited growth in that market and it can fluctuate. It very much depends on sector dynamics.

“Every year there’ll be four or five clubs, plus the promoted teams who have an out-clause from Championship deals, that will be in the market.

“That market is always going to be volatile, but you don’t tend to have situations like in La Liga, where a handful of clubs go a season without a sponsor, because you’re always going to find an Asian-facing betting brand willing to get involved.

“But that’s also the sector of the market where if greater regulation comes in over advertising, they will face the greatest challenge. You might see values half for some clubs if you remove that one competitive dynamic by removing gambling and crypto companies from the equation.”

The government’s wide-ranging gambling review, delayed since 2020 but due this year, will ultimately dictate if clubs are permitted to continue partnerships with betting firms. The need to grow commercial deals — at the top and bottom of the Premier League — is only intensifying.