For a long time, Manchester United have been held up as the best example of a club bringing in revenue from commercial deals. The club has 34 (at last count) deals with companies which generated £153m for the 12 months leading to June 2013. That was 43% of their total revenue, higher than their television and match-day earnings, which are worth £102m and £109m respectively.
Arsenal have always lacked not only Manchester United, but the rest of Europe when it comes to commercial deals. As our good friend LordHillWood blogged, the Arsenal board ‘dropped the ball‘ when it has come to commercial deals over the last 10 years, as they focused firstly on financing the stadium, and then paying it off. LordHillWood estimates the club has lost:
“20 million for the first half of those 8 years and 35 million for the second half, with 45 in the last year means Arsenal’s boards indifference and possible ignorance through their outdated culture cost the club a fortune.”
A conservative estimate that the club has thrown away £230million in potential commercial deals.
There is however, a bright light at the end of the tunnel. In August 2009, Arsenal hired Tom Fox as Chief Commercial Officer, he had previously work for PepsiCo and Nike as SVP Sports Marketing and Director Asia Pacific/US Sports Marketing respectively.
Whilst he had little effect in his 1st few years – it is unclear whether this was due to him having a different remit, or just not able to win a deal – over 2013, there has been a lot to shout about.
We all know about the new deals with the Emirates (renewed in 2012) and the new Puma kit deal (agreed in 2013 for £30m a year) but since Tom Fox has been with the club, we have seen us sign 13 deals in a 2 year period. Of which 9 are in 2013. Here is a full list of Arsenal’s Commercial Partners:
- Emirates – 2004 (Renewed 2012)
- Indest – 2011
- Carlsberg – 2011
- Citroen – 2011
- Airtel – 2012
- Puma – 2013
- Gatorade – 2013
- Bodog – 2013
- BT Sport – 2013
- Imperial Bank – 2013
- India on Track – 2013
- MBNA – 2013
- Paddy Power – 2013
- Sterling Bank – 2013
- Telkomsel – 2013
The value of these deals is not known. There tend to be 3 types of commercial deals set up by the club:
- Sponsorship: A company (eg Emirates or Citroen) paying to have its name on something
- Commission: A company (eg Banks or bookmakers) agreeing to ‘brand’ an item, such as a credit card to increase that items popularity, with the club receiving a commission on all sales
- Provider: A company (eg Drinks providers or network providers) agreeing to provide a service which benefits Arsenal, such as providing the players energy drinks, or being the preferred beer supplier, where Arsenal get something out of it, but also get a bit of commission on sales
It is likely some are for very little money, but more the provision of services, such as the Gatorade one (rumours are we get around £250,000 flat fee, a percentage of sales and do not pay for the players drinks). We will only know the true value of the entire package once the accounts for 2013/14 come out which should show a huge increase in commercial activity.
With 10 deals in 2013 (including the Puma one) hopefully Tom Fox and his team can replicate this in 2014 and we can see the commercial gap closing between Arsenal and Manchester United. A sponsorship deal for the training ground and training kit is one place where Manchester United received £15m a year which we have currently not tapped. Although there might be clauses in the Puma contract which includes them sponsoring the training kit.
The only question left to ask is where this extra commercial deal will go? Will it halt the rise in ticket prices? Probably not. The fact we have a 3% rise for next season despite TV revenue dramatically increasing means that new commercial money is unlikely to see a freeze, let a lone a reduction, in ticket prices. It is more than likely new monies will go towards closing the £60m wage gap between Arsenal and Manchester City. Buy better players, and making the rich young men at the club rich.
But without fans where would the club be ? and where will it end ? £100+ for a lower tier ticket….