Nearly three quarters of European football’s powerhouse clubs – including Manchester United, Liverpool and Real Madrid – are missing out on huge income potential by resisting the sale of their stadium naming rights, a new report has shown.
The report – by corporate valuation experts Duff & Phelps – delves into football’s top brands, exploring their worth and the potential earnings they could make from such a deal.
Duff & Phelps examined 98 teams in Europe’s top five leagues (the Premier League, La Liga, Bundesliga, Serie A and Ligue 1) and learned only 27% currently have commercial deals in place for their stadium names.
That includes German giants Bayern Munich and Italian champions Juventus, who are both signed with Allianz.
But stadium naming is far from commonplace. Although 80% of German top-flight teams have agreed stadium naming partnerships, that is true of only 30% of clubs in England, 10% in both France and Italy, and only 5% in Spain.
It is a costly tactic. Duff & Phelps calculates that top clubs are missing out on tens of millions of pounds a year as a result – and ultimately hampering their chances of success.
The report said: “Clubs must maximise their revenues to be able to afford the best players. One strategy to accomplish this would be to sell their stadium naming rights.”
Real Madrid and Barcelona are the two clubs sitting on the biggest earning potential, according to the report, with their stadium names worth €36.5m a season.
Six of the top ten clubs are English, however. Manchester United sit third on potential earnings of €30.5m, and are joined on the list by Manchester City on €24.95m, Tottenham Hotspur on €19.95m, Liverpool on €19.25m, Chelsea on €19.1m and Arsenal on €19m. Of those, only Manchester City and Arsenal have a deal in place.
The report continued: “Football is undoubtably the world’s most popular sport, with broadcasting rights in 212 territories across the world and over five billion people tuning into a live football match at least once per season.
“The 2018 World Cup Final had 1.12 billion viewers, the most ever recorded, compared to only 100.7 million for the 2019 Super Bowl.
“Considering football’s global reach, it appears that the world’s largest brands seem to underinvest in stadium naming rights compared to other sports in the U.S. For example, the NFL has more than 80% of their stadiums sponsored.”
In Spain, Italy and France it is a tradition to name stadiums after former presidents or club affiliates. For example, Real Madrid’s Santiago Bernabeu is named after the former club president, who is considered one of the most important individuals in Real Madrid’s history.
However, both Real and Barcelona, while potentially owning the most expensive stadia on the list, do offer interesting future prospects, with both teams in the process of significantly upgrading their grounds.
Real Madrid is planning to wrap the Santiago Bernabeu in a titanium LED skin and is installing a retractable roof, pedestrian zone and expanding the existing shopping centre, club shop and club museum. Barcelona too is renovating its Camp Nou. The proposed renovations will redesign the exterior, refurbish the interior, increase capacity from 99,000 to 105,000 and install new handball, futsal and hockey facilities. The upgrades are estimated to cost €550m and €650m for Real and Barcelona, respectively, with Barcelona planning to fund a significant portion of the development cost through a stadium naming rights sponsorship.
In England, Tottenham recently moved to a new state-of-the-art 62,000-seater stadium while other Premier League teams, including Chelsea and Everton, are planning to develop new stadiums that will likely attract sponsorship interest from companies that want to be associated with large clubs.
But which brands would likely be interested?
Duff & Phelps’ analysis of NFL and Bundesliga trends suggests companies operating in telecoms, retail and finance are the top investors in such commercial partnerships – and adds that the exposure benefits are enormous.
The report added: “The largest single sponsor of each league comes from the finance industry which sponsors c. 25% of named stadiums in both leagues.
“A key reason for this is that, in most cases, financial institutions are also buying in to become the team’s financial partner. They use this partnership to sell other services to the club such as forecasting, player and stadium financing and selling credit and debit cards to supporters.
“European clubs could also look to retailers for sponsorship opportunities. Most of the value for a retailer comes through a relationship with the players.
“Brands could save significant amounts if they can negotiate access to the clubs’ and players’ social media platforms, which are some of the most followed in the world.
“In summary, there is significant untapped potential for European teams without stadium naming rights sponsorship, with the most valuable and long-term deals reserved for those with the highest levels of global exposure, Champions League participation and low relegation risk.
“All European teams are increasingly benefiting from being televised around the world on a regular basis, meaning even the sponsors of smaller teams get global exposure to new and existing customers.”