Narrative is not enough for adidas and chelsea
Is it the best of times or worst of times for apparel in sports sponsorship? It is rare that
you can link the English author Charles Dickens with sports sponsorship. However, a recent end
to a jersey sponsorship deal for one of the English Premiere League’s most hallowed clubs
demonstrates how it could be the best of times and the worst of times for apparel partnerships.
Throughout the sporting world, jersey sponsorships will or already have driven
significant incremental revenue growth. NBA teams are going to sell sponsorship logos on their
uniforms starting in the 2017-18 season. Under Armour signed a record $86 million deal with
the University of California, Berkeley for the next ten years.
At the same time, large jersey sponsorship deals are more frequently coming under
scrutiny. A famous recent example entails a senior executive at General Motors reportedly
being fired from his job for “not properly vetting and reporting the financial details about
Chevrolet’s sponsorship of Manchester United.” The sponsorship’s most prominent feature was
having a Chevrolet logo on the front of the English Premiere League team’s jersey.
Adidas currently sits at an interesting intersection of sports sponsorship. It recently paid
$750 million to be the Official Kit (jersey) Supplier of Manchester United. At the same time, the
company yesterday announced that it was ending its sponsorship of English Premier League
team Chelsea six years early after paying a reported $300 million for the deal in 2013.
Why would Adidas pay $350 million more to sponsor Manchester United than Chelsea?
Adidas primarily focuses on selling apparel to customers for a number of sports throughout the
world. Chelsea claims to have close to 400 million global fans across the world. Manchester
United has almost that number of fans in Asia alone with 110 million in China and 659 million
globally. A relationship with Manchester United enables Adidas to reach more customers in
more of its target markets that will more likely facilitate incremental revenue growth for the
This is a salient example of a larger trend happening in the industry. Companies are
more frequently making decisions based on weighing economic and financial factors than ever
before when making sponsorship decisions. In the past, teams could rely on their on-field
narratives to generate interest from corporate sponsors.
Adidas’ actions with Chelsea and Manchester United, however, show that there is a
problem with relying on just the emotional connection with fans to generate dollars for jersey
sponsorship. While Manchester United is arguably the most successful team in Premiere
League history, Chelsea is usually considered second by having won 17 major championships
since 1997. In fact, Manchester United was having one of its least successful on-field runs in
recent history when it signed its new Adidas deal. Even though Chelsea struggled during the
2015-16 season, the team won the Premiere League last season – after its most recent deal
with Adidas was signed.
Ending its deal with Chelsea early and signing a larger deal with Manchester United
makes the most sense for Adidas using an economic lens. Manchester United will likely enable
Adidas to reach more of its customers and sell more products, particularly in the Asian market.
Adidas is not alone in transitioning to a more economically-oriented type of decision making
process when it comes to sports sponsorship. Corporate partners of all sizes need to
understand the economic value of sponsoring a sports organization. Teams, leagues, athletes,
and events need to present a demonstrable ROI to their partners or risk losing corporate
sponsors. The sports properties that can effectively show and communicate value based on
economic metrics will have the best of times presenting a compelling economic story and
retaining corporate partners.
Adam is the CEO and Founder of the sports sponsorship and analytics firm Block Six
Analytics. He is also lecturer for Northwestern University's Masters of Sports Administration. In
addition, he is the co-author of The Sports Strategist: Developing Leaders For A High-