Why do digital companies invest millions in clubs and leagues?

Translated and Edited by: Noon Post

over the past year; Several major clubs in various sports have signed expensive and unknown contracts at the same time.

In the beginning; Barcelona has sold the rights to its famous stadium, Camp Nou, to Swedish music and podcasting giant Spotify. Since March 2021, the logo of Team Viewer, a cloud computing company, has been printed on the Manchester United jersey. In addition, the number of contracts signed between European football and American sports clubs with companies specializing in the field of cryptocurrency increased.

Due to the deteriorating financial situation and declining revenues due to the spread of the Covid-19 virus, as well as debt obligations and relocation payments; Barcelona could not sign with free agents, which prompted him to look for a savior who could save the club from the current situation.

In March of this year, the club announced the launch of a collaboration with Swedish music and podcast giant Spotify, which within a few years had become one of the main platforms for music enthusiasts and the subscription model enabled it to generate revenue. gave me. Despite the silence of the relevant authorities on the value of the agreement, according to what was reported by the Spanish media; FC Barcelona sold the stadium name rights for 300 million euros for four seasons.

Despite the decline of the team and the loss of brand attractiveness after the expiration of Lionel Messi’s contract with Barcelona at the end of the 2020-2021 season; The club managed to sign a contract that brought him huge profits. Since 2016; The club partnered with Japanese group of companies Rakuten, which owns online trading platforms and the Viber app and offers many online services, for 55 million euros per season.

and accordingly; Spotify will not put its logo on the FC Barcelona jersey, which the club has sold to another business partner for the third time in its history. Prior to collaborating with Rakuten, the Barcelona players’ shirts bore the logo of the Qatari Investment Fund with a six-year contract and the UNICEF charity logo. After the name of the Swedish giant was included in the official name of the stadium since the new season, the stadium now bears the name “Spotify Camp Nou”. According to what the Spanish media reported; Following this change, Barcelona has been able to add 20 million euros to the amount of the previous contract.

on his side; In March last year, Manchester United football club signed a five-year contract worth 275 million euros with IT giant Tim Viewer. and with his signature; The club has stated that it is the most expensive contract to sign during the pandemic and the most lucrative in the Premier League. In contrast, United representatives stressed that the choice did not fall on the most financially lucrative bid, but on what promised the development of the private label. Commenting on this, Richard Arnold, the new chief executive of the English giants, says: “Although Tim Fewer did not offer the most lucrative offer, his prospects go beyond financial limits.”

Manchester United’s five-year contract with IT giant / Jack Finney / Offside / Offside via Getty Images

Thanks to the technical skills of the sponsor and the result of the installation of the company’s main application, which is a program for remote control of computers, in about 2.5 billion devices worldwide during the signing ceremony, English club fans will grow in different parts of the world. on his side; The contract increased the use of the application within Asian countries, where United are very popular. The club also plans to conquer markets in which its IT partner is active, including US markets.

In this aspect; The sports brand plays a leading role in such partnerships, says Maria Likhoved, head of the sports and entertainment department of the Rodnaya Resch group of companies, which brings together more than ten agencies of different specialties.

“It was not Spotify that gave birth to the idea to buy the name rights, but Barcelona that offered the sale, as the club takes into account many criteria when choosing a sponsor, not just offers that bring a lot of revenue. “For example, Barcelona refused to enter.” In partnership with H&M and cryptocurrency companies, the latter offered astronomical sums in excess of the value of the contract signed with Spotify.

Likhoved regards the club or association as a well-known and influential leader of the public with a broad and loyal fan base, with whom it can continue to work for many years, noting that in the world of sports, including advertising, we observe maximum loyalty. for these reasons; The choice of digital companies generally falls on the top sports clubs.

Youth-run cryptocurrency companies are a separate category of digital sponsors with an interest in sports, particularly in North America; In the 2021/22 season, the National Basketball Association set a new revenue record thanks to a $ 130 million investment from crypto sponsors, though the value of contracts entered into last season was no more than $ 2 million. According to the independent evaluation team; The investment of currency sponsors is one of the main drivers of total revenue growth of 12 percent to $ 1.64 billion.

and during the season; Cryptocurrency sponsors ranked second in terms of total investment in the league, although they ranked 43rd in 2020, a development in which only five companies contributed: Crypto.cam, Whippool, Coinbase, FTX and Socius. com.

The NBA logic in dealing with digital companies is similar to the motives of European football. Commenting on the deal with Crypto.cam, before the start of the 2021/2022 season, Chris Heck, Philadelphia’s chief commercial operations officer, indicated that the club chose a partner. to integrate it into his business projects.

According to The Atlantic, the value of a contract with a National Basketball Association club ranges from seven to ten million dollars a season; The contract requires the club to put the company logo on the players’ shirts. Unlike football, the logo is not in the center of the shirt and is quite small in size.

The Crypto.com brand became more prominent in American sports after the name of the main arena in Los Angeles changed from the Center Lakers, the home of the Lakers and Clippers, and the home of the American professional basketball team, the Sparks, and the hockey club, the Kings. , in the Crypto.com arena at the end of 2021.

This renaming deal was considered the most expensive of its kind in the history of the sport and could cost the crypto brand about $ 700 million over twenty years, according to US sources.

Before; The FTX cryptocurrency exchange paid $ 135 million to rename the Miami Heat for 19 years.

Cryptocurrency sponsors are also investing in European football, as evidenced by the signing of a contract by the Well Finn cryptocurrency group in May this year worth milionë 20 million a year; The contract obliges the club to put the Will Finn logo on the sleeves of the players’ shirts, which is the part where the logo of the car manufacturer Hyundai was previously placed.

Well Finn had previously announced his intention to sponsor Atletico Madrid, in exchange for 42 million euros per year, according to unofficial data.

in early 2022; Manchester United have signed a milionë 20million deal with blockchain platform Tezos in exchange for the company logo appearing on the shirts the team wears during training. at the time of announcement; Following the investigation, the club revealed that it had found a new partner and canceled the agreement with Tezos due to lack of transparency regarding the origin of the company, while Barcelona terminated the contract with the Onyx platform, which specializes in trading irreplaceable tokens. . after retaining the owner.

It turns out that the Italian football market is particularly open to sponsorships in the cryptocurrency category; Krypto.com became an innovation and technology partner for the entire Premier League ahead of the 2021-2022 season and named it the league’s video technology hub.

Italian club Inter spent the season with “Inter Van Token” from Socius.com, as the official sponsor of the players’ shirts; Chosen by the sponsor to promote its flagship product, “Fan Token”, Rome won the European Conference League with the “Digital Pets” brand on the jersey; The brand is a trading platform for cryptocurrencies and Lazio has also signed such a sponsor in the middle of the season.

Since people need new forms of interaction, old forms do not get the same response.

The report said that the club started the tournament without a sponsor and in October 2021 reached an agreement with the cryptocurrency exchange “Binance”, as stated the director of marketing and sponsorship for the Lazio team, Marco Canigiani during a seminar in the presence of the newspaper correspondent, that crypto companies It became the largest investor in Italian football after a ban on gambling advertising went into effect in 2021.

Kanigiani added; That sport helps build trust in brands, especially for such a complex market where value can be lost quickly, is especially important, as he explained that if someone hears something from a favorite club or if the club asks them to provide data ; He will be more willing to share than if called, for example, by the telephone company.

Vladimir Smirkis, director of Binance in Russia, explained in an interview with “Vedomosti” that the trend towards merging old brands has long been observed.

According to him – over the past year – this trend has been reinforced by new industry opportunities, increased internet penetration and public interest.

“Since people need new forms of interaction, the old ones do not get the same response. In this, we see a great synergy between Binance and the old sports brands,” Smirkes continues.

The Binance CEO describes the mutual interest of digital companies and sports clubs in each other; The online service offers new tools to communicate with the public.

According to him; With the help of sports projects, it is possible for people to be more effectively introduced to the world of “Web 3” (the concept of the Internet of the future where blockchain technologies are at the center of development). “Digitalisation has changed the approach to sports classics,” says Smerkis. and now; Instead of the jersey with the team emblem and the name of their favorite footballer, the public is increasingly interested in owning digital attributes, like NFT.

He added that for them; These interaction opportunities are to reach a new audience that discovers; Through a relationship of trust with their favorite brands; A new digital world.

Likhoved considers that the activity of digital companies is not so new in the western market as a completely different approach to business, which is not uncommon in Russia. She also noted that “the partnership with the club is always a comprehensive story: in which old and new formats are offered”. in Europe and North America; Sports sponsorship is developing in its own way. The stadiums are full throughout the season, while in Russia some matches are played in front of closed windows.

She added that there sponsors follow this audience in clubs and leagues and interact with them for years, while in her country sport is not considered a complete and independent communication channel.

Likhoved points out that “in countries that have a developed sponsorship landscape, where clubs are concentrated and not sponsors, which is unusual for Russia, where clubs are not willing and unwilling to cooperate with any sponsor.”

She explained that the company’s compatible values ​​and previous experience of partnerships, advertising campaigns and environmental friendliness; All of them matter when choosing a sponsor, not just the amount of the contract, as the Russian market has more quick results than quality.

Source: Vedomeste

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