Clubs under pressure to renew shirt deals

LONDON - Fifteen top European clubs are under pressure to renew their shirt sponsorships by next season as their contracts expire amid the economic downturn.

Shirt sponsorships, the backbone of clubs' commercial revenues, have commonly been considered immune to the financial crisis because of their long duration and large media exposure.

However, analysts expect tough times ahead for clubs with troubled owners or smaller appeal as companies trim budgets.

"In times of financial hardship, firms will naturally look for ways to cut costs, and sponsorship of sporting events, including football shirts, seems a natural and easy target," Chris Brooks, professor of finance and director of research at ICMA Centre, University of Reading, told Reuters.

Although many experts consider it unlikely that top clubs such as Manchester United will be unable to sign lucrative new deals, smaller clubs may have to accept lower income.

Several companies, including Malaysian budget airline AirAsia and Saudi Telecom, have been linked in the media to Premier League leaders United as potential sponsors, after U.S. insurance giant AIG said it would not extend its deal beyond 2010.

"Even if football clubs continue to attract some degree of sponsorship it is most likely that future arrangements will be less lucrative for the clubs," Joe McLean, a soccer finance expert with accountants Grant Thornton, told Reuters.

West Ham United -- who played for three months without a shirt sponsor after holiday firm XL collapsed last year -- signed an 18-month contract with online betting company SBOBET that has half the value of their previous deal.

Their Premier League rivals West Bromwich Albion have not been able to agree a shirt deal this term, while six Primera Liga clubs started the season with no shirt sponsor.

"Outside the upper echelons of the game, clubs are in for a bumpy ride over the next 18 months and will have to adjust their expectations if they are to successfully secure shirt sponsorship deals," Simon Chadwick, professor of Sports Business Strategy and Marketing at Coventry University, told Reuters.

GLOBAL APPEAL

Shirt sponsorships also highlight the increasing gap between small and large clubs.

Bundesliga leaders Hamburg SV have renewed their deal with Dubai-based Emirates Airlines for three years.

Manchester City, whose 2.3-million-pound ($3.29-million) per year deal with Thomas Cook expires this season, were also in a position to clinch a valuable deal, analysts said.

Despite the slowdown, analysts expect finance and insurance groups to keep a central role in sponsorship, along with the betting industry.

More than 30 financial or insurance companies are on the shirts of clubs across Europe's six top leagues -- only four fewer than last season, according to German sports consultancy group Sport+Markt.

Total shirt sponsorship revenue across the six biggest European leagues has fallen by about three percent to 393.2 million euros this season, according to Sport+Markt.

The reasons for the decline were lower sums generated in Spain and England and the reduced strength of the British pound.

However, the sector should stay afloat, experts said.

"It is difficult to generalise," said Chris Gratton, sports economics professor at Sheffield Hallam University.

"Once the pound recovers, numbers will look different again," said Harmut Zastrow, executive director at Sport+Markt.


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