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 When the No. 1 U.S. automaker announced in 2012 that it was paying
$559 million over seven years to slap the Chevy bowtie logo on the
jerseys of "Man U" players, the steep price tag turned heads. Now,
in light of GM's announcement last month that Chevrolet will largely
exit Europe by the end of 2015, the contract has become even more of
an overpay because players will be wearing a logo for a product that
is nonexistent in the region.
"Understand what this sponsorship deal is all about — it's eyeballs.
They're leaving a big patch of geography with lots of eyeballs so
the economic value has to go down," said Gary Fechter, an attorney
who has represented companies in sponsorship deals for 35 years.
Fechter is not involved in GM's deal.
Though Chevy has long been an iconic brand in the United States, it
never really took off in Europe, hurt by the region's tough
competition and an economic downturn. GM said it plans instead to
focus on expanding its Opel and Vauxhall brands in the region.
GM still sells its Chevy brand in most other markets around the
world.
Jim Andrews, senior vice president with IEG, a WPP Plc unit that
tracks sponsorships, said the deal still holds promise for GM in
emerging markets where Manchester United is popular, but the value
took a hit with the exit from Europe.
"I would not classify it as a bad deal, but if you could rewind the
clock, knowing that you're not going to be marketing the Chevy brand
in Europe, would you do this deal at that price? I think the answer
is clearly no."
ASIA TO THE RESCUE
GM executives dismiss the notion that the deal is less valuable,
saying the true payoff will be in Asia and other emerging markets.
"Anyone who's ever lived in Europe or understands Europe will know
that there is not a high proportion of Germans that support English
soccer clubs. They follow the Bundesliga" or German professional
soccer league, Alan Batey, GM's North American chief, said at the
Detroit auto show on Monday. Batey is also GM's global head of the
Chevy brand.
"We never, ever did this for Europe," he added. "We did this because
frankly soccer is the sport of the world. We really did this for our
emerging markets, particularly China and Asia."
As with any sponsorship deal, GM will also have to spend additional
money to advertise or promote its partnership with Manchester
United. The automaker is planning a huge promotional launch when the
Chevy bowtie goes on the game jerseys in August and it will also use
the Internet and social media to promote its brand with the club's
millions of fans.
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"HAPPY FACE"
Manchester United's data on its fan base backs GM's argument because
the club says almost half of its 659 million followers globally are
in Asia, including 108 million in China. Another 173 million are in
the Middle East and Africa, and 71 million in the Americas, while
only 90 million are in Europe.
Fechter, the sponsorship lawyer, called GM's argument "putting a
happy face" on a bad deal that could, however, still work in the
end.
Of course, the deal might look better if United's performance this
season was stronger.
Manchester United are struggling on the pitch under new manager
David Moyes this season. Going into this weekend's round of matches,
United are only seventh in the 20-team Premier League. They have
never finished outside of the top three places since the Premier
League was launched in 1992.
Manchester United officials are not fazed by GM's decision in
Europe.
"Chevrolet are very clear that the partnership with us is a global
one and we both intend to continue this partnership to help build
their brand around the world," club spokesman Phil Townsend said.
Insurer Aon Plc, the current jersey sponsor under a four-year deal,
instead signed a new agreement last April that runs twice as long
for $240 million to sponsor United's practice jersey, training
complex and preseason tour.
"We think it's more efficient and effective for both Aon and
Manchester United," Aon Vice President David Prosperi said.
GM may have overpaid for the jersey deal, but it can still pay off
if the automaker reaches enough fans, said Simon Chadwick, professor
of sports business strategy at Coventry University in England.
"It might sound a little outlandish," he said, "but might we see
Manchester United-branded Chevys driving around Beijing?"
(Additional reporting by Keith Weir in
London; editing by Matthew Lewis)
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