Unicef. If there is any one word that captures the contemporary sense of Més que un club it would perhaps be Unicef. Unfortunately, there have been recent reports that the club is going to sell the shirt sponsorship and alter how and possibly where Unicef is located on the jersey.
Via the indefatigable Pep of Barça stuff – comes the news that earlier today those reports took on new specificity with Catalunya Radio stating that the Barça board had agreed to sell the shirt sponsorship to the Qatar Foundation for 166M € over a five year period.
At this point in time caution is urged. The reports of a final sale are very preliminary in their sourcing and may prove to be completely erroneous. However, the club has called a press conference for 12pm Barcelona time today.
Though it’s very preliminary, given the importance of what would potentially be the first commercial shirt sponsorship in club history, I thought it would be useful to try to take a look at the issue from a few different angles.
Key Issues and Questions:
In framing this discussion there are two questions that need to be considered initially. While they are connected it’s helpful to look at them as separate issues first:
1. Should the shirt sponsorship be sold?
2. If it is to be sold, to whom should it be sold to? What is the appropriate organization?
Other critical issues such as: if there is a sponsor how should the image appear on the shirt? and if there is a sponsor what should be done with Unicef? follow from the first two fundamental questions above.
To frame the discussion I think it would be helpful to discuss both of the questions outlined above. And a useful exercise would be to discuss both questions even if you answer the first as no. Debate the merits of the first question on whether the shirt should be sold. However, even if you say no, for a moment accept as inevitable that the board will sell the shirt and then consider to whom it should be sold.
For the sake of clarity, I believe the financial issues at play are the most complicated and probably the least familiar to most people. As such I will spend most of the time focusing on those. The length of that section in no way indicates that finances are more important than any other factor. It’s simply a matter of familiarity.
Should the Shirt Sponsorship Be Sold?
The primary reasons to sell the shirt are of course financial. I’m going to go into the finances in some detail as this is probably the area that needs some clarification. There’s two sides of the financial issues: 1. Lost revenue and opportunity cost, that is the impact that not selling has on missed potential revenue; 2. Pressure from internal financial conditions that require new revenue generation.
Lost Potential Revenue Sponsorship
To put into perspective the opportunity cost from lost revenue let’s compare how Barça ’s revenues compare to two other clubs, Real Madrid, the club with the highest grossing revenues in the world, and Bayern Munich, the club with the most revenues generated through commercial activities (table via the invaluable Swiss Ramble blog):
Real Madrid generates the most revenue of any club in the world. In comparison to Barça they generated 35M more in 08/09 (most recent complete data available). As you can see from the table, the two clubs are comparable in most categories except for commercial activity where Madrid generates 27M € more.
So what accounts for that 27M? Much of it is from shirt sponsorship. When this data was taken, Madrid was making roughly 14-15M € from its sponsorship. Barcelona has no comparable source of revenue. In addition, Madrid has more recently renewed that sponsorship deal with on line gambling company bwin increasing its total to 20-23M through 2013.
How lucrative could a shirt sponsorship be? Well to get that answer let’s compare Barça with Bayern Munich. Barça ’s overall revenues are 76M € more than Bayern as Barça generates 88M more in TV revenue and 40M more on match day (Bayern has set their ticket prices very low). However, on commercial revenue Bayern swamps Barça drawing in 47M € more.
Again, a large proportion of this is from shirt sponsorship. Bayern have the most lucrative shirt sponsorship deal in the world, making 18M € for its shirt. Recently it has renewed its deal most of this difference is due to the shirt sponsorship and it will increase to 25M € with incentives that could take it to 30M.
Barça ’s financial situation has been both controversial and has drawn much attention with the new board re-auditing the club’s books and declaring the club in financial crisis. I don’t want to get into the politics and accounting of this issue right now. For a in depth revue see the Swiss Ramble’s analysis. The main point from the perspective of shirt sponsorship is that the board has publicly stated on numerous occasions that the club is in serious financial difficulties and its policies will follow in turn. This is the stated strategic need that is reportedly driving the way the club is now operating.
During the most recent club elections Rosell was often open about his willingness to sell the shirt sponsorship. He was forced to play a difficult political dancing act at the same time however as he needed to reaffirm support for Unicef. His position evolved and became conditional as he said:
“Could a commercial sponsor be included, together with Unicef? That depends on the club’s finances. First you have to see what the real economic situation of the club is and then you can make decisions that are more or less altruistic. If you don’t know the numbers, you can not give a well-founded opinion.”
– Sandro Rosell
Later on he would downplay his willingness to sell the shirt. But with the new audit by the board which made the allowed him to”know the numbers” and the subsequent declaration of financial difficulty, Rosell appears to be moving forward with the position stated above.
Why the Club Should Not Sell the Shirt?
I’m going to leave this section to you to discuss below as the reasons are very clear. Philosophy. History. Symbolism. Tradition. Identity. Brand development. Messaging. Unicef. The reasons are numerous and I’m sure will make for passionate discussion below.
It’s very possible that by the time you read this, the club has already announced a sponsorship sale. Even if that happens whether or not the shirt should be sold is still a question that needs to be asked and debated.
If the Club Does Sell Whom Should They Sell To?
What kind of organization should a sponsorship be sold to? What characteristics should it have in its own organizational mission? What kinds of organizations should be disallowed from sponsorship? These are only a few of the key question to debate.
Again, by the time you read a sale may be complete. Regardless, it’s still important to discuss these questions as they give us a framework to begin to debate the merits of whatever organization may ultimately act as a sponsor. Even if the sale doesn’t happen in the near future they help structure the issue for us to think about.
The article from Sport describes the position of the board as follows (translation courtesy of Total Barça ):
Sandro Rosell has already warned during the election process that all future options remain open, including a shirt sponsor, although there will be some minimum requirements. Barça, as one of the world’s best clubs, would only be willing to associate their image with a brand that was in the same situation. Barça will only yield its image to a multinational project/company that holds and could contribute further to the international values that the club currently defends and promotes.
These requirements rule out some sponsors that have been suggested in recent years, since the current board has stated that they will not use sponsors from the bunch of companies related to gambling, betting or practices that contrast somewhat with the values advocated by UNICEF. The international market is restricted, but the club is aware of possible deals that from now will be sorted and analyzed. The shirt is already on the market and has a price.
Again, I’ll leave it as this and let you take up the merits of these positions in the discussion session.
What to Make of the Qatar Foundation?
First off, there are reports that the club has called for press conference at 12pm Barcelona time to announce the deal. Until it’s official we should reserve judgment.
However, given the reports of an impending sale let’s take a preliminary look at the Qatar Foundation. If they do become the sponsor it will be a long process to understand what they do and what they represent given that they are relatively unknown. Let’s take a first step.
The Qatar Foundation describes it’s mission as follows:
Qatar Foundation is leading Qatar’s drive to become an advanced knowledge-based society. It is transforming Qatari society by educating the rising generation to the highest world standards – these will be the skilled professionals who will be the country’s future leaders. It is turning Qatar into a producer of knowledge by building a research base. Some of the new ideas will reach the stage of commercialization, helping diversify the economy. Qatar Foundation is also reaching out to individual sectors of the community and addressing social issues to accelerate the human development process in numerous directions.
Outside of what I’ve read, I know a very limited amount about the Qatar Foundation so please take my comments as highly conditional.
Provisionally, I think there are two keys to why this sponsor was chosen. Firstly and most obviously of course is money. Simply put Barça will make a staggering amount of money from this deal. If the reported numbers are correct and the deal is 166M/5yrs Barça will be generating more revenue from its shirt sponsorship than any club in the world.
A second reason that I would guess was critical to this deal is the nature of the Qatar Foundation and the work it does. From what I understand (which as stated is limited), the Qatar Foundation is a government funded non-profit organization in Qatar focused on developing educational initiatives and infrastructure in the country and region. They have a wide portfolio of projects ranging from grade school to graduate education. In addition, they have a wide range of international partnerships with other educational and research insitutions. A number of Western universities and research organizations have opened up schools and branches in Qatar as joint ventures with the Qatar Foundation. For example, Carnegie Mellon University and Cornell University from the U.S. and HEC Paris from France all have campuses in Qatar through the Qatar Foundation.
I have worked with colleagues that have done research work through one of these joint ventures set up between the Qatar Foundation and a Western educational institution. Anecdotally, I can say that those colleagues of mine did in fact engage in serious research as part of their work in Qatar.
To me, it has long seemed highly likely that the shirt would be sold after the election and the audit produced the results they did. Rosell’s comments during the election, the subsequent audit, and declared financial crisis in the club made it almost inevitable. They created a narrative whose conclusion would almost inevitably be sponsorship sale. The key step here was declaration of severe financial distress. Once this happens then all policies, practices and traditions become uncertain and subject to change.
In some ways I had already resigned myself to the sale, though all of this possibly coming on so suddenly is a surprise in timing. In turn, for me, the looming questions have been who would the club sell to and how would they fit with the social mission of the club? The next question that immediately then pops up – What happens to Unicef?
The fact that the Qatar Foundation is a non-profit focused on education to me seems like a major key to the deal. Selling the shirt sponsorship to a non-profit (even one in another country) is going to give Rosell the cover he needs to make this deal. It allows him to state that the club is staying true to its social mission. There are very few potential opportunities where Barca could be sponsored by a non-profit and still generate considerably more revenue in commercial shirt sponsorship than any other club in the world. I’m not supporting this or saying it’s the right thing to do – I’m just explaining why I think this particular sponsor may be chosen if in fact the Qatar Foundation does assume sponsorship as has been reported.
At the same time, while the sponsorship may directly come from a non-profit, the money is ultimately coming from the government of Qatar, which is the major funder of the foundation from what I understand (which may be very incomplete). The involvement of any country’s government with Barca’s first commercial shirt sponsor carries its own host of precarious issues.
I’ll allow all of you to debate the merits of these arguments in the comments. There’s a great deal to talk about and a number of difficult, complicated issues.