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Euro Football Clubs’ Goal: More Licensing at Home and Abroad

European football (soccer) clubs have been expanding their licensing activities over the past two to three years, including in markets outside their home territories.

The Union of European Football Associations (UEFA), the governing body of European football, has qualified 237 clubs from 54 countries for its 2013/2014 club competitions, but most of the clubs with the broadest licensing programs are those who play in the top divisions in each country, including the British Premier League, German Bundesliga, Spanish Primera Division, and their counterparts in other territories. (Unlike in the U.S., the clubs handle their own licensing, rather than conducting these activities through the leagues.) Top clubs for licensing include Manchester United, FC Barcelona, and AC Milan, among others.

In fiscal 2013, Manchester United reported that “retail, merchandising apparel, and product licensing revenue” rose 14.2% to £38.6 million, or $63.3 million at current exchange rates. That includes sponsorship income from Nike and others, as well as royalties from licensed merchandise. The club says it sold more than five million items of licensed merchandise overall that year, through 200 licensees in 10,000 retail stores in more than 130 countries. In the first quarter of fiscal 2014, its “retail, merchandising apparel, and product licensing revenue” was up another 13.8%.

Focus on New Markets

While football clubs generate the majority of their merchandising revenues from their home countries-where a number of them oversee long-established and broad licensing efforts-many are placing an increased emphasis on global territories.

Last year, for example, Paris Saint Germain retained Early Bird Licensing as its agent in the Nordic region, while Tottenham Hotspur signed with Velocity Brand Management for Australia and New Zealand. Both clubs, as well as Liverpool, were first-time exhibitors at the Licensing International Expo in 2013.

Tottenham Hotspur, a London-based club also known as the Spurs, offers an example of how some clubs are expanding, both domestically and worldwide. Over the last two years, its licensing program has grown by more than 50%, both in the number of licensees and in revenues generated from merchandise, according to Gary Jacobson, brand licensing manager. Recent deals include Drew Pearson for headwear and accessories, Sun Ce for back-to-school merchandise in the Middle East, and TextPride for a digital emoticon pack.

The Spurs have increased their presence in the U.S. of late. Fresh initiatives include a deal with Sports Endeavors to produce new merchandise and distribute existing products via e-commerce, a technical partnership with Under Armour, tours, and grassroots soccer programs. “Our number of Official Supporters Clubs in the country has more than doubled during the past year, meaning an increased demand for Club merchandise,” Jacobson says. The club also has agents in South Africa, the Middle East, and Scandinavia.

Many European football clubs already have a significant fan base overseas; Real Madrid estimates that it has more than 300 million fans in the world, with half of those residing in Asia.

Meanwhile, in addition to clubs expanding their brands overseas, some are upping their activities domestically. Zenit St. Petersburg, a member of the Russian Premiere League that says it counts 10% of the Russian population as fans, retained European Licensing Company as its representative in its domestic market. (ELC also represents Juventus, Barcelona, and Manchester United in Russia.)

Expanding the Fan Base

Several clubs are building their global profile through experiential licensing, content extensions, and sponsorship deals, in addition to expansion of their merchandising programs:

  • Real Madrid is developing a theme park in United Arab Emirates, scheduled to open in 2015. The complex is expected to include a stadium, museum, youth sports academy, hotels, and a marina.
  • Manchester United recently signed Gloops to distribute social games and Manda Fermentation for a supplement sponsorship in Japan, where it says it has 4 million fans. It also has forged sponsorship agreements in other parts of Asia, such as with soft drink maker Wahaha in China and with Unilever as its official personal and laundry care partner in Southeast Asia.
  • Barcelona has had a deal for branded soccer camps in the U.S. since 2011. Participation has grown from 140 people that year to 1,000 in summer 2013.

Global Licensees

One key factor in the global expansion of many of the leading clubs is the master licensing, supplier, and sponsorship agreements they have in place with official apparel and footwear companies, notably Nike and Adidas. These firms often retain global licensing and merchandising representations rights along with the ability to make official and replica uniforms and other products. These companies have a global reach and help raise the clubs’ awareness around the world.

Nike’s relationships in Europe include Barcelona and Manchester United, as well as the Dutch and French Football Federations. Last spring, it signed with the Middle East Licensing Company to represent its clubs throughout that region.

Adidas will take over licensing for Juventus Turin from Nike starting in 2015. It also represents AC Milan, Real Madrid, Chelsea, FC Bayern (of Munich), and CSKA Moscow.

Puma sponsors and serves as master footwear, apparel, and accessories licensee for clubs across Europe, including teams in Germany, England, Scotland, Greece, the Netherlands, Spain, Portugal, Belgium, Italy, France, and more, as well as a number of national teams.

E-Commerce Is Route To Global Merchandise Sales For Euro Football

Sales of European football (soccer) club merchandise through e-commerce allow clubs to reach fans across borders across Europe and around the world:

  • Kitbag, based in England, sells products tied to almost 40 teams, ranging from licensing-heavy brands such as Chelsea (with 518 listings on the site), Celtic Glasgow (304), and Olympic Marseille (266), to clubs such as Schalke, Werder, Hertha, Borussia Mönchengladbach (all in Germany), Sparta (Czechoslavakia), Olympiakos (Greece), Zurich (Switzerland), CFR Cluj (Romania), Athletic Bilbao (Spain), and AS Roma (Italy), each with just one item listed.
  • Sports Endeavors’ Soccer.com, based in the U.S., markets products tied to football clubs around the world, including AS Roma; Arsenal; FC Barcelona; LOSC Lille, Stade Rannais, and Nantes, all based in France; Manchester United; and Celtic Glasgow.

UEFA launched an online store in 2011 to sell merchandise based on its various leagues and championships (but not the individual clubs). Sports Endeavours sells UEFA merchandise in the U.S. as well.

Euro Football Clubs Expect Financial Rules To Boost Licensing Initiatives

UEFA’s new Financial Fair Play regulations, which were approved in 2009 and implemented during the 2011-2012 season, require European football (soccer) clubs-half of which had been losing money-to hold their spending to levels less than the revenues they take in. Penalties for noncompliance range from fines to disqualification from competition. Although it is too early to say what impact this will have on licensing, it is expected to contribute, in part, to clubs being more active in looking for ways to increase revenues.

More importantly, general market trends continue to drive licensee and agent signings, as well as increasing merchandise sales. Clubs are investing more in their licensing departments, and retailers are increasingly embracing football merchandise.

“Licensing has been an area of focus at Tottenham Hotspur for a number of years now, regardless of any new regulations,” the club’s Gary Jacobson says. “Premier League football and its clubs carry a global appeal, and fans represent a ‘cradle-to-grave’ opportunity for retailers in all sorts of product categories.”

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