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1.: Credit Crisis Hits English Soccer as AIG, Shirt Sponsors Tumble From: Mohammad Nazri

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1.: Credit Crisis Hits English Soccer as AIG, Shirt Sponsors Tumble

Posted by: "Mohammad Nazri" nazri@rhbinvestmentbank.com

Wed Sep 17, 2008 10:58 pm (PDT)

Credit Crisis Hits English Soccer as AIG, Shirt Sponsors Tumble

By Tariq Panja

Sept. 18 (Bloomberg) -- Manchester United's shirts read AIG. They might
as well say U.S.A.

The U.S. government's $85 billion takeover of American International
Group Inc. <http://www.bloomberg.com/apps/quote?ticker=AIG%3AUS> gave
it control of United's shirt sponsorship, one of the most visible in
sports after the team won two of soccer's biggest club championships
last season.

The English Premier League is becoming a scoreboard for the global
credit crisis. Newcastle players wear the logo of Northern Rock Plc, a
U.K. mortgage-lender that was nationalized in February; West Ham lost XL
Leisure Group Plc last week when the tour operator grounded all its
flights because it ran out of money; and West Bromwich Albion was unable
to land a shirt sponsor after being promoted from the second-tier
championship.

``The market has got flatter,'' said Nigel Currie
<http://search.bloomberg.com/search?q=Nigel+Currie&site=wnews&client=wne
ws&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&ge
tfields=wnnis&sort=date:D:S:d1> , director of sports marketing at
Guildford, England-based Brand-Rapport. ``There's not that much money
sloshing about.''

Typically, a shirt deal is a club's largest single source of sponsorship
revenue. AIG, which struck the deal with the U.S. government two days
ago, is in the second year of a four-year agreement with United worth
56.5 million pounds ($102.9 million).

This season, however, shirt sponsorship revenue in England's top soccer
league fell to 67 million pounds from around 75 million a year earlier,
Currie said. It was the first time it has fallen, he said.

Sponsor-Free Match

When West Brom played West Ham last week, it was the first time in the
Premier League's 16-year history that a match was played with both teams
sporting jerseys without a sponsor's name. Since Crawley, England-based
XL Leisure collapsed only a day before the game, West Ham played with
patches over the logo.

Sometimes not having a sponsor is better, Currie said. When newspapers
needed to illustrate Northern Rock's difficulties after it became the
victim of the first run on a British bank in more than a century, they
turned to sports.

``You look in the business pages and they will inevitably use a picture
of Michael Owen
<http://search.bloomberg.com/search?q=Michael+Owen&site=wnews&client=wne
ws&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&ge
tfields=wnnis&sort=date:D:S:d1> with a Newcastle shirt on,'' Currie
said. ``It portrays an image of not being successful.''

The Premier League generates revenue of more than 1.5 billion pounds and
sponsorship income accounts for a fraction of that. United, for example,
collected 49.3 million pounds in television revenue last year, and
earned another 42.9 million euros ($61.3 million) from European soccer's
governing body by winning the Champions League last season.

Contingency Plans

United, owned by the American Glazer family, won't disclose its
contingency plans for a possible loss of principal sponsor AIG,
according to a team representative. The club, which has won three
European titles and the English league 17 times, wouldn't have trouble
finding a new one, said Stefan Szymanski, a professor of sports business
at Cass Business School in London.

``There would be a queue of sponsors lining up for United,'' Szymanski
said.

Manchester United's roster includes England national team striker Wayne
Rooney, Argentina's Carlos Tevez and two-time English league player of
the year Cristiano Ronaldo. The club won the Premier League title last
season as well as the Champions League, the most prestigious in club
soccer.

West Brom said this week it is in talks with several ``interested
parties'' over securing a sponsor to replace Deutsch Telecom AG's
T-Mobile. It's unlikely to receive more than 1 million pounds, said
Brand-Rapport's Currie, who worked on Manchester United's previous shirt
sponsorship deal with Vodafone Group Plc.

Other Deals

Jacques Bungert
<http://search.bloomberg.com/search?q=Jacques+Bungert&site=wnews&client=
wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p
&getfields=wnnis&sort=date:D:S:d1> , president of Young & Rubicam
Brands, which arranges sports sponsorship deals in Europe, said the
plight of West Brom and West Ham may have implications for other mid-
ranking Premier League teams.

``The fact the team doesn't have a sponsor is very frightening for the
others, wondering if they will go in the same direction,'' Bungert said.

West Ham said today that it isn't planning to announce a new sponsor
before its next league game against Newcastle this weekend.

The British Broadcasting Corp. reported the East London team had
received 2.5 million pounds from a 7.5 million-pound, three-year deal it
had signed with XL.

One English team got around the whole issue. Birmingham's Aston Villa,
owned by U.S. billionaire Randy Lerner
<http://search.bloomberg.com/search?q=Randy+Lerner&site=wnews&client=wne
ws&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&ge
tfields=wnnis&sort=date:D:S:d1> , snubbed corporate sponsorship offers
and instead offered the team's claret and blue shirt to Acorns, a local
hospice for children.

``As a statement it's a pretty good way of meeting your corporate social
responsibility obligations and burnishing your image in the local
community,'' Currie said.

To contact the reporters on this story: Tariq Panja
<http://search.bloomberg.com/search?q=Tariq+Panja&site=wnews&client=wnew
s&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&get
fields=wnnis&sort=date:D:S:d1> in London at tpanja@bloomberg.net;

Last Updated: September 17, 2008 20:38 EDT

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