What's In a Name?

Last month RTG was pleased to recommend the Financial Fair Play website as a kindred spirit for the Reclaim the Game campaign. Following the recent rebranding of Cardiff City, in an article from FFP, Ed Thomson explores just how far clubs may go in order to exploit sponsorship opportunities.

Naming Rights - the next step. Could clubs incorporate sponsorship in their name?

Shortly after arriving at Wembley before the 1975 FA Cup final, FA officials insisted that Fulham black out the manufacturer’s name on their boots (you can see their name-free boots in this clip). Obviously a great deal has changed in 37 years and today there is precious little that isn’t sponsored - even the competition now calls itself ‘the FA Cup sponsored by E.ON’.

One of the consequences of escalating wage-bills has been the rather unseemly scramble for increased commercial revenue - clubs look to exploit every avenue in order to increase income. Newcastle abandoned the name St James Park and now play at the Sports Direct Arena. Liverpool and Chelsea are discussing changing their stadium name in the search for extra revenue. Outside the Premiership, Cardiff recently announced that they have changed the traditional colour of their shirt to suit the demands and commercial aspirations of their new owners – a cosmetically simple change from Bluebirds to Red Dragons. With player wage levels being slow to react to the 'soft salary cap' envisaged under FFP, traditionally important aspects of the club’s history and culture are now considered as options for commercial exploitation.

We would probably be foolish to believe that sponsorship has evolved as far as it can do – there is probably more to come. Perhaps, for a view of the future we should look at Indian Premier League cricket – a competition which makes the FA Premier League look distinctly understated – see clip
But what happens when there is nothing else is there to sell? Could a club sell its name? Could we soon see teams named something like ‘Melchester Big Mac Rovers’? We are probably some way off that at the moment but there are some important precedents. In 2010 Stirling Albion considered a tie-in with Compare the Market.com to rename themselves Stirling Albion Meerkats. This rather cuddly concept was vetoed by the SFA - a spokesman advising; "Given that a name change for commercial purposes would have huge implications, the integrity of the game would be paramount in any decision-making process."(link).

For the wealthy benefactor clubs, team naming rights might offer a solution to the thorny problem of how to balance the club’s books for FFP purposes whilst ensuring the club pay top dollar to secure the finest players. UEFA has established the "Club Financial Control Panel" to oversee the licensing process for their European Competitions. One of their duties is to review any commercial contract from a 'related party' (i.e. connected to the owner) and ensure it is for 'fair value' and not artificially inflated in an effort to help the club meet FFP. As the Panel looks at precedents, it would struggle to apportion a 'fair value' to any brand new kind of sponsorship from a related party. A club operating on a 'benefactor model’, willing to add sponsorship to the club name would, potentially, be able to argue that almost any figure (£50m, £80m, £100m?) represents 'fair value'. It is also possible that any naming rights deal could be front-end loaded so that the income could be timed to meet the club's immediate FFP needs. Although the recently announced Premiership TV deal for 2013-16 makes FFP compliance more attainable, the possibility of a top-flight club selling naming rights hasn’t receded entirely (and a lower deal after 2016 might put the issue back on the agenda).

In England, traditionalists can take some comfort from the fact that FA Council approval is currently required for any change of name from the Premier League down the Isthmian and Northern Premier Leagues. Fortunately any change in ‘playing name’ cannot be done overnight – an application needs to be submitted prior to 1 March for the following season (FA rules, page 97).

Headlines were made recently when a potential take-over of Bury by Rangers was muted. Although the story was swiftly denied, the idea was apparently for Bury to play Football League home games at Ibrox in a blue shirts and, ultimately, change their name back to Rangers. It all sounds rather fanciful until we recall events at Wimbledon – the club moved to Milton Keynes and in 2004, the Football League approved the change in club name to MK Dons.

As the FFP requirements start to bite, clubs will increasingly come under pressure to raise income. We should also consider how the Premier League bosses would react to a proposed change in club name for purely commercial reasons. They are unlikely to be at all keen on the idea of selling team naming rights. However, it would be deeply embarrassing for the Premier League to have one or more of their top clubs excluded from the Champions League because they could not meet the FFP criteria. It remains to be seen, but perhaps Peter Scudamore (the champion of the 39th game), or one of his successors, might view team naming rights as the lesser of two evils.

The FA aren’t as rooted in the past as many would believe and perhaps we shouldn’t rely on them indefinitely to protect our current value structure. We should remember how things have changed since 1975 – it now seems inconceivable that the FA would once have insisted that Fulham stick tape on their boots for the good of the game.

Across Europe there are some notable examples of clubs that have considered changing their playing name for commercial reasons:

Getafe/Team Dubai

Last year, it was announced that La Liga team Getafe had been bought for around E90m by the Royal Emirates Group and would in future be known as Team Dubai. It has since transpired that the REG have more in common with the Portsmouth’s former Arabian owners, than Sheikh Mansour. The funding for the purchase has stalled.

SV Austria Salzburg/Red Bull Salzburg

Red Bull Salzburg took over ownership in 2005 and have since changed the name, moved to a new stadium and changed the strip from purple to the Red Bull can colours (with, unsurprisingly, a bull on their badge). A splinter club has been formed under the old name and plays in the third tier of Austrian football.

PSV/Philips SV

PSV stands for Philips Sport Vereniging (Philips Sport Union) and for a couple of seasons tried to rebrand themselves as Philips SV. This change wasn’t very effective and was unpopular with the fans and the club has stopped pushing the Philips name.

Llansantffraid/Total Network Solutions/The New Saints

After winning the Welsh Cup in 1996 and qualifying for the Cup Winners Cup, Llansantffraid FC (nicknamed ‘The Saints’) accepted £250,000 from an IT company and became Total Network Solutions Llansantffraid FC. The ‘Llansantffraid’ was soon dropped and the club was generally referred to as ‘TNS’ by fans. In 2006, British Telecom took over the IT company and the sponsorship ended. After trying to sell their naming rights on ebay, the club settled on the name “The New Saints FC”.

RTG Recommends Financial Fair Play

Last month RTG reported on the likelihood that Manchester City or Chelsea would fail UEFA’s financial fair play rules (FFP) and whether UEFA would have the stomach to enforce them. Without looking at the empirical evidence RTG suspected that neither would meet FFP rules or make much effort to do so. We have found a site – www.financialfairplay.co.uk that provides detailed evidence and analysis to suggest we were correct.

Astonishingly, the assumptions made are generous to the extreme i.e. City to win the Premier League, Champions League and FA Cup and that they would continue to increase their commercial revenue as dramatically as they have done so over the last couple of years. And still, they do not come close. We strongly recommend a visit to the site.

New TV Deal – Same Old Rip Off

The new TV deal that has been struck between the Premier League, Sky and BT is the richest ever and will be worth just over £3bn (a 70% increase on the last agreement). The team finishing bottom in season 2014/15 will actually make more money from TV than Manchester City did last season as champions. The deal is worth 10 times the original Premiership deal back in 1992 – considered even then as a ridiculously large amount of money.

Like the original deal, the money will be coming from supporters’ and subscribers’ pockets. Note also that, in that same period, admission prices have increased by a similar amount. Again like the original deal, this huge windfall will not be spent at grass roots level or in the development of our national game, but will go on players’ wages and agents’ fees. And once again it will be the supporters who are short changed.

Adding injury to insult is the announcement that the number of games shown live will increase to 154 – nearly 43% of all matches. Expect even more disruption to supporters with changes to kick off times and disruption to travel plans.

Media Reporting Fans the Flames of Euro Racism

When the media reported on the potential for racist chanting and violence in the run up to Euro 2012, it appeared that they were almost licking their lips in anticipation of trouble – particularly with the now absent English hooligans to follow and bait as in previous tournaments. In fact, some of the language in relation to the Ukrainian and Polish supporters was positively offensive.

Nobody wants to see a return to the UK’s dark old days of neo fascist supporters groups so it is essential that these issues are brought to the fore. But if we are to pinpoint racism amongst football crowds, there are very few (if any) European nations who remain totally guilt free. It seems hypocritical, therefore, for the English media to take this rather patronising and holier-than-thou attitude in the way they did (not to mention the fact that the ex-England captain will shortly be making a court appearance on racism charges).

Rather than going on the offensive toward the Poles and the Ukrainians, they should really have focused on UEFA’s constant inability over the last ten years to punish perpetrators across Europe as a whole (including players, coaches and supporters) and paying lip service to the campaign against racism.

Italian PM Laments Football’s Warped Morals

“Football should be stopped for two to three years. It is not a proposal by the government but a question I am asking as someone who was passionate when football was still football. It’s particularly sad when a world which should be an expression of the highest values – sport, youth, competition, fairness – turns out to be a mass of foul play, falsehood and demagoguery.”

Mario Monti, Italian Prime Minister

Words of wisdom from Mario Monti, Prime Minister of Italy, in response to yet more match fixing and corruption allegations within the Italian game.

As RTG has written previously, the more money that floods into the game, expect to see more corruption – a situation not helped when the world’s governing body is one of the worst culprits.

Olympic Sponsors Pick GB Team

Adidas are one the major sponsors of the summer 2012 Olympics. It has embarked on a major ad campaign featuring David Beckham as its ‘main man’. Some of the ads seem to have it as a given that David Beckham would feature in the GB football team.

It wouldn’t be the first time that a sponsor has chosen a team. In France 1998, Brazil had to bow to contractual obligations with Nike that meant that Giovanni had to feature in the team, despite bad form and not deserving his squad place. Brazil obliged by playing him in the first half of their first match against Scotland. He wasn’t seen again in the tournament. Infamously, in the final, it was said that a clearly not-up-for-it Ronaldo played also only at the insistence of Nike.

RTG would love it for GB to do well in this tournament, but a lot of our passion for it will evaporate if it’s viewed as another corporate vehicle promoting its products and celebrity at the cost of sporting endeavour. There are many, many better choices than David Beckham.

UEFA Financial Fair Play Update

In June 2010, RTG wrote a piece about UEFA’s impending Fair Play Rules. Further details have since come to light which have clarified some of the rules. Firstly, we bemoaned the fact that the ‘carpet baggers’ like the Glazers, Hicks and Gillettes of this world, would still be allowed to continue to undertake highly leveraged buy-outs of football clubs. We now understand that this is not the case.

The amount of debt allowed by any club will be limited to the annual turnover of the club. Currently, both Chelsea and Manchester United fail this test. This explains United’s reported effort to make shares available on the Singapore stock market - a move that will turn that debt into shareholder equity but without the business restrictions that a London placing of the shares would entail.

Secondly, the ‘sugar daddy’ element, which up to now has seen Roman Abramovich and Sheikh Mansour financially dope their teams over the last few years, will also have restrictions in place. At the time of our first article, it was widely reported that any extra investment could be made as long as that investment was turned into equity and not debt. Again, this is not the case. UEFA have clarified the rule and there will be a gradually reducing level allowed, thereby progressively curtailing the ability of such sugar daddies to influence unduly transfer markets.

The real test, though, will be in the ability of UEFA to control and monitor its own rules effectively. Given how British football authorities have failed so categorically to enforce simple tests of ownership rules, RTG is really not confident. The real indicator will be to see how this summer’s transfer dealings go. If half the rumours that abound are true, then both Chelsea and Manchester City will embark on yet another transfer splurge. If so, you can bet that they are not the slightest bit worried by Financial Fair Play despite both failing by miles to meet the terms of the new rules.