So, out of nowhere really, with no rumours doing the rounds about such a deal, Arsenal announced an extension to the shirt sponsorship with Emirates yesterday.
A five year lengthening means they’ll be kit sponsors until 2024, and of course the airline retain the naming rights of the stadium until 2028 aside from that. In the announcement it was described as ‘largest sponsorship deal ever signed by the club’, and that’s a good thing but also, given it’s 2018, the cost of things rarely, if ever, goes down, and the duration of the extension, it ought to be the biggest deal we’ve ever done.
Interestingly, the club have not released the financial details of it, and when I asked they said there were no plans to go into the specifics. However, via the back channels, we’ve been told it’s in excess of £200m, working out at around £40m per season. It’s a substantial sum of money now, no question, but you might ask if the length of the contract will make it look less healthy in the future.
The amount of money in the game nowadays is incredible, and what looks good in 2018 may appear much less so in 2021, for example. However, Arsenal seem keen to retain the brand association with Emirates, and when you consider our current circumstances – a team not in the Champions League and struggling to get back in there via our Premier League performances – maybe that’s something that has to be taken into account too.
There was the usual corporate speak in the announcement, with Ivan Gazidis saying:
Emirates are again demonstrating their great belief in our approach and ambition and their significantly increased investment will help us continue to compete for trophies and bring more success to the club and our fans around the world.
The deal is for the playing kit and the training kit, so there hasn’t been a separation like at other clubs where a different sponsor for the training gear has brought in even more money. However, there is room now for the club to negotiate for a separate sleeve sponsor, and I understand that efforts are currently being made to get that done ahead of the new season.
Arsenal have been sounding out potential partners, and the price they have put on it is fairly substantial – in excess of £10m per season. How successful they’ll be at that kind of cost remains to be seen, but it’s definitely a new revenue source and one which will hopefully make up some of the shortfall that exists between our commercial revenue and that of some of our rivals.
In this piece in the Telegraph, Jeremy Wilson highlights the gap:
Arsenal’s commercial income was respectively £127.1m and £184.6m behind City and United last year. As a percentage of total income, Arsenal’s was put at 21 per cent compared to Manchester United and Manchester City respectively at 47 per cent and 46 per cent.
I’m not sure exactly how accurate the figures are, but there’s no doubt other clubs are better at the commercial side of things than we are. There has long been a sense that we could do more in this area, so the Emirates extension plus a sleeve sponsor would go some way to doing that.
Which isn’t to say that we can match what United do, for example. They are a bigger club, a commercial behemoth that I don’t think anyone else in England can come close to, but there’s room for improvement. Part of that may well be a new kit manufacturer in the not too distant future.
Next year is the final year of the Puma deal, and there are strong rumours that we’re in discussions with Adidas about taking up the baton when it expires. Frankly, at this point I’d give it to anyone who could make us a yellow and blue away kit, and some of what Puma have produced down the years has been pretty grotty, but it’s all about the money, and whoever is willing to pay the most will be the one who gets the gig.
So, if things are improving and more money is being earned from commercial deals and partners, that’s great, and we should be happy about that. Ultimately though, the more successful your team is, the more you can earn from these kind of deals, and as we face the prospect of another season outside the Champions League, we have to be mindful of how that affects the Arsenal ‘brand’ when it comes to securing this kind of revenue.
What looks great to sponsors is a full stadium rocking because you’re playing one of the biggest clubs in Europe. What doesn’t look so good is a sea of empty seats as you face off against a European minnow. The tranches of red are notable at almost every league game too. That’s the reality of it, so what this new Emirates deal should be about is helping spend our way back into the top four, because that’s really what it’ll come down to.
Everything else aside there’s no question this is a squad that requires investment and rebuilding. We’ve started the job with what we did up front in January. We moved some players on, we brought some new players in. That has to happen everywhere else though. Midfield, defence, and in goal. It sounds like a nuclear approach, but look at our squad and tell me we don’t need to do to those areas what we did with our attacking options last month.
It doesn’t have to be wholesale, but we’ve got to add real quality to make this a more competitive team which can, at least, get back into the top four and eventually (hopefully) challenge for the title again. The consequence of having a better team is increased commercial value, and round and round it goes.
This summer, with a World Cup a shortened transfer window, means that Arsenal need to be seriously efficient with what we do in the market. Hopefully the new men I wrote about yesterday can help in that regard, so while the new Emirates deal is one I think we can pleased about, it’s only a small part of what is an ongoing job. We can’t rest on our laurels, that’s for sure.
Right, I’ll leave you this morning with yesterday’s Arsecast Extra, news throughout the day on Arseblog News and I’ll be back tomorrow. Until then.