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Euro 2000 is gearing up to make sports history
Mary O'Hara
Friday June 9, 2000
Football, the seemingly unstoppable cash cow, is set to grow even fatter during Euro 2000. The event is expected be one of the most lucrative in sports history. Against a backdrop of 100% increases in the cost of Champions League sponsorship and protests from potential sponsors of the event including General Motors-owned Opel about the price increases, the cost of Euro 2000 sponsorship rights has soared to £7m for each of the main sponsors - including Coca Cola, Carlsberg and Mastercard, with KLM and Alitalia as the tournament's official airlines. This compares with fees of about £3m for Euro 96.
European TV rights are estimated to have reached as much as £1.6m and the 40 official merchandise licensees for the tournament stand to make significant gains as retail sales are predicted to double from £150m in 1996 to more than £300m, said Copyright Promotions, the tournament's licensing agents.
Mike Reynolds, spokesman for the Institute of Sports Sponsorship, says that to stand out "companies must spend above and beyond the initial investment". The ISS estimates that football sponsorship in Britain alone is worth more than £100m per year - a figure matched only by formula one motor racing.
Value for money
Mr Reynolds claims that while these sums may appear high, the major global players who invest the most, stand to gain the most. The downside is that those companies which do not supplement initial investments may not see the full benefits.
Carlsberg, a long-term European Championships sponsor, says Euro 2000 is so central to Carlsberg's strategy that it is backing up its investment with an additional £10m in Britain alone - or the whole of Carlsberg's marketing budget for the time of year, a spokesman confirmed.
Steve Cumming, sponsorship manager for Carlsberg in Britain, said that in addition to branding at the tournament, the company will have promotions and advertising, including a one-off competition via pubs and promotions at Tesco.
Merchandising licenses are expected to reap rewards greater than World Cup 98 for companies such as Marks & Spencer, Adidas, Electronic Arts and Character Group, which are making and selling products ranging from clothes and accessories to cuddly toys and face paints. Competition for licences was fierce, according to one licensee. The amounts paid for the licences are undisclosed but if the licensees get it right they will find themselves in a strong position for upcoming events including the World Cup in 2002.
M&S, with exclusive rights to boyswear ranging from sweatshirts to toddler outfits, confirmed that the range "has already almost sold out".
Bernard Phee, sponsorship manager for M&S, said: "Football is undoubtedly something we will continue to look at. We are involved in England's bid to host the 2006 World Cup and if this is successful, even greater involvement would be something to consider."
The business of licensing can be hit and miss as Character Group learned when its share price suffered when it issued a profit warning in April after substantially overestimating demand for Star Wars: The Phantom Menace merchandise.
Jon Diver, marketing director at Character Group, said the company had gone into the Euro 2000 deal with the lessons of the the Phantom Menace in mind.
"We have definitely protected our position. Our strategy has been to go in, get out and move on. We are on course to clear most of the merchandise at retailers before the tournament even starts but there is a possibility we may have under supplied the market this time."
Even when an event is a runaway success, investors' revenues are under threat. Companies can often avoid paying for sponsorship yet still capitalise on an event by other means. Sources at Opel, for example, say they get better value for their money by sponsoring individual teams, such as AC Milan, at the big tournaments.
Counterfeit threat
Counterfeiting is a very real threat for merchandisers. ISL, the marketing company responsible for Euro 2000, say it is working closely with trading standards officers in the host countries to minimise the threat. However, a spokesman for Copyright Promotions conceded that goods will slip through the net. "It is impossible for me to put a figure on it but we can't deny that this is a problem. Rotterdam is Europe's largest port after all."
At the heart of the anti-counterfeiting effort is Delta Labelling, a small British garment labelling company based in Tamworth. It supplies all Euro 2000 licensees with labels that have hidden security codes sewn into them which can then be identified by customs with a simple test.
Jim Bowman, one of the company's directors, said: "As these types of events escalate in size, security is becoming extremely important. Counterfeiting is a big problem and we identified this area as one of growing importance." Delta Labelling is already negotiating for the World Cup 2002 licence.
Euro 2000 is also benefiting broadcasters. ITV is set to make £25m with demand for air-time surging, compared with an £8m decline in revenues during the 1998 World Cup when it was accused by many advertisers of overpricing.
Eurosport, which is screening the tournament across Europe, will run 450 hours of coverage sponsored by Carlsberg, Fuji, Philips and Hyundai, says it has already sold its complete advertising inventory.
If Euro 2000 tells us anything, it is that the football bubble is far from bursting.
Where the money goes
• Thirtyone matches will be played over three weeks starting tomorrow
• European TV rights cost upwards of £1.6bn
• Event sponsors paid £7m each, double that for Euro 96
• Retail sales of merchandise worldwide are expected to double that of Euro 96 to £300m
• Ladbrokes and William Hill predict Euro 2000 will break betting records in the UK with stakes exceeding £100m
Mary O'Hara
Friday June 9, 2000
Football, the seemingly unstoppable cash cow, is set to grow even fatter during Euro 2000. The event is expected be one of the most lucrative in sports history. Against a backdrop of 100% increases in the cost of Champions League sponsorship and protests from potential sponsors of the event including General Motors-owned Opel about the price increases, the cost of Euro 2000 sponsorship rights has soared to £7m for each of the main sponsors - including Coca Cola, Carlsberg and Mastercard, with KLM and Alitalia as the tournament's official airlines. This compares with fees of about £3m for Euro 96.
European TV rights are estimated to have reached as much as £1.6m and the 40 official merchandise licensees for the tournament stand to make significant gains as retail sales are predicted to double from £150m in 1996 to more than £300m, said Copyright Promotions, the tournament's licensing agents.
Mike Reynolds, spokesman for the Institute of Sports Sponsorship, says that to stand out "companies must spend above and beyond the initial investment". The ISS estimates that football sponsorship in Britain alone is worth more than £100m per year - a figure matched only by formula one motor racing.
Value for money
Mr Reynolds claims that while these sums may appear high, the major global players who invest the most, stand to gain the most. The downside is that those companies which do not supplement initial investments may not see the full benefits.
Carlsberg, a long-term European Championships sponsor, says Euro 2000 is so central to Carlsberg's strategy that it is backing up its investment with an additional £10m in Britain alone - or the whole of Carlsberg's marketing budget for the time of year, a spokesman confirmed.
Steve Cumming, sponsorship manager for Carlsberg in Britain, said that in addition to branding at the tournament, the company will have promotions and advertising, including a one-off competition via pubs and promotions at Tesco.
Merchandising licenses are expected to reap rewards greater than World Cup 98 for companies such as Marks & Spencer, Adidas, Electronic Arts and Character Group, which are making and selling products ranging from clothes and accessories to cuddly toys and face paints. Competition for licences was fierce, according to one licensee. The amounts paid for the licences are undisclosed but if the licensees get it right they will find themselves in a strong position for upcoming events including the World Cup in 2002.
M&S, with exclusive rights to boyswear ranging from sweatshirts to toddler outfits, confirmed that the range "has already almost sold out".
Bernard Phee, sponsorship manager for M&S, said: "Football is undoubtedly something we will continue to look at. We are involved in England's bid to host the 2006 World Cup and if this is successful, even greater involvement would be something to consider."
The business of licensing can be hit and miss as Character Group learned when its share price suffered when it issued a profit warning in April after substantially overestimating demand for Star Wars: The Phantom Menace merchandise.
Jon Diver, marketing director at Character Group, said the company had gone into the Euro 2000 deal with the lessons of the the Phantom Menace in mind.
"We have definitely protected our position. Our strategy has been to go in, get out and move on. We are on course to clear most of the merchandise at retailers before the tournament even starts but there is a possibility we may have under supplied the market this time."
Even when an event is a runaway success, investors' revenues are under threat. Companies can often avoid paying for sponsorship yet still capitalise on an event by other means. Sources at Opel, for example, say they get better value for their money by sponsoring individual teams, such as AC Milan, at the big tournaments.
Counterfeit threat
Counterfeiting is a very real threat for merchandisers. ISL, the marketing company responsible for Euro 2000, say it is working closely with trading standards officers in the host countries to minimise the threat. However, a spokesman for Copyright Promotions conceded that goods will slip through the net. "It is impossible for me to put a figure on it but we can't deny that this is a problem. Rotterdam is Europe's largest port after all."
At the heart of the anti-counterfeiting effort is Delta Labelling, a small British garment labelling company based in Tamworth. It supplies all Euro 2000 licensees with labels that have hidden security codes sewn into them which can then be identified by customs with a simple test.
Jim Bowman, one of the company's directors, said: "As these types of events escalate in size, security is becoming extremely important. Counterfeiting is a big problem and we identified this area as one of growing importance." Delta Labelling is already negotiating for the World Cup 2002 licence.
Euro 2000 is also benefiting broadcasters. ITV is set to make £25m with demand for air-time surging, compared with an £8m decline in revenues during the 1998 World Cup when it was accused by many advertisers of overpricing.
Eurosport, which is screening the tournament across Europe, will run 450 hours of coverage sponsored by Carlsberg, Fuji, Philips and Hyundai, says it has already sold its complete advertising inventory.
If Euro 2000 tells us anything, it is that the football bubble is far from bursting.
Where the money goes
• Thirtyone matches will be played over three weeks starting tomorrow
• European TV rights cost upwards of £1.6bn
• Event sponsors paid £7m each, double that for Euro 96
• Retail sales of merchandise worldwide are expected to double that of Euro 96 to £300m
• Ladbrokes and William Hill predict Euro 2000 will break betting records in the UK with stakes exceeding £100m