Sports sponsors feel the heat amid global financial turmoil

Sports sponsors feel the heat amid global financial turmoil

Paris: Fans howled when Manchester United was bought three years ago by Malcolm Glazer, an American businessman. So far, they are responding with good humour to the US government’s takeover of American International Group Inc., (AIG) the troubled insurance company whose logo is emblazoned across the English soccer club’s shirts—even though the rescue means US taxpayers are underwriting the sponsorship.

“Good to see the US government making a good investment for once," one contributor wrote. “In Manchester United that is, not AIG."

Whether Washington’s foray into soccer would continue for the long term was not immediately clear. At some point, though, AIG’s marketing department—if not Fed chairman Ben Bernanke—may have to take another look.

“Their need to compete in the marketplace will still be highly evident," said Rune Gustafson, chief executive of the British unit of Interbrand Corp., an agency that helps clients develop their corporate identities. But after the US government’s takeover, he added, “this kind of sponsorship would have to get reassessed."

When the credit crisis began last year, many people in the marketing world thought they might be able to get through unscathed. No longer.

Jonathan Barnard, head of publications at Zenith Optimedia, a firm that buys space and time for advertisements, said he was working on a “substantial revision" of his forecasts for global ad spending because of the financial turbulence.

The English Premier League, in which Manchester United competes, is one gauge of the tighter marketing belts. The value of shirt sponsorships like AIG’s deal with Manchester United has fallen this season, for the first time ever, said Nigel Currie, director of Brand Rapport, an agency that arranges sponsorships, in Guildford, England.

A Manchester United spokesman referred questions about the sponsorship to AIG, which did not respond to a request for comment.

Sometimes the recipients of sponsorship money are all too happy to hand it back, fearing that their own image may be sullied by association with a sponsor that has run into trouble. That was the case when the Houston Astros baseball team moved to end a sponsorship deal with Enron.

If AIG’s sponsorship of Manchester United were to end, Currie said, the club—one of the most successful in soccer, with a global following—would probably have little trouble finding a replacement.

Still, even sports sponsorship, one of the most buoyant areas of marketing in recent years, is feeling the squeeze.

“It’s like the rest of the world," Currie said. “It’s in a bit of a recession, and things aren’t as good as they were."

©2008/The New York Times