Before we break into the data, it’s important to understand sponsorships. Sponsorships in jersey deals typically include a printed logo only; no tagline, no way to explain your purpose, no call to action. I’ve personally purchased jerseys and have had to Google the sponsor because I had no idea who they were.
Not all jerseys have sponsorship opportunities, such as the NFL. The NBA only recently added patches in the 2017-18 season. For perspective, in February of 2023, it was estimated the Knicks would be targeting a 30 million dollar a year agreement for their partner. A few other sports that allow jersey sponsorships include hockey and baseball. However, like the NBA, these sponsorships are very contained and less visible. Other entities take the opposite approach. In motorsports , the sponsorships dominate outfits and automobiles. Soccer falls somewhere in the middle, with the typical sponsorship having a center primary position on the jersey and sometimes secondary sponsorships sold on sleeves.
Breakdown of the Opportunity
Not all jerseys “sponsor” the same, meaning not all jerseys sell as well or attract the same television visibility. That luxury obviously comes at a price. In soccer, when you look at the top English Premier League, the typical top six teams' sponsorship deals pull in about £40million to £50million per season, while the next group in the same league typically pulls in about £5million to £10million per season. As you switch to other leagues, it fluctuates. For example, within the MLS, perhaps $3 million to $7 million would be the target cost for a sponsorship, based on what we know. Bringing in some more prominent leagues, we can use Serie A (Italy’s top division) as an example. The estimate, as we know of in recent years points to the $7-$11 million range, so slightly more. However, this is fairly comparable, all things considered.
Breakdown of the Cost
Now to track the true profit, to follow one team’s sponsorship all through the process, let’s go back to the top of the English Premier League in 2021-22. We will take Manchester United as the prime example. In this season, they generated $64 million GSB in revenue from kit sponsorships.
Knowing they sold 1,950,000 jerseys in 2021, we can start to break down the operational cost to understand the profit. This article does a great job of breaking down those economics and there are quite a few people that take a share in the output, but at the core, it’s estimated a jersey only costs 10% of its retail price to
make (labor, material and transportation). The estimated cost of marketing per jersey is at 3%. The other overhead that may affect cost is the retailing aspect and maintenance. It may be a bit in the high range, in my opinion, especially given the fact that the team isn't always the retailer. Let’s ballpark that at £15 euros/per jersey instead of £26 per jersey for that “gray area” reasoning. So let’s say the cost per jersey is £25.4, or roughly 32% of the jersey cost. If Manchester paid £25.4 per jersey and procured 2 million units (since there is always a margin of imperfection), the assumption would be they paid roughly £16.25 million. Even at the highest end, if we said they were always the retailer, that cost per jersey would be £36.8 or 46%, which would put the loss at £33.9. This would certainly cut into the profit but leave some profit nonetheless. Over the course of the last seven years with Chevrolet as their sponsor, the average per year was £51 million. In either situation, hypothetical profit from sponsor to manufacturing would be £34.75 million or £14.2 million, respectively.
So, a nice revenue stream in regards to the club, but what is in it for the advertiser, and more importantly, is it worth it?
Advertisers Perspective: Showcasing the Benefits
Sticking with the Manchester United example, £40million to £50million per season for sponsorship seems steep. The sponsor essentially covers the clubs cost and tacks on millions in extras. However, let’s step through the touch points of opportunity the advertiser would get for their brand:
Release publicity: Upon release the kit will get picked up by tons of social accounts, blogs and media channels introducing and analyzing all the new kit arrivals. If you are a new sponsor to the team, this may be the one moment these channels introduce your brand by more than just the name.
TV visibility (game-time): Every game, pregame or activity with the team in uniform your brand will be on full display. The sheer presence of the soccer kit sponsor display makes this very appealing. For example, in the 22/23 season, the EPL generated and average viewership of 3.1 million people per game. Of course, leagues like the MLS are only a fraction of that, but on the rise.
Association and connection: Up to now, it’s all just about impressions, but there is certainly a level of credibility and connection that comes with partnering with a club with established adoring fans. The halo effect of their affection may give your brand some more preference, or at the very least, a few more search results of people who want to know who is front and center in their beloved club. The goal could also shift toward local connection for talent acquisition.
Day-to-day visibility: With fans scattered about the world, you turn everyday people into walking models for your brand. People could be wearing that jersey for years. The reach here is most likely underrated.
With a mix of mainstream media, local publicity, and a ton people wearing your jersey for years to come, you are sure to maximize the reach and awareness of your brand.
Best Strategies for Partnership?
If young companies have the capital, they seem to benefit the most from these sponsorships. Getting your name out in these methods, is sure to put more gas on the fire for awareness and curiosity. That top level awareness is key and could drive more results to your bottom line.
For more established companies, it’s a strategy to consider as you most likely have the funds and may be “less risky” for that reason alone. However, I think there may be slightly less opportunity as well. People are likely already aware of your brand, so the top of funnel actions are likely not needed. It shifts to staying top of mind for preference and favorability. It's not to say sponsorship for established companies doesn't make sense; it just requires more intention before making that decision. For example, Interstate Batteries or Goodyear Tires sponsoring Nascar has synergy and connection.
The other reason established companies may sponsor is for local community connection, which may give them some edge in recruiting talent. Target sponsoring an MLS club (where they are headquartered) in Minnesota would be a great example.
Certainly none of these strategies are wrong; however, I do think there is more opportunity for young companies... if they can afford it that is.
Let’s hear your thoughts in the comments below or send me a personal message if you have a different take.