European Cup Win May Determine Samsung’s Backing of Chelsea
Stock Chart for Samsung Electronics Co Ltd (005930)
The South Korean electronics maker, which last quarter surpassed Nokia Oyj (NOK1V) as the world’s largest mobile phone maker, put its name on the club’s shirt in July 2005. The company will decide on whether to renew its annual 16.3 million-euro ($21 million) deal by the end of this month, said Sunny Hwang, Samsung’s vice president and head of worldwide sports marketing.
Chelsea is a surprise finalist in Europe’s elite club competition. Its sixth-place Premier League finish is the lowest since Russian billionaire Roman Abramovich bought the team in 2003. Abramovich fired manager Andre Villas-Boas eight months after he joined from Porto and interim coach Roberto Di Matteo oversaw a victory in the F.A. Cup and a shock defeat of defending champion Barcelona in the Champions League semifinals.
“Being associated with a winning team is much better than a failing team so it’s natural that Samsung should wish Chelsea could win,” Hwang said in an interview in London. “Of course that will play an important role when we decide whether or not we renew the contract.”
The current agreement expires at the end of next season, and Samsung said today in a statement that it considers the popularity, performance, and image of the event or the team when deciding on an endorsement deal.
Chelsea spokesman Steve Atkins didn’t respond to a voicemail seeking comment.
‘Wide Range of Factors’
Samsung said a “a wide range of factors” will be considered when it decides whether to continue with Chelsea.
“Our decisions do not rely on the outcome of a single event,” the company said in today’s statement.
The Samsung jersey sponsorship is the fifth-highest in European soccer, according to German market research company Sport + Markt. Manchester United and Liverpool get about $32 million a season, while Barcelona signed what it said was a “record” deal worth 30 million euros a year in December 2010 to promote the Qatar Foundation.
Battle With Apple
Samsung unveiled its latest high-end handset in London this month, intensifying a battle with Apple Inc. (AAPL) in the $219 billion market smartphone market. Europe accounted for 19 percent of 2011 revenue, according to data compiled by Bloomberg.
Hwang also said his company has turned down opportunities for naming rights to various stadiums, including Chelsea’s Stamford Bridge. The Blues have failed to sell naming rights for several years and want to find a sponsor as part of proposals to move to a new stadium. The club said May 4 that it was bidding to acquire the Battersea Power Station site in London.
“Our experience is that even though we put the Samsung name on that, no media mentions Samsung but just the stadium name, so that was the actual reason,” said Hwang.
Stadiums don’t offer the same brand-building opportunity as team jerseys, said Emmanuel Hembert, principal of global management consultancy A.T. Kearney, who advises soccer clubs.
“The exposition you have on shirt sponsorship is much higher,” he said in an interview. “Wherever they play you have your name displayed. For the stadium the display is much lower.”
Hwang said the Chelsea sponsorship, which was renewed in 2009, has been used to market Samsung’s goods in Europe, and doesn’t compare to a global sponsorship like the soccer World Cup, for which Sony Corp. (6758) is a top-tier partner. Hwang said Samsung will consider competing with Sony the next time FIFA opens its tender for an electronics partner.
“When we study the possibility of the World Cup we have to judge the idea from a global perspective,” he said.
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