March 5 (Bloomberg) -- Standard Chartered Plc and 18-time English soccer champion Liverpool are in talks for the international bank to extend its agreement as the team’s principal sponsor.
London-based Standard Chartered, which makes most of its money in Asia, is negotiating with Liverpool even though the team has wrestled with problems on and off the field since the original four-year accord was reached in September 2009.
“We are engaged in ongoing conversations with Standard Chartered regarding extending the partnership and continually delivering excellent commercial and community value,” the team said in a statement confirming the discussions.
Liverpool yesterday announced a pretax loss of 40.5 million pounds ($61 million) for the 10 months ended May 31, 2012. It’s seventh in the Premier League after 28 games and is almost certain to miss out, for a fourth straight season, on participating in the lucrative Champions League. Success clauses in the agreement mean the Reds didn’t get a portion of the 20 million pounds Standard Chartered could pay annually.
Standard Chartered’s sponsorship of Liverpool is its only agreement with a major sports team. The bank, which also confirmed the discussions, said the “association with Liverpool FC has proved to be positive for the bank and we remain very pleased with the success of the partnership to date.”
The deal came into effect in 2010, the year the club was sold to Fenway Sports Group, which also owns the Boston Red Sox baseball team. Banks forced through the sale after former owners George Gillett and Tom Hicks of the U.S. failed to refinance a 300 million-pound loan used to buy and operate the team.
Liverpool, which hasn’t won the English championship since 1990, has managed to increase its commercial income even though it’s fallen behind teams such as Manchester United, Chelsea and Manchester City. Warrior Sports, a unit of New Balance Athletic Shoe Inc., this season started a six-year, 25 million pounds-a-season apparel agreement. General Motors Co.’s Chevrolet brand, which is trying to expand its presence in Asia, and airline Garuda Indonesia have also signed as sponsors.
Liverpool’s take from sponsors is second only to Manchester United in the U.K. The Premier League leader’s 117 million pounds in annual commercial income is 54 million pounds more than Liverpool made in the 10 months to May 31, 2012.
Popularity in Asia
Standard Chartered has said it aligned with Liverpool because of the team’s large supporter base in Asia, where a 2011 tour drew thousands of fans. Liverpool’s popularity in the region is founded on its success in the late 1970s and 1980s when it dominated English and European soccer, said Simon Chadwick, a professor of sports business at the University of Coventry.
“I think there’s a predisposition toward Liverpool in certain parts of the world like Singapore and Malaysia because they are former colonies and Liverpool was the team they were exposed to,” Chadwick said in a telephone interview.
Still, there are signs that Liverpool’s below-par playing achievements may start to hurt negotiations with sponsors. Adidas AG Chief Executive Officer Herbert Hainer said in a July 2012 interview his company’s decision not to renew its apparel agreement with Liverpool was linked to poor performance.
“The gap between their performance on the field and what the number should be is not in balance,” he said.
Chadwick said the club, which won its fifth European Cup in 2005, a record for a British club, remained in a strong position in the “short to medium term” although it will struggle if it continues to be unsuccessful on the field.
“The research we’ve done shows success in sport is one of the best ways to brand your team, or your athletes,” he said.
Chadwick also said Liverpool may look to recruit players from regions where the team is popular. Manchester United has signed sponsors in Japan since acquiring forward Shinji Kagawa last year.
“Kagawa is a great player but it appears to be very important for Manchester United that he happens to be Japanese,” he said.
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