The unbelievable value of trademarks in football [Part 1]
One of the most interesting things about trademarks and IP is how hidden their value seems; for something said to be so important. It’s often harder to see (and truly value) big ideas behind business compared to brick and mortar assets. They just tend to not be as obvious.
This doesn’t mean that intellectual property isn’t as (if not more) important than tangible assets! In fact, some of the world’s biggest companies value their IP at 80% of their worth. For example, Forbes values Apple’s brand (not including any of its physical aspects) at $154 billion alone.
Whilst it seems bizarre for logos, trademarks and slogans alone to be worth this much. There is method in this madness.
But, how do we even begin to understand how IP is so valuable (and why it needs protecting more than your PIN code?)
Football. As with everything the answer can be found in football!
The beautiful game (and shedloads of money)
One of the complaints of the “modern” game is it’s flooded with money.
The value of television deals balloon at each opportunity. Teams with limitless financial clout simply seem too big to fail. And, with each generation, players are paid increasingly mind-boggling amounts to ply their trade on the pitch.
As a result, the game seems more out of reach to the everyday fan than ever. No team sums up these symptoms of change more than Manchester United.
The Red Devils: fading footballing force but world-beating brand
Whilst in decline on the pitch since the departure of Sir Alex Ferguson in 2013; Manchester United has remained #3 in the Forbes list of richest clubs on the planet.
In fact, Deloitte reported in 2017, Man United reached the summit of their “Money League” – beating all other teams (including league winners) on overall financial performance. All in spite of their waning dominance in sporting terms…
It just doesn’t add up! How can a team in decline do so well financially?
The answer lies in United’s unmatched performance as a powerful global brand that somehow remains synonymous with footballing excellence.
Manchester United: how their trademarks and brand works
At the heart of United’s continued success is good will and reputation built during their dominant period (1992-2013). During his tenure “Fergie” won 38 trophies for Manchester United, including 13 Premier League titles, and 2 Champions League crowns. This lofty level of success attracts a lot of fans from far and wide. These fans spend a lot of money to show their colours.
In this way, the brand not only represents a “promise” and continued delivery of a certain kind of experience to these fans. It is also a promise to business partners, that association with “United” will guarantee future earnings.
In business terms, this means deals – really big deals.
In 2015, Manchester United announced a kit deal with Adidas – worth £750 million over 10 years (where Adidas license the Manchester United trademarks to produce and sell replica kits). With over an alleged 600 million Manchester United fans worldwide to sell these kits to – you can see why Adidas might value this deal so highly.
But that isn’t the end of it as far as shirts go!
Chevrolet are the principle sponsor of Manchester United’s replica shirts (Aon still pay to appear on their training gear) and will pay United, £357 million over 7 seasons since 2014 for the privilege. More recently, Manchester United recently announced they are seeking a sleeve sponsor worth £20 million a season (four times the amount of their Manchester rivals).
This shows that even the smallest amount of real estate on a United shirt remains incredibly lucrative to investors – who align themselves with an exceptionally resilient and favourable brand.
What’s more, in this day and age top football clubs agree hundreds of commercial and licensing deals which allow businesses to associate their goods and services with a team. All of which, increasingly fill the coffers.
Clearly for investors, long-term success of the brand at this level trumps short-term impotence on the pitch. In fact, continued growth, in spite of an on pitch drought, probably proves to investors how impervious to damage Manchester United’s brand really is!
Man United: a success without its IP?
But what would happen if Manchester United didn’t manage, or lost its trademarks altogether? For brevity, that’s a story for another day.
However the point here is: (if handled correctly) brands can be a powerful way of protecting a business’ prosperity. Even as tough questions arise about a business’ capability to perform – a well-managed brand can be a reassuring influence for a range of key stakeholders (until the storm passes…)
If you have any questions about how to build, protect and use your brand like Manchester United; call our award-winning intellectual property solicitors on:
0113 237 9900
*The views expressed are not the views of Virtuoso Legal, but Dr. Martin Douglas Hendry, cynical Tottenham Hotspur fan, and should be treated as such. Research provided by Aqeel Hussain.