Samsung Mulls Man United Sponsorship
By Kim Yoo-chul
Staff Reporter
Samsung Electronics may strike a new shirt sponsorship with British soccer team Manchester United ― one of the most valuable sports franchises in the world.
In 2005, Samsung concluded a five-year $95 million shirt sponsorship deal with Chelsea Football Club. The deal is to expire in June next year.
"Manchester United has recently sent an official letter asking if it's possible to seal a new shirt sponsorship deal," a Samsung Electronics spokesman told The Korea Times, Sunday.
According to sources close to Samsung's sports marketing, the Korean company has been in detailed internal talks since then to study how the possible partnership change will impact its business in Europe.
"The rumor that Manchester United has requested 60 billion won in annual support from Samsung, however, is exaggerated," according to the spokesman.
As for further financial details, such as possible contract terms and the deal size, the official said, "Nothing has been decided on yet."
Such remarks came after American Insurance Group (AIG), the logo of which currently adorns the front of the Red Devils' jerseys, announced a few months ago that it wouldn't extend its four-year deal with the club when it expires next year.
In the wake of the global credit crunch, AIG recently needed a $150 billion bailout from the U.S. government to avoid bankruptcy.
Manchester United receives about $19 million per season from AIG.
"The club has approached other companies as well," the Samsung official said, referring to some Middle Eastern telephone companies.
"Olympics" and "Soccer" are the two main pivots for Samsung's sports marketing.
By steadily sponsoring these, Samsung is seeking a chance to increase brand recognition for its consumer products.
Samsung was the official partner of the recently finished Beijing Olympics. By spending over 80 percent of its Olympics sponsorship budget in China, its mobile phone share there rose to 20 percent.
Samsung is the world's biggest maker of flat-screen television sets using liquid crystal display (LCD) panels, and ranked the second highest in handsets in terms of market share after Nokia.
Since 2005 ― the year the "Samsung Mobile" brand appeared at Chelsea's Stamford Bridge ground ― Samsung's mobile share in Europe has steadily expanded to reach 20.1 percent last year.
It was also the top mobile vendor in the United Kingdom and France, taking up a market share of 26.8 percent and 29.6 percent, respectively, in 2008, due partly to increased brand recognition, according to Samsung officials.
Samsung also added 10.3 percentage points in its European LCD TV market share between 2004 and 2008.
"Big distribution outlets and mobile phone companies are the biggest corporate clients. Executives are really big fans of soccer, many of whom are sided with either Manchester United or Chelsea," a Samsung official said.
But analysts and industry watchers say Samsung is not in a position to be involved with a huge sponsorship as it has been facing operating difficulties in its global businesses due to the worldwide recession.
Its chip and flat-screen division posted the first ever-quarterly operating losses in the fourth quarter of last year, as sluggish demand for consumer electronics gadgets dampened consumer appetites for electronics and forced related players to suffer massive inventories.
In line with such a bleak picture, Samsung is tightening its purse strings on its sports marketing.
Samsung has dropped its sponsorship of a torch relay in the Vancouver Winter Olympics next year and is considering trimming its association with the 2010 Summer Games in London.
Signs of thrift are on the wall as the company is also set to reduce support for local sports.
"A sizable cut in our marketing and advertisement expenses for this year reflects such a dismal performance. We will wait and see before deciding," the spokesman added.
"We're in a tough situation. But supporting Manchester United is attractive, considering the previous track record on brands through sponsoring Chelsea. Price really matters," another Samsung official said.
Malcolm Glazer, the owner of the Tampa Bay Buccaneers football team, bought Manchester United for more than $1.5 billion in 2005. South Korean international Park Ji-sung plays for the club.