One Less Taxpayer Bill to Pay, AIG Replaced as a Manchester United Marketing Partner

http://www.mcnsports.com/en/node/7397
One Less Taxpayer Bill to Pay, AIG Replaced as a Manchester United Marketing Partner

By Evan Weiner

June 3, 2009

9:00 PM



(New York, N. Y.) -- American taxpayers got some good news earlier today out of Manchester, U. K. The Manchester United football club will have a new corporate logo on the team's uniform top starting in 2010 as the Chicago-based insurance company Aon has signed a marketing deal with the squad to replace the "to big to fail" insurance company, the American International Group or as it is better known, AIG as a ManU shirt sponsor.

For whatever reason, AIG executives back in April 2006 decided to partner with ManU, arguably the best known sports brand name in the world. The deal was for four years and paid Manchester United about 56.5 million pounds over the life of the deal. On January 21, 2009, the day after Barack Obama was sworn in as the 44th President of the United States, AIG officials announced the "too big to fail" insurance company would not extend the sponsorship.

American taxpayers, who own a good chunk of AIG, will be on the hook for a $25 million payment to the English football club for the 2009-10 season. That is, of course, a pittance compared to the monies the United States government has "loaned" the "too big to fail" insurance giant since September 2008.

In March 2009, House Democrat Ann Kirkpatrick of Arizona was threatening to hold hearings to see if any of the government bailout money was going to pay off the AIG-ManU agreement. Nothing came of that but AIG monies going to sports and junkets is a sensitive topic.

The idea of having the AIG logo on the ManU shirts was part of a marketing effort to expose the company to new clients around the world. That strategy did not work with AIG, at least not when you consider that AIG hit a liquidity crisis on September 16, 2008 and collapsed. The Bush Administration came to AIG's rescue by loaning the company up to $85 billion. AIG received more than $120 billion in the fall of 2008.

After the 2009-10 English Premier League season, AIG will be out of the sports business, at least in Manchester. Other companies seem to be leaving sports sponsorships as well and that is playing havoc with three National Football League teams, Jerry Jones' Dallas Cowboys, the Mara family and Tisch family owned New York Giants and Robert Wood (Woody) Johnson IV's New York Jets. Jones has been unable to sell the naming rights to his soon to be opened new Cowboys Stadium in Arlington, Texas and the Mara-Tisch-Johnson troika is still looking for a naming rights partner for the new Meadowlands stadium opening up in East Rutherford, New Jersey.

Finding marketing partners in Arlington and East Rutherford may be difficult in this economic climate when the truth of the matter is that no one can really quantify just how much business is brought in when a company spends money on naming rights at stadiums or arenas.

Jones, the Maras, the Tisches and Johnson need the naming rights dollars to help pay off debts incurred by stadium costs. Even though local governments in Arlington and in New Jersey are putting up hundreds of millions of dollars in developing the facilities, the owners were counting on corporate dollars to pay off the bills.

Because Jones, the Maras and Tisches and Johnson are not getting that money, it could spur them to really take a hard line in the just started owners-players collective bargaining negotiations. The owners want the players to understand that there may not be as much money available to pay them in 2011 and will suggest that give backs might be appropriate.

The old days of NFL Commissioner Paul Tagliabue and NHLPA Executive Director Gene Upshaw extending the 1993 labor agreement is done. Tagliabue has retired and Upshaw passed away last August. Also missing from the negotiating table is Dan Rooney, the Pittsburgh Steelers owner who was named ambassador to Ireland by President Obama. The players trusted Rooney.

Although the present labor deal ends in 2011, there is some pressure to get a deal in place shortly after next February's Super Bowl. The provision that wedded the owners and players to the 1993 agreement, the owners would lose the salary cap in the final year of the collective bargaining agreement while the players would cede the chance to be gain free agency after four years and would have to wait until six full years of service, expires sometime next March. That clause caused nightmares for both sides as the owners have set players cost while players, many of who never last six years, could bid their services to other teams after four and any change would upset the applecart. The owners though want change and are willing to risk losing the cap in 2010 if they are able to get the players to agree to cost reductions in the next collective bargaining agreement.

NFL owners recently extended over the air network contracts with CBS and FOX and reworked a deal with DirecTV.

The NFL has had a problem for years with revenue sharing and it was not with the players. The owners have apparently abandoned the "leaguethink" policy which NFL Commissioner Pete Rozelle in 1960 or 1961 usurped from Lamar Hunt's newly formed American Football League after Hunt borrowed the concept from Branch Rickey's Continental Baseball League which was looking for owners in 1959. Rickey's league never got off the ground but his idea of sharing TV revenues among the Continental League owners along with other revenue streams took hold in Rozelle's NFL in 1961 and 1962 after Rozelle convinced Jack Mara in New York, George Halas in Chicago and Daniel Reeves in Los Angeles that sharing TV money equally with the Green Bay Packers, Steelers and Baltimore Colts would strengthen the league. Today, big market teams want to keep large revenues generated within their markets and not share it with small market franchises. That has caused a discrepancy between large and small market teams because some of the large market teams use the money to pay off debts or create larger football coaching staffs or scouting staffs.

That divide is still a problem for the owners.

Naming rights are a big deal. But do naming rights really promote a company. The New York Mets and Citibank entered into a $400 million-20 year naming rights deal that started well before the bottom fell out for the bank. American taxpayers have put money into Citibank along with Bank of America which has the naming rights for the Charlotte football stadium and a multiyear deal with the Richardson family's Carolina Panthers.

But does a name slapped onto a football stadium, baseball field or an arena really bring in business? Does an AIG logo on ManU's shirts mean business for AIG? That is a question that is probably unanswerable. Companies still invest in sports because they believe that it is the best way to get their message across to 18-34 year old men. The only thing that is sure that American taxpayers are off the hook after the upcoming Manchester United season for $25 million a year as the AIG logo will fade into ManU's history book. But they are still on the hook for Citibank, Bank of America, General Motors and other entities that have received bailout money for sponsorships and while the monies paid for sports sponsorship is a drop in the bucket, the question of propriety should be answered. Should government back entities like AIG spend even a nickel on any advertising?


eweiner@mcn.tv