Analysis: Chevy exits from Europe despite Man U dealComment on this story
Ben Klayman Detroit
The recent decision by General Motors (GM) to pull its well-known Chevrolet brand out of Europe suddenly makes its expensive sponsorship deal with Manchester United, the world’s most recognised soccer club, look like less of a winner.
When the largest US car manufacturer announced in 2012 that it was paying $559 million (R6 billion) over seven years to slap the “Chevy” bowtie logo on the jerseys of “Man U” players, the steep price tag turned heads.
Now, in light of GM’s announcement last month that Chevrolet would largely exit Europe by the end of next year, the contract has become even more of an overpay because players will be wearing a logo for a product that is non-existent in the region.
“Understand what this sponsorship deal is all about – it’s eyeballs. They’re leaving a big patch of geography with lots of eyeballs so the economic value has to go down,” said Gary Fechter, an attorney who has represented companies in sponsorship deals for 35 years. Fechter is not involved in GM’s deal.
Though Chevy has long been an iconic brand in the US, it never really took off in Europe, hurt by the region’s tough competition and an economic downturn. GM said it planned instead to focus on expanding its Opel and Vauxhall brands in the region.
GM still sells its Chevy brand in most other markets around the world.
Jim Andrews, the senior vice-president with IEG, a unit of ad agency WPP that tracks sponsorships, said the deal still held promise for GM in emerging markets where Manchester United was popular, but the value took a hit with the exit from Europe.
“I would not classify it as a bad deal, but if you could rewind the clock, knowing that you’re not going to be marketing the Chevy brand in Europe, would you do this deal at that price? I think the answer is clearly no,” Andrews said.
GM executives dismiss the notion that the deal is less valuable, saying the true pay-off will be in Asia and other emerging markets.
Manchester United’s data on its fan base backs GM’s argument because the club says almost half of its 659 million followers globally are in Asia, including 108 million in China. Another 173 million are in the Middle East and Africa, and 71 million in the Americas, while only 90 million are in Europe. – Reuters