Did Retail Brokers Save Football?

English football clubs have just ended a record summer transfer window in 2022 after combined estimated spending of €2.23 billion. Other European leagues also spent aggressively, but it was nowhere near the English Premier League (EPL) clubs: the closest was Italian Serie A with €749.2 million.

However, clubs trade players, meaning the net spending numbers can be either positive or negative (positive if the clubs earned by trading players). On that too, EPL dominated with net spending of €1.35 million of net spending, whereas Bundesliga and League 1 clubs earned.

However, the aggressive spending by European football clubs today is a far cry from the position most clubs found themselves in just a couple of years ago. Football and many of its sponsors took a massive hit during the pandemic months. Matches were canceled across the board and then played behind closed doors in empty stadiums.

The Premier League officially canceled all matches on 13 March 2020, only to resume the season on 17 June, with matches taking place behind closed doors. Even the 2021-22 play season started behind closed doors. All the clubs were only allowed to open up the stadiums in a limited capacity in May 2021. The games returned to normal with fan-packed stands in the 2021-22 season.

Apart from the sentiments of fans, it was a nightmare from a business perspective: the majority of the football club revenues came from sponsors, who, at the time, were not receiving any value.

Football sponsors from the airline and hospitality industry felt the extreme impact of the pandemic. High-risk finance company Basset & Gold, a sponsor of West Ham, even went bankrupt, citing the pandemic.

Some sponsors cited “force majeure” to stop payments to the football clubs. “It's quite obvious that having no more events, everything has to be suspended, it seems so logical to me,” Marc Vanhove who runs the restaurant chain Bistro Regent, shirt-sponsor of Bordeaux FC, told Agence France-Presse.

PSG’s primary sponsor for the 2019-2020 game season, French hotel group Accor, was also evaluating backing out from paying the entire contract amount of around 50 million euros but ended up honoring it.

Retail FX to the Rescue?

However, sponsors from one sector performed particularly well during the pandemic: Retail FX. Almost all of the well-known online brokerages reported record income for 2020. IG's net trading revenue for the 2020 fiscal year increased by 36 percent to peak at £649.2 million. Its rival CMC Markets also ended FY2021, from April 2020 until March 2021, with a record net operating income reaching £409.8 million.

And they showed their generosity towards the sports industry, which has become one of the most preferred marketing channels.

Royal Forex, with its online trading brand ROinvesting, even donated 50,000 euros to AC Milan’s foundation for fighting the pandemic. On top of that, the broker became a sponsor of the Italian giant in April 2020 and later extended the deal.

The valuation of the pandemic-hit clubs also made it lucrative for companies to ink sponsorship deals. Several brokers inked new football sponsorship deals in 2020 and 2021. eToro, Libertex, Skilling, easyMarkets, Axi and GO Markets are only a few trading brands that inked deals with some top European football giants.

eToro, with its over two dozen active sports deals, is only behind Allianz and much ahead of Visa and Mastercard, to be one of the top financial services brands on the football field. Its largest sponsorship deal is with AS Monaco for $5 million, which it inked during the pandemic months.

“eToro uses a wide range of marketing channels including sports sponsorships,” eToro’s Head of Global Sponsorships, Dylan Holman told Finance Magnates.

“A key element of the sport is about being part of a community, fans come together because of a shared passion. eToro shares this focus on community.”

Value of Sports Sponsorship

There are a lot of marketing channels out there. So, why do brokers prefer football so much? The answer is “brand credibility and trust”, as pointed out by Matt House, the CEO and Founder of SportQuake, an agency that brokers football sponsorship deals.

“Football clubs and players are well known around the world, amongst key demographics, and by partnering with these properties, brands benefit from the positive halo effect to their own public image,” he added.

“From a budgeting perspective, the other key benefit of football sponsorship for multi-market businesses, like online trading platforms, lies in the global nature of leading football properties.”

Moreover, Libertex, a broker sponsoring FC Bayern and Tottenham Hotspur, confirmed the demographic advantage of football sponsorships.

“Some could argue that the demographic crossover between the two activities is quite significant since the majority of football fans tend to be male, which is also true of short-term traders,” the CMO of Libertex, Marios Chailis said.

“That isn’t to say, however, that brokers, us included, do not look to appeal to women. In fact, when it comes to long-term and passive investment, female traders account for the lion’s share of new entrants to the market.”

Brand Building and Gaining Clients

While there is no doubt that football sponsorships help brokers to strengthen their brand value, “it is also an effective method of gaining clients, particularly when integrated alongside performance marketing campaigns,” as per House.

Chailis added: “Conversion rates are, of course, a yardstick that any marketing activities are measured against, and we wouldn't still be pursuing sports sponsorships unless we were seeing tangible results, too.”

Big Ticket Deals or Sponsoring Regional Clubs

Even in the sports sponsorship space, brokers are implementing different strategies. Some are going after the big football brands, whereas a few are scrapping strategic deals with many smaller clubs.

eToro was probably the first brokerage to execute such a strategy by inking deals with a dozen British and German football clubs in September 2020. IC Markets was another broker to follow this strategy as it secured sponsorship deals with 12 La Liga and Bundesliga clubs.

What's more is that the strategy made sense as smaller football clubs have strong regional fan bases and, most importantly, they needed sponsors after the pandemic more than Champions League-level clubs, so brokers had to take that opportunity.

“Without doubt, the professional recognition and prestige we gain from a partnership with a world-renowned club like FC Bayern is immense, but then again, fruitful and well-thought-out deals with smaller clubs can occasionally generate the same conversion level with proper management,” said Chailis. Earlier, Libertex sponsored the Spanish football club, Getafe, which never finished La Liga in the top four and is much less in stature than FC Bayern or Spurs.

“Well planned, strategic buying of smaller clubs has also shown to deliver big results - as in the case of eToro,” SportQuake’s House said. “Their high-density, multi-club strategy allowed them to reach fans en masse around the world… Their success speaks for itself and highlights how, with the right planning and buying, a range of football sponsorship strategies can achieve impressive results.”

Future of Football Sponsorships

Putting any brand in front of hundreds of millions of football fans is lucrative for any business. Big corporations like Emirates, Accor, Spotify, Etihad, TeamViewer and others have put their brands on the shirt of major European giants.

But, the spending on online trading sponsorships is also growing. According to SportQuake, brokers collectively spent $125 million in football sponsorships in the 2021-2022 play season, which is a yearly increase of 49 percent.

However, the entry of deep-pocket crypto giants jumping into the sports industry has shadowed online brokers in the past couple of years.

House believes brokers will take the stage in the sports sponsorship space again as the crypto boom cools off.

“We see this investment coming in two key areas,” he said. “Firstly, global football club sponsorship – more brands, more partnerships and, within this, bigger partnerships, incl. club uniform. Secondly, local club football and the adoption of football strategies that deliver in key local markets, specifically LATAM, Central America and smaller European markets.”

Did Brokers Save Football?

Though the words “brokers saved football” would not be entirely appropriate, at a time when the football world was on its knees, brokers on the back of record trading activity, did step in and spend money.

Were those deals opportunistic? Undoubtedly. Football is big business and sponsorship is not charity work. However, with clubs like Arsenal so broke they had to fire the team mascot of 27 years, the vast sums of money pumped into the game by retail brokers provided a much-needed financial lifeline to some of the world's biggest football clubs.

Football would have survived without the Retail broker sponsorship money. Player wages and transfer budgets would have to be realigned without it, but still, football would have survived. What will be interesting to see is come contract renewal time how many of the deals continue.