Why Etihad Airways is pumping money into Major League Soccer
The United States’ two most popular sports by far are also the country’s most idiosyncratic – one features a “football” game where players throw and catch an oval ball and the second has a World Series in which no overseas teams take part.
So why would a premier Arabian Gulf airline choose to sponsor a sport that is not in the least bit quirky there, although in the States it does go under a name its British fans deride, and which ranks about fifth most popular?
The reason Etihad Airways chose to become the financial muscle behind Major League Soccer (MLS) – America’s equivalent of the English Premier League (EPL) – is simple: exposure.
Football is one of the fastest-growing sports in the US. For example, approximately 29.2 million viewers watched the Fifa World Cup, which took place in Brazil last year, a 20 per cent increase on the 24.3 million who tuned in for the 2010 edition and a 50 per cent increase on the 17 million viewers who watched in 2006, according to data from Nielsen, a global information and TV audience measurement company.
Additionally, within MLS, approximately 827,000 viewers per game on average have been recorded to May, across ESPN, UniMás (Spanish Language) and Fox Sports, since the league kicked off its 20th edition this season – a 37 per cent increase on the 605,000 average last year, according to Nielsen. The finale, the MLS Cup, was watched by an audience of 505,000 viewers in December.
Etihad’s potential exposure to this significant and fast-growing audience is an obvious draw. The appeal has been buoyed by the fact that ESPN and Fox Sports paid a combined US$75 million per season and Univision paid $15m per season, signing eight-year broadcasting deals with MLS in May 2014.
That came a month after Etihad underscored its support by entering multi-year partnership with MLS as the official airline partner of the league. Deal values have not been made public but in the United Kingdom, Barclays secured a three-year deal in 2012 to sponsor the EPL for atotal of £120m (Dh691.3m).
“Etihad Airways has a growing portfolio of sports properties that cover the globe and we’re delighted to now add Major League Soccer, a leading international sports brand, to this group,” James Hogan, the president and chief executive of Etihad, said at the time.
Similar sentiment was conveyed by Don Garber, the MLS commissioner. “We are excited to welcome Etihad Airways as the official airline partner of Major League Soccer in the United States and are proud to be the first major sports association in the US for such a prestigious global company,” he said.
“On behalf of our clubs, our players and our millions of fans, we welcome Etihad Airways to the MLS family and look forward to working with them to help grow their business in this region.”
Today, much like at the Etihad sponsored and Abu Dhabi-owned Manchester City’s home ground in the EPL, the airline’s logo and its messages are displayed across pitch-side LED hoardings during nationally televised MLS matches, as well as across nationwide broadcast partners’ platforms and MLS Digital Properties – which covers the US and Canada and describes itself as “the number one soccer network in North America”.
“MLS Digital Properties offers the only 24/7/365 online advertising solution for brands looking to reach a coveted audience of diehard, unduplicated sports fans, through unique turnkey programmes that drive campaign objectives by utilising content, video, mobile, and social media,” it says on its website.
So far, Etihad’s decision to place its name prominently within a burgeoing US sport appears to be a wise one.
According to the most recent quarterly report from the US department of transportation, the Middle East saw available seats to and from the United States rising 15.3 per cent to 8.8 million in July last year from the same quarter a year earlier.
The UAE was ranked 13th in the department’s grading of top foreign country gateways, with a year-on-year increase of 25 per cent in passenger traffic from June 2013 to last year.
In addition, the presence of the Etihad message on US TV sports channels has the perhaps unforseen advantage of allying the airline with a population fiercely proud of its domestic carriers.
The relationship between US and Middle East, in regards to global aviation, has made the headlines in recent months, after allegations from US carriers that Middle East airlines received unfair subsidies of $40 billion in the past decade, something the Gulf carriers strongly refute.
Gulf airlines, notceably Emirates and Etihad, are well aware of the opportunity sports sponsorship offers to appease potential domestic disquiet over their push to challenge US airlines.
Away from MLS, as The National reported this month, Etihad will become the exclusive airline partner of the Washington Capitals ice hockey team, the Washington Wizards basketball team and the Washington Mystics women’s basketball team.
The deal with Monumental Sports & Entertainment (MSE) also covers the city’s Verizon Center venue, which hosts more than 200 sporting events and concerts each year. The agreement also reflects a major lobbying offensive by the Gulf carriers after they came under fire from Delta, United and American Airlines.
“This is all about raising awareness and it is becoming part of the battle to win hearts and minds,” says John Strickland, the director of the UK-based JLS Consulting.
Etihad is also set to capitalise on a growing number of eyeballs within MLS stadiums as the league continues to grow its annual total attendance – from a mere 2.8 million in 1996 to a little over 6 million last season. The average attendance at games as of this month has reached 20,425 – a 6.7 per cent increase on the 19,148 recorded for the 2014 season, according to mlsattendance.com. Also, 91.5 per cent of the seats available across the 21 MLS club franchises were reported as occupied.
To further widen its presence within MLS, Etihad has also signed up with the Abu Dhabi-based Abu Dhabi United Group’s North American venture New York City Football Club. The five-year deal, announced late last year, sees the group act as a founding partner and Etihad the shirt sponsor. The partnership tied in perfectly for the newly formed franchise, ultimately reflecting MLS’ continued growth and the immense interest in the game from fans within New York City.
In fact, in the memorable opening home game on March 15, New York City FC had to make the upper tier sections of the Yankee Stadium available to accommodate demand as 43,507 fans came through the turnstiles to watch New York City beat New England Revolution. Moreover, by the time the final whistle was blown, every single one of the 4,000 scarves stocked in the stadium had been sold.
“The demand for New York City FC merchandise at the game, shows the appetite for the Club and how eager our fans are to get behind their team,” says Tom Glick, the president of New York City FC.
“They weren’t just there to witness an extraordinary spectacle in the history of New York sports; they were buying into their team and showing their support.”
Etihad currently flies to Chicago, Dallas, Los Angeles, New York City, San Francisco and Washington DC – all of which, except San Fransico, have a very strong football base.
All this points to further opportunities. As Mr Hogan points out, Etihad through MLS aims to “continue to build its brand in the United States, a key market for us, while offering an ideal platform to interact with the millions of sports fans and communities across the country and showcase the airline and services”.
As they say in Britain: “Back of the net.”
Shuaib Ahmed is a freelance journalist who regularly writes about football for the footynions.com website
Emerging markets investment trend is set to continue
Investment from the Middle East and Asia into sport in Europe and the United States continues to grow significantly.
It is a trend mirrored by the two regions’ international investments. Since 2007, the Qatar Investment Authority has injected over US$65bn into Europe while in 2013, Chinese funding of US businesses amounted to $12.2bn, a 51.7 per cent increase on the previous year. The surge of investment has occurred in spite of the worst global economic downturn since the Great Depression. This is helping to fuel the overall increase in the value of major American and European sports as well as driving increased global reach for these sports.
The investment from the emerging markets has, to some extent, come about because the economic downturn in the West has made local investment harder to find. In particular, unsustainable financial practices in European football have also encouraged clubs to look for more stable ownership.
As a result, the reach and growth of fan bases of the key European and American sports, leagues and teams has expanded and the value of their direct commercial assets have increased significantly. For brands, the larger global footprint of key sports, leagues and teams has increased the power and value of sponsorships and investments in these properties as they now reach into the key markets of Asia and the Middle East.
In addition, the emergence of media rights and sponsoring brands from both regions is making the global sports marketplace more competitive. The influx of these investors has resulted in an escalation in the price of sponsorship opportunities and increased the barriers of entry for local investment. So will this trend continue? Yes. The relevant economies in the Middle East and Asia remain strong and they have large reserves of wealth. Governments in the Middle East and Asia are becoming more sports-minded and are attracting more major events and competitions, resulting in significant planned investment in facilities and sports-related infrastructure over the next 10 years.
One area of potential risk is increased regulation in Europe and the United States to negate the perception of “being taken over” by these regions. While this is a legitimate risk, Repucom believes the commercial benefits will carry the day and the globalisation of sport will not slow down any time soon.
* Source: Repucom 2015
Updated: May 28, 2015 04:00 AM