Banchiero Sports Enterprises LLC

The Asociación del Fútbol Argentino (AFA) recently announced a delay to the start of the regular season due to financial difficulties affecting many of its clubs. However, Club Átletico Boca Juniors, the only major Argentine club unaffected, recently signed two important sponsorship deals which could open up the market and kick the season off.

Both are shirt sponsorship deals that will replace Boca’s previous agreements with Argentine Home Appliance chain, Megatone, and UNICEF, respectively. Megatone will be replaced by the Korean electronics giant, LG Electronics, as the main sponsor. (Boca’s agreement with Megatone ended on July 31st during Boca’s recent participation in the Audi Cup. The LG sponsorship became effective during Boca’s friendly with Austrian club, Lask Linz.)

The LG deal is a three-year contract that runs until the end of 2011 and will pay Boca $2 million in the first year and an incremental $250 thousand each year, thereafter. Said spokesman Jerry Kim, “LG is forecast to reap over $20 million in advertising effects and adding Argentina is one of two key markets in South America along with Brazil. The soccer marketing will be highly effective in Argentina as soccer is considered a national sport.” Last year, the consumer electronics company recorded $300 million in sales in Argentina.

Marcela Rossi, Brand Manger for LG Electronics Argentina, commented: “Boca Juniors is a football club with global recognition and background which represented a perfect match for us with respect to the sponsorship. We chose Boca because the institution’s characteristics fell in line with LG’s philosophy of high performance and unique style, along the global impact of its image. We believe the energy from the passion for Boca Juniors matches the energy LG puts into technological development and innovation. Through sports and especially football, LG looks to reaffirm its corporate mission which centers on innovation, personal achievement through the establishment of goals, teamwork, and the definition of a single objective: to be number one.”

Sport sponsorship, particularly football, is an integral part of LG’s corporate strategy. LG sponsors other clubs such as Monarcas of Mexico, Monterrey of Mexico, Sao Paulo FC of Brazil, Olympique Lyonnais of France and Fulham of England. Other sports sponsorships include golf (LG Skins Game), cricket (World Cup), and hockey. According to company officials, LG has seen a significant increase in brand awareness, has become a market leader in Brazil and has enjoyed annual sales growth of 21% in Europe since 2001.

On the other hand, or sleeve to be precise, Boca Juniors also signed an agreement with the French oil-petroleum company, Total, which sells lubricants in Argentina. The agreement sees Total pay $500 thousand dollars to replace UNICEF on the sleeves of Boca’s jerseys. (Sources say that the agreement with UNICEF has not expired and its logo will probably appear on Boca’s shorts.) Like LG, Total also has sport sponsorships as part of its marketing strategy but has mainly been involved in motorsports like Formula 1 and Grand Prix.

Both deals were announced on July 18 at an exclusive, but downplayed, press conference at Boca’s Bombonera Stadium with senior officials from each company and club on hand for the announcement. The most interesting question asked was to LG with regard to why during the current economic climate that many companies have stayed away or halted investments in sports sponsorships. Ms. Rossi responded: “Due to the crisis, companies should be more strategic with their investments, and at this moment, we believe this [sponsorship] is one of the best initiatives to empower the LG brand, invest directly in the brand, and the return will be a definite increase in visibility and reputation, not only in Argentina, but around the world. After having looked at various marketing opportunities, we are convinced that this partnership will raise LG and Boca’s profiles internationally and in the long term.”

The deals also come at a time when many Argentine clubs are drowning in debt and unable to meet obligations to their players and businesses. It seems Mauricio Macri’s (Boca’s former president and current mayor of the city of Buenos Aires) business philosophy which made Boca a successful global football franchise in the late nineties and up to 2003 is once again being utilized and demonstrating market leadership in the local football market. As a result, many feel the Boca deals will usher in a new interest in the local football market by sponsors who are trying to gain market share in emerging markets (ie, Argentina) and also help renew investor confidence in the country itself.

Fabian Banchiero is a sports consultant specializing in Latin American football and owner of Banchiero Sports Enterprises LLC based in New York.

Originally Published: Football Partnerships