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All Blacks break with tradition as AIG agrees jersey rights

GLOBAL INSURANCE PROVIDER American International Group (AIG) has signed a five-and-a-half-year sponsorship agreement with the New Zealand Rugby Union (NZRU) – a deal which will see the famous All Blacks jersey carry a permanent corporate logo on the front for the first time in its history.

According to the NZRU, the deal is the second most lucrative sponsorship in global rugby union, behind that of the governing body’s own kit manufacturing deal with adidas, which is reported to carry a value of $90m over a ten-year period (2009-2019).

Sports Sponsorship Insider has learnt that AIG will contribute an annual sum of at least US$5m. However, considering AIG’s immediate status as the only other global partner of the NZRU alongside adidas, that figure is likely to be closer to the annual sum of US$9m the sports apparel brand is thought to be paying.

News broke of the sponsorship and the potential branding of the All Blacks shirt in July, but was only officially announced earlier this month. The deal has been met with criticism from ardent New Zealand rugby fans with claims that any form of corporate logo – other than the apparel manufacturer – detracts from the integrity of the historically ‘clean’ jersey.

The Property

AIG’s sponsorship is far wider reaching than simply branding the shirts of the six teams which fall under the NZRU’s jurisdiction: the All Blacks, the Maori All Blacks, the All Blacks sevens, the under- 20s, the Black Ferns (women’s 15) and the women’s sevens.

The company, which will be designated Major Global Sponsor of the New Zealand Rugby Union and Official Insurance Partner of the All Blacks, will support rugby from community level to professional level and will provide significant funding each year for specific initiatives such as charity, education and player safety projects.

The appearance of the AIG name on the All Blacks’ shirts has proven to be the sticking point for many of those against the sponsorship.

Anticipating a widespread negative reaction, AIG and the NZRU decided upon a logo which will appear on the shirt one third of the size of standard International Rugby Board (IRB) regulations. The move may placate fans who object to the sponsorship which, according to a senior sports marketer close to the deal, would not have happened in any form without branding on the jersey.

“The logo was always going to be the most contentious point. All of the other assets are great but the big factor to justify a decent rights fee is having a logo on the shirts,” he said.

“This is a major sponsorship deal and if you want to talk about a comparable rights fee to what Australia, England and South Africa are getting, and those are the benchmark figures, then that benchmark includes a logo on the shirt.”

The AIG logo will also appear on the shorts of the All Blacks, less than two thirds of the maximum size permitted.

The Deal Makers

Given the extremely high profile nature of the deal, negotiations were made at the most senior level on both sides.

Representing AIG was US-based president and CEO, Bob Benmosche, who was likely to have been supported by Christina Pretto, senior VP, Corporate Communications, who has overall responsibility for branding and advertising.

Steve Tew was the driving force behind the deal for the NZRU. Appointed chief executive in 2008, he has made it clear in the past that the organisation needs to react to commercial progression. As our source says: “Would this have happened under the chief executive prior to Steve Tew? Maybe not. Is Steve Tew more commercially astute? Probably, yes.”

Tew was aided in brokering the deal by Mark Adam, commercial general manager for the NZRU.

The Clincher

The recruitment of another global partner had the overall objective of securing additional financial security for rugby in New Zealand to ensure there will be adequate resources available to nurture and retain the country’s top playing and coaching talent.

Steve Tew has stated publicly on a number of occasions that running rugby in New Zealand costs around NZ$100 million (US$82m) each year and that maintaining funding has become an increasingly difficult task.

Despite a home Rugby World Cup in 2011 where the All Blacks emerged victorious, deficits are forecasted for the organisation in the coming years and additional sources of revenue are required to replace the short-term and unsustainable solution of using cash reserves to meet financial shortfalls.

“The fundamental thing that needs to be understood here is that these are the commercial realities of professional rugby,” said our contact. “The NZRU aren’t going to have another Rugby World Cup any time soon and they barely made any money from that.

“Over time, whatever the rights holder organisation is, there tends to be a softening towards the realities of the commercial market. This isn’t just a sponsorship where it’s another chunk of money to fill a gap in sponsorship revenue for a year – it’s a completely new income stream which they’ve never had before.

"New Zealand is a small country and this is going to be one of the biggest deals in the history of rugby. It’s going to give them the ability to retain talent, improve infrastructure and develop younger players at grassroots level – the money will be going into very positive things and will ensure a better future for New Zealand rugby.”

What does it mean?

The deal marks the return of AIG to sports sponsorship. Thought of by many as the company responsible for bringing the American financial market to its knees, AIG endured a torrid few years in the aftermath of the economic crash in 2008.

Having been bailed out by the US Treasury to the tune of $182.3bn, AIG has recently come good on a promise it made in May 2010 to pay back the US government and American taxpayers at a profit. As of September 14, AIG has realised over $15bn of positive return.

“AIG has obviously had a bad time, but they have now turned that into a commercial success story and felt this was the right time to launch back into the global consciousness,” said our source.

Having previously held one of the most prestigious sponsorships in global sport as front of shirt sponsor for Manchester United (2006-2010), returning to the world of sports marketing following a two-year hiatus has potential pitfalls for AIG.

“Coming back into the market you’ve got to be quite delicate about who you are going to work with in terms of what message you want to send about your company.

“If AIG went back to football, they would immediately be compared against the sponsorship they previously had. And if you think about what’s available in the football market, it’s difficult to find something to match up to United.

“By choosing rugby they’ve removed that analogy and they’ve chosen the best player in that sport, so they can still be associated with number one.

“From a sport platform point of view, there aren’t many global sports other than football but rugby is a growing sport, it performs well in some of AIG’s key markets and it’s now on the Olympic roster (sevens) so there’s a good growth message there too – it’s a strong alternative to football.”

Also worth noting is the fact that AIG has a significant business presence in New Zealand and is an integral stakeholder of the rebuilding operation in Christchurch following the earthquake disaster in February last year, nullifying claims that the sponsorship is an example of a foreign corporation entering the space with little or no affiliation.

Despite the positive aspects of AIG’s involvement with the NZRU there is a lingering controversy surrounding the deal. But it is a controversy fully anticipated by both parties and, arguably, a necessary evil of a partnership that is hoped will germinate into a successful sponsorship programme going forward, both in terms of acceptance and performance of the sponsored teams.

As our contact summarises: “For AIG, it’s one of those where in week one, they have to take the backlash on the chin and let that die down. And then, over time, tell the story about why they’re doing it and the lasting impact it will have on rugby in New Zealand.”

Board Report by Andy Westlake, CEO, Fast Track


October 12 will be remembered by many New Zealand rugby fans as the day that the face of their favourite team changed - the day their sporting sons (and daughters) cemented a sponsorship partnership with one of the world’s leading insurance businesses.


The deal has received a mixed response from the Kiwi rugby fans, with some believing that placing a logo on the “once sacred All Blacks jersey” is something that the people of New Zealand will find hard to stomach.


For me, however, the deal is a standout opportunity for AIG, but one that will require good planning and excellent execution to get right.


The All Blacks brand stands very proudly in the world of elite sport and has a world class reputation as one of the best teams, in any sport, anywhere in the world. The parallels that AIG will be able to draw to their business are many and varied: a winning tradition, teamwork, tenacity, integrity and performance are just some values AIG will wish to share.


The All Blacks also travel extensively (especially the sevens team) and their new sponsor will be afforded many opportunities to activate when the teams are on the road. With sevens rugby coming to the Olympics in Rio 2016, the game is building a global footprint and the All Blacks will be right at the heart of the story.


We have to accept though that AIG’s new favourite team will be at home for a large proportion of the year and home is a long, long way from many of AIG’s most important customers and AIG’s own people.


The challenge will be to share the stories and allow their customers exclusive access inside the All Blacks when they’re not on the road, sharing content that adds value to the AIG brand and offers unparalleled access to this world class team. They will also need to jump all over every opportunity to leverage value from those occasions when the teams are beyond the shores of New Zealand.


I’m sure that when the All Blacks faithful see AIG adding value to their passion for the team, allowing them better access and a deeper connection to the team they love, then AIG’s reputation will grow and the people of New Zealand will recover from the shock of the jersey carrying a brand other than adidas and the silver fern.

 

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