MINUTES OF THE LAST MEETING/ MATTERS ARISING
There were no changes to the minutes. As regards action points from the last meeting:
The Club will announce the ticketing policy for next season in due course.
Ground entry timing and pre-match bar options
At present Jimmys and Dixons open two hours before kick-off for Matthew Harding (“MH”) Upper ST holders and this was being advertised from yesterday. One fan commented that for the Birmingham match the venues were open at 10.30am and although the bar didn’t open until 11am the Club’s efforts in opening earlier are welcome.
THE GLOBAL BUSINESS
This was introduced by Ed Connock and Ron Gourlay.
Ed introduced his role as ensuring that sponsors and the Club maximise their value from sponsorship deals and to help the Club increase revenue and grow the business. The aim of today’s presentation is to explain why we have sponsors and how we work with them.
Partners bring revenue in terms of financial resources. As we grow as a business we get better partners who invest more.
The other issue is data collection to engage with our fans. We want to know who our fans are, where they are and what they want. It is easy to say a club has 600 million fans worldwide but such a statement is meaningless. We also want better insight into local markets. The Club has huge exposure but we don’t have matching resources worldwide so our partners are marketing partners as well as sponsors. Cultures around the world vary greatly and we want insights as to what works in different areas.
It is important that sponsors share our values and vision. We want to be the biggest and the best club and are therefore looking for:
1. The best sponsor partnerships;
2. The best fan engagement worldwide beyond watching the team on television;
3. Community spirit.
We want to be a force for good which is a message that runs throughout the Club. Developing through community work is vital. We find that younger fans have a closer affiliation with Chelsea than with other clubs. The aim is therefore to turn those supporters into lifelong fans. We could have our own branded products in time but at present the Club’s message is through football.
The Chelsea Foundation does a fantastic job in the UK but we want to export that work by focusing on youth, education and health. Underpinning this contact are the pre-season tours.
In Asia we have blue pitches. We still have four in and around south west London which are Chelsea-branded blue Astroturf pitches. We have introduced them in Hong Kong and some other Asian markets. We send individuals to coach local coaches, a process which Samsung invest in and for which Adidas provide kit. The aim is to have a year-round international presence there for the Chelsea experience. There are partner activities, pre-season tours and supporter clubs can use the facilities. We opened pitches in Kuala Lumpa in Malaysia last summer and by the end of the year they will be in Bangkok, Seoul and Japan. We can expand this to other markets but we have to organise a sustainable presence to go with the pitches.
In the US we partner a network of youth clubs such as in North Carolina. They have thousands of members and the programme can develop with our coaching curriculum. Soccer is huge in the US and if young players wear our kits out there they may have a long-term affinity with Chelsea.
As regards sponsor-led activities we are happy for them to use the facilities but are obviously looking for football-centred activities primarily. Sponsors may already have major links to a particular community. Singha are desperate to roll out blue pitches in Thailand. Coca-Cola have a pan-African tournament across 32 markets there which, as a prize, allows the best players the chance to train at Cobham annually. Barbados are looking to roll out grassroots programmes across the Caribbean.
In the past 12 months, Samsung and Adidas have worked together to take our Foundation coaches into 16 markets to run football camps (focused on both CSR and promotional activity). We are looking for a further 10 or so to develop over the next 12-18 months.
Traditionally the pre-season tour was a money-making exercise in football. Now we want to use the tour to highlight what we are doing during the rest of the year in a country. Our strategy is “Here to Play, here to stay” which we launched last summer.
We return to the US in July.
In response to questions from the Forum:
Length of contracts/ business environment
Samsung are tied in until 2015 and Adidas until 2018. As stressed though we want the right sponsors for the long-term. For example we have spoken to Singha about aligning their deal to the length of Samsung’s and Adidas’. Adidas have increased the length of their contract further to the success of our partnership.
This all ties in to the business side. There are 30 new stadia in the Premiership (“FAPL”) and Championship in recent years. We also have UEFA Financial Fair Play to contend with.
We don’t want to sign up as many sponsors as possible as that devalues the brand. We are the fifth biggest club by revenue in Europe but have only the 31st largest stadium in Europe excluding non-club grounds.
The aim is always to be successful on the pitch. There are largely three business areas: match day, broadcasting and sponsorship. Match day revenue is now the smallest of the three. As regards broadcasting we are in centralised deals for the FAPL and Champions League (“UCL”). This is linked to appearance money and how well we do.
As regards the commercial sector we will add at least five sponsors in the next year or so. For instance there may be four different car companies with whom we work in different markets. We communicate with our fans by different products in different markets. We used to be very London-centric in our outlook but that has changed.
As regards the stadium we still consider that an expansion or a move fits into the growth of the Club generally. There has to be an investment on the playing side which means driving up revenues and controlling costs. If we reduce wages on the pitch the quality could suffer.
We have 1.3 million people who attend matches.
There are decisions to make regarding ticket prices and those are the challenges. 160,000 use our hotels with take up increasing on and around match days from an occupancy rate of 40% to present day occupancy of 96%. We have the restaurants including the fitness club restaurant and they are doing well. However there is a limit to how much match day revenue can grow further. We would love to have more young fans, a bigger family area and more disabled places at matches but our revenue will go down and existing ST seats will be reduced. It is an ongoing strategic approach to address these.
We have more of a say regarding broadcasting at UEFA, the FAPL, shareholder meetings and the European Club Association (“ECA”). The market is changing with social media and Chelsea TV for instance. There are other ways to stream content which we are currently developing.
The summer tour will start on 13/14 July and we are going to Seattle, Washington and New York. We are announcing the opposition in New York in early March. A lot will happen with our sponsor partners while we are there.
The Club has been accused of not publicising its commercial activities sufficiently. We consider that all our activities overseas have a Corporate and Social Responsibility (“CSR”) aspect. It means we get massive support from local communities and local football boards such as in Thailand. Cas Knight previously discussed the TV aspects to the Forum. The presentation here shows what we are doing in the commercial arena.
In order, broadcasting, match day and then marketing are usually the biggest revenue streams at clubs. Our approach is more in line with the other big clubs in Europe.
In Bangkok, the Coca-Cola relationship was strong but we couldn’t have a wide relationship as some players were tied to Pepsi in Africa. However Coca-Cola agreed to a regional deal and sponsored the Thailand match. Singha had player images on their product. Singha had messaging for the website and their branding went on ten million beer products. Coca-Cola won’t do a global deal but in Africa they would work with us on local promotions for a particular deal. We are now discussing what else we can do in Thailand with them. They clearly have a massive reach. Each local Coca-Cola office will also have a different approach but we can take our model from successful areas to their other offices.
Feedback from Singha has been brilliant. They only work with us and Manchester United. We have another 2½ years with Singha to run. Singha are a family-run business and they have 70% of the Thai beer market.
Comparisons with other clubs
As regards competition with other clubs, ours is a long-term plan. Manchester United are driving their business by signing as many sponsorship deals as possible. We are preparing for long-term growth which would succeed even if we don’t win trophies every year. Revenues will certainly keep increasing.
We have an MD in Asia. There are 46 countries in the Asian Federation and his role is to drive our programme there. We want long-term contracts.
Benefits to sponsors
Our partners develop their own merchandising brands in conjunction, for instance with the sale of Adidas shirts.
In Thailand there is more revenue in the market than previously and so fake products are less popular. Bangkok produces 95% of all fake products and 7 million are employed in that market. We try and stop the process but where we have succeeded is in reducing the number of fake products coming into our market. We are also aware that £70 shirts won’t sell in most of Asia and we price merchandising accordingly.
We consider we have about 310 million who have some kind of affiliation to Chelsea. The key is the interaction we have with them. We don’t want fans who jump from club to club.
In theory we could try and sell them Chelsea TV for £1 each but in reality we need to know more about them to strengthen the links.
Sponsors also want to benefit from the databases. Opening shops doesn’t work overseas as they don’t generate long-term business.
There is a difference between sponsorship and short-term advertising. In the stadium we could sell more advertising space but that would devalue the benefit from the clean look of the stadium. Smaller clubs perhaps don’t have the possibility of planning for long-term benefits. In time every stadium will sell naming rights just as we all have sponsorship on shirts.
Online gaming is huge for EA Sports and players can play internationally. Two billion games were played on-line last season. If players in some Asian markets select Chelsea as their team on-line we can register that person in a draw to win a trip to London. 800,000 have entered the competition in seven Asian markets in the past three months. We have their email address and other information, though only if they confirm they are happy to receive further information. We then build relationships with them such as exclusive content, access to Chelsea TV etc. We don’t inundate them with sponsor details.
Sponsor partners may be interested in either exposure or building up a database. 188Bet want exposure for instance as you can’t advertise betting in some parts of Asia.
Cost of sponsorship
There is no one rate and every contract is unique. It depends what elements are included.
We don’t insist that blue pitches are only in Asia and coaching is only in the US for instance but there are different emphases in different markets. Soccer is the biggest sport for under 18s in the US but they can benefit from better coaching largely rather than from blue pitches.
Match day experience
One supporter suggested that match going fans could highlight the match day experience in emerging markets. This could be an ambassadorial role for Forum members. The Club responded that authenticity is important and the Club encourages its supporter clubs. The Club knows that supporters overseas want connections with Chelsea but approaches to supporters there have to be relevant to local culture and market conditions. 10 million woke up at 4am in Thailand to watch the Napoli match. 15.9 million In Nigeria watched us play Inter. These are staggering figures.
If 1% can be converted that becomes a massive fan base.
The Club will consider the role that UK fans/ the Forum can play in this.
One fan asked if the Club has considered SAB as an equivalent partner to Singha in Africa.
Coca-Cola are the Club’s partners in Africa. Singha are the Club’s beer partners.
We have identified our markets which are UK, US, South East Asia. Our up and coming markets are Brazil, India and China. We look at what will work within each market. The Club doesn’t have the same opportunities in Africa at the moment.
As regards the youth clubs in America, we already work with five and that number will soon be doubled. Each youth club has c.10,000 members. The problem is that when they are 18, fans’ interest switches to American football/ baseball. There is no one way of breaking into this market as the professional arena is dominated by other sports. However fans there may keep an affiliation with Chelsea when they are older. Blue pitches, on their own, wouldn’t work there. We can however stress there that “soccer” is a great team sport for young people and that good players can aspire to play professionally.
Players from overseas markets
The Club won’t look at players professionally based on whether they come from potentially lucrative markets. This would be a short term measure and the commercial side does not influence the playing side in such direct ways. The Club has talent scouts in Asia however.
We kept the “super club” approach under wraps as we wanted to make sure it works first. We are aware that we don’t get the credit in the media that we deserve. The media tour these areas with us pre-season but they don’t want to publicise our work often. There is a mixture of reasons. One of the key drivers for press publicity is personal appearances by players. When we launched blue pitches during the most recent pre-season tour they received good publicity locally. When a player speaks to the press there may be a brief mention of the Club initiative during or at the end of an article.
One fan commented that our player visits to hospitals before Christmas weren’t widely publicised and in general the Club doesn’t get the publicity it deserves from such initiatives. The Club responded that Sky would want to show such visits but the Club decided not to widely publicise the hospital visit apart from on Chelsea TV, as the trip was for players to see children, some of whom were seriously ill.
The Club is aware that Barcelona tends to get favourable publicity. Barcelona received good publicity at the time from their UNICEF deal but didn’t get commercial benefits from this. Barcelona paid UNICEF to publicise them. The Qatar Foundation paid Barcelona for sponsorship a couple of years later.
Our spending is around £5-6 million per year on CSR and associated initiatives. Sponsors pay a fee to the Club and a contribution towards our CSR. This is what makes us different. Other clubs can try and copy this but we aim to have the best deals tied up.
In local markets we get good publicity. As the Club develops CSR initiatives the national media will have to recognise achievements more widely.
Revenue from non-UK sponsorship
About 60% probably comes from sponsorship for non-UK activities. Around five years ago 90% would have been UK.
Adidas is only a 50% contributor to the total.
There are flat fees for sponsorship deals plus bonuses for success on the pitch.
The Club wants to ensure that this fits with the general marketing strategy and there may well be an announcement in the next year.
Supporters expressed their appreciation for the presentation.
The Club stated that further to the issues raised in the presentation and the growing status of the Club internationally, it is very important to ensure that the entire fan base is listened to. This could also involve looking at new forms of social media. The Forum has been successful but the international dimension should be incorporated. It may be that minor changes are needed to the current Forum or a separate international structure introduced alongside. The Club will discuss its ideas further at the next Forum or over the summer.
One fan said a smaller Forum with representatives working harder would be advantageous. Another said the match day experience of Forum members would be very useful for overseas supporters to hear who are travelling to the Bridge. Forum members said they would be happy to assist the Club in communicating with overseas fans.
One fan said that the way forward may be for international fans to discuss separate issues to match day fans on forums. The Club commented that there are other bodies in place including the supporter club structure and disabled committee which will be taken into account in any structure.
Another fan said that our international supporter clubs can be useful in developing marketing initiatives locally.
One fan said that the Club could make better use of publicising its initiatives in response to fans who write to Forum members via the website.
One fan asked whether the Club was aware of what happened on the buses in Napoli. The Club responded that UEFA witnessed it and there is a full briefing on Monday.
The Club will publicise this on the website.
The Club is happy to speak to the Supporters Football Federation about it.
Fans were told to be at the bus stop at 4pm and some buses left at 6.55pm. Families were reliant on the buses for their safety. There was a lack of communication generally. Some fans were urinating on the buses as they were on the buses for so long. Fans had to stand on the buses for hours.
The Club responded that the situation was unacceptable for our fans. The Foreign Office provided advice regarding the buses beforehand. The Club couldn’t go against this. The last bus arrived at 7.51. UEFA delegates were involved in prior planning based on previous hostility to away fans there. A lot of work was undertaken beforehand. The Club is aware that the shuttle bus system didn’t operate as promised.
The Club requested that observations from fans be sent to Steve Atkins ideally in the next 24 hours.
One fan said that on the domestic front the Club were criticised for cancelling the train to Swansea. There were complaints that fans weren’t emailed with details and that the decision to cancel was made too early. However the Club publicised the train on the website, in the programme and on the large screens. The Club added that only 26 tickets were sold and there were tight deadlines in which decisions had to be made. The Club knows very quickly whether a high take-up is likely after publicising travel arrangements.
ANY OTHER BUSINESS
Player/staff autographs in the family stand
An email to the Forum complained that stewards don’t allow autographs to be collected in that area. The Club responded that there is a concern that items signed generally in the stadium end up on EBay.
The Club will review autographs being restricted in the family area.
One fan asked whether the Club will maintain its contract with Viagogo after the recent Dispatches programme which accused Viagogo of legalised touting? There are other issues to discuss including their handling charges. The Club said that the contract expires at the end of the season and the matter is being considered. Viagogo is a supplier and not a partner as was represented in the programme.
Viagogo to be discussed at a Forum meeting.
188Bet to be discussed at a Forum meeting.
Away fans in home areas
One fan said there were Arsenal fans ejected from the West Lower in or around row 29. The Club said that this was a concern as the match didn’t go to general sale so they must have come from ST holders or members. Part of the ejection process includes follow up/ taking away memberships or STs as appropriate if someone is found to have supplied tickets to away fans. The fan added that stewards had acted quickly though.
(The Club later investigated the matter and ascertained that there were no ejections from around row 29 of the West Lower but there were 11 ejections in total in the stadium for away fans being in home areas of which 6 were from the West Upper.)
The Club added that there is a customer services email address and the Club welcomes such feedback identifying problem areas.
Fans noted that there is a massive demand from Napoli fans in London for the forthcoming home match.
The Club was asked why this was scrapped on Chelsea TV. The Club responded that the decision was taken some time ago to replace it but there wasn’t an alternative programme in place so it was decided to continue until Christmas. Junior cup matches and other live matches would replace the programme initially. One fan said that £6 per month was a less attractive deal for Chelsea TV without this programme.
The Chair commented that the final meeting of the season will most likely be in April.
(The meeting ended at 11.40am.)