Neither Chelsea nor Three have much to gain from resuming "suspended" sponsorship
Old and busted: Where were you when we were s**t? New hotness: Where were you when we were sanctioned?
Chelsea Football Club has been Abramovich-free for nine days, and still the club’s website remains Three-free and Three’s website remains Chelsea-free. One would think that Three would want to resume honoring their three-year, ~$55 million / year sponsorship contract, for the obvious reason of not giving the appearance of breaching that contract by letting the sponsorship “suspension” extend beyond the resolution of the ostensible reason for the suspension. But after the two month trial separation period, maybe one or both sides recognize there’s no road back.
Three’s “confounding” response revealed a weak handle on sponsorship
Everything about Three’s suspension of the contract was bizarre from the start. Sponsorship expert Jim Andrews noted two confusing features.
First, Three suspended their sponsorship not after Russia invaded Ukraine, but after the UK government sanctioned Roman Abramovich, effectively confiscating Chelsea FC. Per Three’s press release, “[I]n light of the government’s recently announced sanctions… we feel that given the circumstances, and the Government sanction that is in place, it is the right thing to do.”
Andrews said it “can be reasonably argued that Chelsea FC is not connected to Putin’s government. It certainly was closely tied through its owner just days ago, but with Abramovich now legally cut off from the club and with the sale of the team in motion, Chelsea sponsors are no longer at risk of supporting a Russian oligarch.” We would go further and say that it’s more than a reasonable argument: it was the intention and effect of the sanctions, ultimately leading to the forced sale in which Roman Abramovich was little more than an observer.
Second, with over 30 years of experience in the sponsorship industry, Andrews finds Three’s decision to suspend the sponsorship “confounding.”
“These are terms that unless defined in a sponsorship agreement - language I have never seen in a contract - are without literal meaning. Typically, a company is either a sponsor or they are not; there is no legally agreed upon sponsorship limbo.”
Three didn’t have a PLAN for sportwashing away the Blues
Three and PLAN International UK, a non-profit charity, were the only two sponsors who distanced themselves from Chelsea after the UK government sanctioned Abramovich. Whereas Three “suspended” their sponsorship contract, PLAN executed a perfect act of cost-free sportwashing 2.0 by “bringing forward the closure of our partnership,” which was already expiring in May 2022.
Like Three, PLAN prefaced their statement by talking about the war in Ukraine, but justified their decision by referencing the government sanctions. The same dynamic Andrews applied to Three therefore applies to PLAN UK: they breached their contract only after Chelsea FC were effectively severed from Roman Abramovich, that is, only after the minimal risk of money flowing from Stamford Bridge to the Kremlin was eliminated. Seems redundant to do your sportwashing after the government’s taken the Current Bad Man (a variation of the Current Thing) to the cleaners, but that’s what makes sportwashing 2.0 such a versatile form of cosplay.
There wouldn’t be much upside in Todd Boehly unleashing his lawyers on PLAN for breach of contract. The value of the remaining three months of that contract plus whatever damages would barely cover a few hours of his lawyers’ time.
But at more than $50 million per year, Three has now “suspended” about $12 million worth of contractual value. Every day that the suspension continues is a day closer to Chelsea’s deadline for putting a sponsor on one of the most valuable pieces of real estate in sports: the front of the Chelsea jersey. The club was unable to remove the Three logo from their jerseys for the final run-in of the 2021/22 season due to limitations with getting new jerseys, which amounted to free advertising for Three. If Three is going to be on the jersey for the preseason tour in the United States, Chelsea and Nike need to know soon.
Sports sponsorship trades on the passion and loyalty of sports
If not, Chelsea need to know even sooner so they can either find a new jersey sponsor or upgrade Trivago from training kit to match kit.
In that latter case, Chelsea could return some good will to Trivago and send a powerful message to the sponsorship industry about the value of loyalty by not charging Trivago the higher sponsorship fee that the match kits entail.
As Andrews said in March, “This state of abeyance is not good for the team’s players, staff or fans and Three’s decision merely rubs salt in the wounds.”
Sponsors leverage fan loyalty to accomplish whatever their goals for the sponsorship are. Gaining access to an audience that already has a deep attachment to one party in the relationship is one of the major reasons companies sponsor sports properties, and it’s one of the unique value props that sets sponsorship apart from any other marketing or brand initiative.
If a sponsor can tap fans’ passion in a way that advances their business objectives, then the sponsorship is a success. The best sponsors serve the fans so well that the fans’ passion for their team becomes the “seed affinity” for the sponsor, and the sponsor walks away with passionate consumers alongside their other objectives. More often than not, sponsors are able to achieve their objectives without moving the needle on audience or market sentiment. Simply being present is enough for them to get what they want.
Rarely do sponsors generate anything worse than apathy. Stranding a club at a moment of crisis – abandoning the club, the organization and the fans at the moment they most need their allies’ support – well, that seems like the sort of thing that could bring fans’ emotions down upon a company in an unusually adverse way.
Football fans, in particular, hold grudges across decades and generations over far less.
It’s hard to see what value could be left in the relationship between Three and Chelsea FC given the breach of trust and potential breach of contract. The fact that Three has not resumed (whatever that would even mean) their sponsorship contract over a week after the sale was completed suggests that at least one of the parties isn’t too interested in picking up the pieces of the relationship.
Three may think they “suspended” their ties with Chelsea, but it’s likely they burned this (Stamford) Bridge; and if their logo remains on the front of the Blues’ kit for the 2022/23 season, it’s because both sides’ lawyers already have enough billable hours.
Postscript: As I was writing this, I saw that the US government is moving to seize two planes registered to Roman Abramovich. He won’t enjoy flying commercial, but I wouldn’t be surprised if he books his next flight on Trivago.