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SPORTS BUSINESS: Peter Baumgartner, Etihad CCO, interview
Tuesday, 02 August 2011 15:54 0 Comments
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High flier: Peter Baumgartner believes the perfect synergy between Etihad and Manchester City will help both reach their ambitious destinations
Etihad Airways’ sponsorship of Manchester City made the headlines when they announced a 10-year extension to their deal estimated to be worth in the region of £400million (Dh1.6bn).
It is the biggest deal of its kind in the football world, includes the renaming of the club’s ground to the Etihad Stadium and the development of land in Manchester, establishing an Etihad Campus as part of a unique marketing and infrastructure development strategy.
Here, Etihad’s Chief Commericial Officer, Peter Baumgartner, who negotiated the deal, gives Sport360° editor Steve McKenlay an insight into how it evolved.
Why did you take the original decision to put Etihad on Manchester City shirts? Was it purely down to the fact that Sheikh Mansour owns the club?
Two years ago, as a brand, we were already searching for a higher calibre of sponsorship in sport so the Manchester City opportunity just came at the perfect time for us. Obviously, the Abu Dhabi link was important and added to the opportunity by providing us with a synergy that would not have been there otherwise, but the deal was assessed and negotiated on a purely commercial basis.
With the confidence of the Abu Dhabi involvement, as a sponsor we knew what to predict in terms of the development the team would make moving forward. We had the opportunity to lock in sponsorship at the market value of that time with a lot of confidence and reassurance that the team would make progress which would increase the exposure and value of the deal. In effect we had progress reassurance.
Would you have sponsored Manchester City without the Abu Dhabi involvement?
We would have sponsored something of the nature of Manchester City. We were looking out for an opportunity, not just in the English Premier League but Germany, for example, is also, geographically, very important for us as a company and if a cracking opportunity comes around today, tomorrow or the day after tomorrow then we would be interested but the EPL was on our radar and Manchester City, as it turned out, was perfect for us.
With the Abu Dhabi involvement the whole perspective of the team had changed. Would the club have been on the radar without that? Probably not.
What has the past two years of shirt sponsorship brought to the business?
The football team has worked itself up from mid-table towards the top of the Premier League and that was certainly in line with our expectations, which we had because we knew the Abu Dhabi support was in there, so it has certainly delivered. In fact, it has over-achieved and we have shared in the exposure that has brought. It also gave us that confidence to enter into negotiations to extend the deal.
It is important to how we activate this deal. We almost don’t use the term ‘sponsorship’. We prefer to look at it as a partnership. Some see sponsorship as a time zone during which you stick your logo on a shirt and that’s all you pay for. It goes deeper than that; the activation around it is key for us.
When I talk about activation I am talking about our community work and soccer schools which are a very important component. When we select partners one key component, apart from the commercial benefits, is that we share the same mindset, the enthusiasm, approach and ambitions moving forward. If that is not there, then it will not be successful. From the outset Manchester City were spot on, totally in line with our mindset.
That has created the dynamics of doing things together on a marketing, promotional and community and social media side basis. Things like having a Manchester City painted aircraft, activity on social media platforms etc are all a consequence of working together with the same objectives from the moment that first deal was negotiated. Almost every part of the new deal was a logical consequence of what we have done over the past two years.
Awareness is a huge part of any sponsorship deal so, despite the activation side of things, surely this is still paramount.
That is correct but marketing of a brand has moved on from the way it was done 10, 20 years ago. When I first started in aviation, sponsorship was based around advertising and producing nice-looking ads. Today it is more about one-to-one marketing, targeted campaign management, database marketing and so on.
The way to leverage sponsorships and activate them has changed and developed hugely. It’s about how you create opportunity using the Etihad Manchester City website, facebook pages, behind the scenes, viral marketing campaigns, and working with the sports media with content activation. There are so many strategic components that have to be able to tick the box.
At what stage did you start thinking about a 10-year deal that would become the biggest of its kind in the football world?
The timeline became important once the scope of the partnership became more tangible and it was obvious that shared ambitions and far-reaching vision was there. There has to be a lead time to achieve those ambition so we had to be sure that a carefully structured and achievable plan was in place.
We fly to 71 destinations; that will be between 100 and 120 by 2020. We have 8,000 staff; we will have 17,000-18,000 by 2020. We have a fleet of 61 aircraft; it will 150 by 2020. Europe is a key geography for us in terms of a 10-year network development. So we have to develop corporate infrastructure, training facilities, call centres, marketing. For Etihad to own a sports brand that is pre-programmed to be operate at the very top in the very near future was the perfect synergy.
How does Manchester City and the proposed Etihad Campus help with your expansion as a company?
It is an opportunity to merge many things that would otherwise operate in isolation into one big idea. You look at our brand values - service excellence for example. Manchester City want to be a top football club. The results on the pitch are the key component but they want to have a great stadium and top hospitality to wow corporate clients. We have that experience to bring into the partnership.
The stadium hospitality will have the Etihad lounge feel with service quality we can bring as a top airline. If you look at all the big football clubs they are not there just because of the results on the pitch. They are able to turn a football match into a great experience off the pitch as well.
Do you actually have any say on what the club does with the money you pay them?
The important thing here is to understand where each party’s expertise lies. There are many areas where we share expertise and where we bring expertise in. We have influence on things like stadium and campus development which do not directly relate to the requirements of the Manchester City first team.
So, in the infrastructure of the club we have a say in what happens, but anything that relates to the football club as such we leave to the people who have that expertise, and that’s definitely not us.
You cannot predict that a football club is going to be successful. Bearing that in mind, if Man City had not qualified for the Champions League would you have gone ahead with a 10-year deal?
Obviously, the Champions League is important so that is a very difficult question to answer. Would the fee have been a different one without the Champions League qualification? It would have been an interesting conversation. But no, it was not a deciding factor.
The deal is the consequence of two years together and having two visionary teams that can move forward hand in hand and take it beyond the normal in a way that will benefit both parties. Winning the FA Cup and the qualification for the Champions League strengthened our confidence. You can’t buy success in football but you can have confidence in the fact that the club is moving in the right direction.
Why is sports sponsorship a good move for companies?
It is a very positive environment. When you look at the values that are traditionally associated with sport, especially football and Formula One, they are generally very positive.
What about a club getting relegated or a bad accident in F1. Does damage limitation of negatives come into your thinking?
There is no sponsorship without a risk element. But with Manchester City, we have the confidence that we will get the right exposure, geographically, and from a target audience point of view. We know they will move in the right direction because we know there is that Abu Dhabi involvement and we know how professionally the whole club is set up and run.
That minimises the risk. So any negativities are very manageable and can be contained. The other big positive is that Manchester City gives us exposure far beyond the UK borders, especially as they are now playing on the international scene, which gives us a pan European fan base.
How long did it take to put together this innovative deal? Was it an easy process?
There is a non-standard approach to it so it took some time to get there. It is well thought through and reaches into so many aspects of our business. It went from brain storming, scoping and into strategy alignment and so on. To put everything together took about four to five months. So it was relatively short.
Why are you so excited about this partnership?
If we are to be perceived as a top airline representing what Abu Dhabi wants to be perceived as in the world and what we want to achieve, we had to find a way to accelerate that positive perception and that global reputation. You never get a second chance to make a first impression so we had to live up to expectations.
We have become a challenger brand, challenging the accepted standards in our industry, trying to find our own way of doing things. We always look for opportunities to stand out and challenge standards right across the board and that includes sports sponsorship.
Manchester City gives us all the tools to demonstrate that this is more than just sticking a logo on a shirt or a stadium. It is about establishing a new benchmark for sports sponsorship and marketing.
Interview by Steve McKenlay
Tuesday, 02 August 2011 15:54 0 Comments
<a class="postlink" href="http://sport360.com/component/content/article/95-all-features/169361-sports-business-peter-baumgartner-interview-etihad-cco" onclick="window.open(this.href);return false;">http://sport360.com/component/content/a ... etihad-cco</a>
High flier: Peter Baumgartner believes the perfect synergy between Etihad and Manchester City will help both reach their ambitious destinations
Etihad Airways’ sponsorship of Manchester City made the headlines when they announced a 10-year extension to their deal estimated to be worth in the region of £400million (Dh1.6bn).
It is the biggest deal of its kind in the football world, includes the renaming of the club’s ground to the Etihad Stadium and the development of land in Manchester, establishing an Etihad Campus as part of a unique marketing and infrastructure development strategy.
Here, Etihad’s Chief Commericial Officer, Peter Baumgartner, who negotiated the deal, gives Sport360° editor Steve McKenlay an insight into how it evolved.
Why did you take the original decision to put Etihad on Manchester City shirts? Was it purely down to the fact that Sheikh Mansour owns the club?
Two years ago, as a brand, we were already searching for a higher calibre of sponsorship in sport so the Manchester City opportunity just came at the perfect time for us. Obviously, the Abu Dhabi link was important and added to the opportunity by providing us with a synergy that would not have been there otherwise, but the deal was assessed and negotiated on a purely commercial basis.
With the confidence of the Abu Dhabi involvement, as a sponsor we knew what to predict in terms of the development the team would make moving forward. We had the opportunity to lock in sponsorship at the market value of that time with a lot of confidence and reassurance that the team would make progress which would increase the exposure and value of the deal. In effect we had progress reassurance.
Would you have sponsored Manchester City without the Abu Dhabi involvement?
We would have sponsored something of the nature of Manchester City. We were looking out for an opportunity, not just in the English Premier League but Germany, for example, is also, geographically, very important for us as a company and if a cracking opportunity comes around today, tomorrow or the day after tomorrow then we would be interested but the EPL was on our radar and Manchester City, as it turned out, was perfect for us.
With the Abu Dhabi involvement the whole perspective of the team had changed. Would the club have been on the radar without that? Probably not.
What has the past two years of shirt sponsorship brought to the business?
The football team has worked itself up from mid-table towards the top of the Premier League and that was certainly in line with our expectations, which we had because we knew the Abu Dhabi support was in there, so it has certainly delivered. In fact, it has over-achieved and we have shared in the exposure that has brought. It also gave us that confidence to enter into negotiations to extend the deal.
It is important to how we activate this deal. We almost don’t use the term ‘sponsorship’. We prefer to look at it as a partnership. Some see sponsorship as a time zone during which you stick your logo on a shirt and that’s all you pay for. It goes deeper than that; the activation around it is key for us.
When I talk about activation I am talking about our community work and soccer schools which are a very important component. When we select partners one key component, apart from the commercial benefits, is that we share the same mindset, the enthusiasm, approach and ambitions moving forward. If that is not there, then it will not be successful. From the outset Manchester City were spot on, totally in line with our mindset.
That has created the dynamics of doing things together on a marketing, promotional and community and social media side basis. Things like having a Manchester City painted aircraft, activity on social media platforms etc are all a consequence of working together with the same objectives from the moment that first deal was negotiated. Almost every part of the new deal was a logical consequence of what we have done over the past two years.
Awareness is a huge part of any sponsorship deal so, despite the activation side of things, surely this is still paramount.
That is correct but marketing of a brand has moved on from the way it was done 10, 20 years ago. When I first started in aviation, sponsorship was based around advertising and producing nice-looking ads. Today it is more about one-to-one marketing, targeted campaign management, database marketing and so on.
The way to leverage sponsorships and activate them has changed and developed hugely. It’s about how you create opportunity using the Etihad Manchester City website, facebook pages, behind the scenes, viral marketing campaigns, and working with the sports media with content activation. There are so many strategic components that have to be able to tick the box.
At what stage did you start thinking about a 10-year deal that would become the biggest of its kind in the football world?
The timeline became important once the scope of the partnership became more tangible and it was obvious that shared ambitions and far-reaching vision was there. There has to be a lead time to achieve those ambition so we had to be sure that a carefully structured and achievable plan was in place.
We fly to 71 destinations; that will be between 100 and 120 by 2020. We have 8,000 staff; we will have 17,000-18,000 by 2020. We have a fleet of 61 aircraft; it will 150 by 2020. Europe is a key geography for us in terms of a 10-year network development. So we have to develop corporate infrastructure, training facilities, call centres, marketing. For Etihad to own a sports brand that is pre-programmed to be operate at the very top in the very near future was the perfect synergy.
How does Manchester City and the proposed Etihad Campus help with your expansion as a company?
It is an opportunity to merge many things that would otherwise operate in isolation into one big idea. You look at our brand values - service excellence for example. Manchester City want to be a top football club. The results on the pitch are the key component but they want to have a great stadium and top hospitality to wow corporate clients. We have that experience to bring into the partnership.
The stadium hospitality will have the Etihad lounge feel with service quality we can bring as a top airline. If you look at all the big football clubs they are not there just because of the results on the pitch. They are able to turn a football match into a great experience off the pitch as well.
Do you actually have any say on what the club does with the money you pay them?
The important thing here is to understand where each party’s expertise lies. There are many areas where we share expertise and where we bring expertise in. We have influence on things like stadium and campus development which do not directly relate to the requirements of the Manchester City first team.
So, in the infrastructure of the club we have a say in what happens, but anything that relates to the football club as such we leave to the people who have that expertise, and that’s definitely not us.
You cannot predict that a football club is going to be successful. Bearing that in mind, if Man City had not qualified for the Champions League would you have gone ahead with a 10-year deal?
Obviously, the Champions League is important so that is a very difficult question to answer. Would the fee have been a different one without the Champions League qualification? It would have been an interesting conversation. But no, it was not a deciding factor.
The deal is the consequence of two years together and having two visionary teams that can move forward hand in hand and take it beyond the normal in a way that will benefit both parties. Winning the FA Cup and the qualification for the Champions League strengthened our confidence. You can’t buy success in football but you can have confidence in the fact that the club is moving in the right direction.
Why is sports sponsorship a good move for companies?
It is a very positive environment. When you look at the values that are traditionally associated with sport, especially football and Formula One, they are generally very positive.
What about a club getting relegated or a bad accident in F1. Does damage limitation of negatives come into your thinking?
There is no sponsorship without a risk element. But with Manchester City, we have the confidence that we will get the right exposure, geographically, and from a target audience point of view. We know they will move in the right direction because we know there is that Abu Dhabi involvement and we know how professionally the whole club is set up and run.
That minimises the risk. So any negativities are very manageable and can be contained. The other big positive is that Manchester City gives us exposure far beyond the UK borders, especially as they are now playing on the international scene, which gives us a pan European fan base.
How long did it take to put together this innovative deal? Was it an easy process?
There is a non-standard approach to it so it took some time to get there. It is well thought through and reaches into so many aspects of our business. It went from brain storming, scoping and into strategy alignment and so on. To put everything together took about four to five months. So it was relatively short.
Why are you so excited about this partnership?
If we are to be perceived as a top airline representing what Abu Dhabi wants to be perceived as in the world and what we want to achieve, we had to find a way to accelerate that positive perception and that global reputation. You never get a second chance to make a first impression so we had to live up to expectations.
We have become a challenger brand, challenging the accepted standards in our industry, trying to find our own way of doing things. We always look for opportunities to stand out and challenge standards right across the board and that includes sports sponsorship.
Manchester City gives us all the tools to demonstrate that this is more than just sticking a logo on a shirt or a stadium. It is about establishing a new benchmark for sports sponsorship and marketing.
Interview by Steve McKenlay