All About: Barcelona FC & Spotify Sponsorship Deal
16th of March 2022 has marked the beginning of a new era for FC Barcelona as the club signed an agreement with the Swedish music streaming company Spotify to become their leading partner from the 2022/23 season for the next four seasons. Here is the story behind the partnership between FC Barcelona and Spotify, from the terms of the agreement to its impact on the entire sports industry.
“This partnership will allow us to continue to bring the Club closer to its fans and make them feel, even more, part of the Barça family through unique experiences, combining two activities such as entertainment and football, making it possible for us to connect with new audiences around the world.” Joan Laporta, President of FC Barcelona.
FC Barcelona: press release
The Camp Nou will be branded “Spotify Camp Nou”
This new agreement contains some groundbreaking announcements, such as the stadium rebranding, a first in the club's history. The long-term vision is to create more synergies between football and music, helping artists interact with a global community and FC Barcelona fans experiment with new experiences around the game.
“Our vision for the partnership is this: Spotify and FC Barcelona want to bring the worlds of music and football together, giving a global stage to players and artists at Spotify Camp Nou and building new opportunities to connect with fans.”
Spotify: press release
For the Catalan club, the long-term agreement with the stadium's tittle rights makes perfect sense. It will support the Espai Barça project, an ambitious plan to transform the club's facilities and environment into a new entertainment experience. In addition to the stadium naming right, the Swedish company also partnered with FCB to associate its brand with one of the most famous jerseys in the world.
The Swedish brand as shirt sponsors
Spotify brand will appear on the front of both men’s and women’s team shirts beginning in the 2022/23 season and for the next four seasons. They will also sponsor the training shirts for the next three seasons.
“Spotify and FC Barcelona will work together to create opportunities for the iconic shirt to be a space that celebrates artists worldwide. As a shirt sponsor, Spotify will work to create a new platform to amplify artist voices. We think this can be more than just a Spotify logo on a shirt.”
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Could we see artist photos or album covers on jerseys in a near future? Spotify codes that take you to a new track or album when scanned? FC Barcelona could provide its fans with unique and evolutive jerseys for each season. Imagine the value created for an artist that could promote his new album using FC Barcelona’s jersey. Moreover, as rarity and uniqueness are well known to influence a product's price (shown today by the NFT), this kind of activation could bring a lot of financial value to Barcelona.
Was it the right deal for FC Barcelona?
According to Spanish newspapers, the partnership is estimated at €280 million for four years even though the financial figures haven’t been made public because of a Spotify confidentiality clause. Barcelona's marketing vice president Juli Guiu ensured that this agreement will provide the Club with "the essential financial resources to manage future strategic and sporting challenges", which includes exclusive benefits for members and supporters of the club such as “unique experiences and discounts on subscription plans”.
Given the financial crisis of the club and the overall performance of the A-team over the last seasons, the partnership seems to be valuable for Barcelona especially when we know their accounts presented a loss of €481m for the end of 2020-21 financial year. However, if we step back and analyze the deal as a whole, it might not be as profitable as one may expect for this club. The Spotify deal encompasses two of the main assets: the stadium & jerseys - this is not necessarily the best option to sell both to the same partner when you need to maximise your sponsorship revenues.
Focusing only on jersey, top clubs already sign huge deals: with €70 million per year (equivalent to one-year contract between Spotify and FCB), the Real Madrid deal is the most valuable one in the football industry as of now. Manchester United receives €55 million per year from TeamViewer and most other clubs have deals between €45 & €55 million.
When it comes to the stadium naming right, the same analysis applies to the Catalan club. Back in 2019, Duff & Phelps analysed the naming rights potential value of leading clubs in Europe and, without any surprises, Barcelona ranked at the second position, with an estimated €36.50 million per season. Considering the €70 million deal offered by Spotify, Camp Nou’s value has possibly been devalued. And looking back at the figures from Duff & Phelps’ studies, Manchester City’ stadium, coming in 4th position, is estimated at €24.95 million per year in 2019. With a less popular stadium than Camp Nou, the England Club seems to better optimize the value of its stadium with its main partner Etihad Airways.
If we could expect more from a financial standpoint for FC Barcelona, there is no doubt that this partnership also extends beyond the numbers and fits with the club’s new direction as President Joan Laporta continues to rebuild on and off the field the Barcelona's new era. On the Spotify side, there was also an important reason not to invest more in this sponsoring deal.
SKY SPORT: What does the Spotify sponsorship deal mean for Barcelona
Why did Spotify decide to partner with FC Barcelona?
Spotify’s answer is pretty straightforward: “It’s about connecting fans with players and artists of every kind, music, and sports. So Barcelona's fans and audio lovers on Spotify will come together to form a massive, globally-connected community bridging the worlds of music and football.” Spotify: press release
Spotify users are mainly young people. According to Business of Apps, more than 50% of the users are between 18 and 34 years old. Hence, older generations, less familiar with the audio streaming subscriptions model, could be the marketable people that Spotify seeks to reach through this partnership, as explain Tom Gravy – board Director of PRS For Music.
Another reason, as mentioned by Alex Norstrom, Chief Freemium Business Officer of Spotify is to leverage the enormous fan base of the Spanish club: "The more fans engage with our platform, the more opportunities creators have to make a living from their art, and the huge fan base of FC Barcelona will help fuel this growth.”
However, with more than 350 million followers around the world, FC Barcelona has only 1% of "registered" fans (about 3 million) in its database. The eventual terms Barça settled on could have been worth even more if a greater share of their alleged 350 million fans had actually handed over their data to the club. Matt Rogan, the former CEO of the Two Circles agency, highlighted that of the 3M marketable people, Spotify could reach at best 500K, and convert around only 10 000 people. With an average basket of €120/year, the Swedish company could expect to generate a low return on investment given the €65-70 million invested per year.
Spotify y la base de datos del Barça
From a broader perspective, this raises the question of determining the fan base today, and more importantly how to leverage it. First, a club should not only consider its fans but also each of its player’s fans as they have become a communication window in their own right. If a club can identify both fans as well as their preferences (players), it will undoubtedly have a more significant impact to negotiate deals. Spotify does it with its users and the artists they follow. Collecting this data and creating suitable acquisition tunnels is not an easy task and FC Barcelona could use this partnership as a way to learn from Spotify how to establish direct communication channels with its followers to personalize, get close, and monetize that relationship - moving closer to a D2C model.
Going further: From sponsorship to partnership agreements
Learning from its partners is not new, but nowadays, companies seem to be more interested in establishing real partnership programs than dealing with traditional sponsorship. Historically, the sponsorship model refers to logo placements, advertisements, visibility, and recognition but add low business value, marketing value, and do not drive sufficient ROI anymore. Real partnerships are no longer a one-way collaboration between the sponsors and the club, but rather a two-way collaboration in which both entities should work closely to create tailor-made and flexible offerings and so maximise the value of their own business.
This agreement between FC Barcelona and Spotify underlines the transition to long-term partnerships, relying on data and knowledge to get the most of it and increase ROI. Qualified databases will be more and more the very first pillar to measure and size partnerships opportunities so it is necessary to collect and process as much data as possible from the fans. One way to get to know them better is to engage and interact with them via digital solutions and new technologies.