Analysis: Chevy's exit from Europe weakens GM's deal with Manchester United

Fri Jan 17, 2014 1:29pm EST
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By Ben Klayman

DETROIT (Reuters) - General Motors Co's recent decision to pull its well-known Chevrolet brand out of Europe suddenly makes its expensive sponsorship deal with Manchester United, the world's most recognized soccer club, look like less of a winner.

When the No. 1 U.S. automaker announced in 2012 that it was paying $559 million over seven years to slap the Chevy bowtie logo on the jerseys of "Man U" players, the steep price tag turned heads. Now, in light of GM's announcement last month that Chevrolet will largely exit Europe by the end of 2015, the contract has become even more of an overpay because players will be wearing a logo for a product that is nonexistent in the region.

"Understand what this sponsorship deal is all about - it's eyeballs. They're leaving a big patch of geography with lots of eyeballs so the economic value has to go down," said Gary Fechter, an attorney who has represented companies in sponsorship deals for 35 years. Fechter is not involved in GM's deal.

Though Chevy has long been an iconic brand in the United States, it never really took off in Europe, hurt by the region's tough competition and an economic downturn. GM said it plans instead to focus on expanding its Opel and Vauxhall brands in the region.

GM still sells its Chevy brand in most other markets around the world.

Jim Andrews, senior vice president with IEG, a WPP Plc unit that tracks sponsorships, said the deal still holds promise for GM in emerging markets where Manchester United is popular, but the value took a hit with the exit from Europe.

"I would not classify it as a bad deal, but if you could rewind the clock, knowing that you're not going to be marketing the Chevy brand in Europe, would you do this deal at that price? I think the answer is clearly no."

ASIA TO THE RESCUE   Continued...

A Chevrolet logo is displayed on a vehicle at Courtesy Chevrolet dealership in Phoenix, Arizona, January 4, 2011. REUTERS/Joshua Lott