This article has printed in “Tejarat_e_Farda” magazine, Dated: Saturday, November 18, 2023.

https://www.tejaratefarda.com/fa/tiny/news-45703

Why Don’t Major Companies Sponsor Football in Iran?

An Impossible Dream

Vahid Namazi, Journalist and Football Researcher

In an era where news of brands investing hundreds of millions of dollars in sports to enter a dynamic, untapped, and profitable market emerges daily, where do we place the news of a mobile phone shop from Amol sponsoring Esteghlal and having its name on the back of their jerseys? Has Iranian football become so desperate that its club managers, oblivious to the stature of the “brand” they represent, hold out their begging bowls to a mere mobile shop (not a major retailer or a prominent brand) out of sheer necessity? Or is the mobile retail business so lucrative that it can afford to rent the back of one of Iran’s and Asia’s biggest teams’ jerseys?

While the suspicious nature of the lavish advertising by this Amol mobile shop—lining up sports and cinema stars on its Instagram page to announce a 30-million-toman discount on the latest iPhone—is evident, this article addresses a more significant issue in Iran: “the lost revenue due to the absence of major sponsors in sports,” particularly in Iranian football.

Thirty-two years ago, in October 1991, when Persepolis played a match, the fans at Azadi Stadium awaiting their beloved team witnessed something unprecedented in modern Iranian history. That day, the advertisement of a tire manufacturing company on Persepolis’ red jerseys—for revenue or some other favor—was seen as a sin, tainting the sanctity of sports. Fans who watched foreign football matches on TV, either live or delayed, had seen shirt sponsorships as a common practice in countries with established football cultures. They read here and there that football had become a revenue-generating industry, and the changing world viewed sports differently. What better place than a popular team’s jersey to advertise a company’s name or product? And if the match was televised, even better. But that day, Iran’s state TV executives decided not to broadcast Persepolis’ match with their sponsored jerseys! In a society heavily influenced by post-1979 revolution rhetoric and the eight-year Iran-Iraq war, sports were seen as a means of “spiritual refinement,” not revenue generation. However, the post-war mindset aimed at rebuilding the country and healing the wounds of destruction and backwardness sought to open doors for investment and encourage capitalists who had kept their money out of the market due to the war and earlier turbulent years. They now looked to a government whose slogan was reconstruction and whose leader had a particular fondness for “technocracy.”

As the atmosphere became more open, the path for money to flow into football and sports seemed smoother. Yet, Iran’s entirely state-controlled football could only spend money, not generate it! Gradually, sparks of change emerged, and state-owned economic entities turned to football to flex their muscles. In those years, the National Steel Company, which had taken Persepolis under its wing at the insistence of Hassan Ghafoori Fard, then head of the Physical Education Organization and Persepolis’ owner, put its name on Persepolis’ jerseys. Sepahan was funded by a cement factory, and Parastoo chewing gum appeared on Esteghlal’s jerseys. However, there was no mechanism or law for revenue distribution in Iranian football.

Even now, nearly three decades later, Iranian football remains a chaotic mess! At best, only five of the 16 Premier League teams (about 30%) can be considered private, but they generate virtually no revenue from football. Undoubtedly, their owners are banking on “rent-seeking opportunities” that might one day turn their investments profitable. The notion of sharing potential football revenues, advertising, or TV broadcasting rights is a mirage, and generating income from Iranian football is akin to a joke. The appearance of big and small brands on the front and back of team jerseys either harks back to the lamentable mobile shop story or is a case of the proverbial “from one pocket to another” to keep state-owned teams from starving, while “commission-takers” continue to profit!

Sports Sponsorship: A Win-Win Deal
Sports sponsorship is a significant revenue source for franchises operating in the sports industry. Franchises are massive commercial companies or holdings that sell their brand rights in various forms and profit from their trademarks. In 2022, the global sports sponsorship market was valued at approximately $66 billion, expected to grow to $108 billion by 2030. The most significant aspect of sports sponsorship revenue comes from leveraging brand names, allowing the display of commercial logos during sports events. Regionally, North America, with its highly successful professional leagues like the NBA and NFL, accounted for over a third of global sports sponsorship revenue in 2022. Given the commercial success of North American leagues, it’s no surprise that some of the world’s most valuable sports teams are American. Topping the list is the Dallas Cowboys of the NFL, with a brand value of about $6.5 billion in 2022. Compare this to the most valuable football brand in 2022, Real Madrid, valued at around $1.7 billion. The NFL generated about $1.88 billion in sponsorship revenue in 2022, doubling its 2010 figure. Meanwhile, the NBA and its star-studded league also saw similar sponsorship success, with revenue reaching $1.6 billion in 2022.

However, sponsorship in sports is not one-sided. According to 2022 surveys, many sports fans worldwide support the role of sponsors in their favorite sports, with over half agreeing that sponsors help companies establish a commendable social presence while promoting their products. A global study focused on football fans showed that direct brand involvement in sports sponsorship was more appealing to two-thirds of respondents, encouraging them to purchase the brands’ products.

Given these figures, it’s clear that the path for sponsors in global sports is well-paved, with laws and infrastructure facilitating their presence. Now, the eyes of major economic giants are set on new markets, with extensive planning to enter these arenas. One of the latest fields sponsors have entered is esports, projected to have nearly 550 million mobile viewers by 2025. Such a growing market is a paradise for advertisers and sponsors, with esports revenue expected to reach nearly $2 billion by 2025. Consider this: while one part of the world has reached such heights, another part is stuck with such a bland stew that the necessary laws to support sponsor involvement in sports—and create a suitable environment for sports, both professional and grassroots, to benefit from economic entities—are sacrificed in disputes between lawmakers, the government, and others.

Why Is Sports Sponsorship Essential and Important?

1. Sports sponsorship empowers organizations to host major events:
   Without financial resources, no sports organization or event organizer can succeed. Sponsors ensure that organizations, federations, and sports authorities have the best and most financial resources to host major events, using sponsorship revenue to build the infrastructure needed for professional and worthy hosting. This attracts loyal spectators willing to pay for high-quality matches.
2. Sports sponsorship allows teams, officials, and players to focus solely on training and performance quality:
   Esteghlal and Persepolis have been Iranian football’s darlings for decades, with vast financial resources flowing from the government’s coffers into their pockets. It’s been enough for their managers, like spoiled children of a wealthy family, to complain about empty pockets to their “father,” who dips into the treasury to cover their expenses. Yet, in recent years, these two boastful giants have been so cash-strapped that their managers and players have publicly complained on TV about going hungry, causing embarrassment. While it’s hard to believe, nothing is unbelievable in Iranian football. Although club managers are responsible for selecting suitable training and accommodation venues, logistics, marketing, and planning successful commercial strategies for hosting sports events, finding sponsors is perhaps their most critical task. A manager spending all their time securing funds and sponsors will lack the time and patience to professionally manage their team and club, leading to lower match quality, reduced league productivity, and fewer spectators. Thus, the relationship between finding sponsors and securing “daily bread” in sports is entirely direct.
3. Major sponsors attract more audiences and increase revenue:
   The higher the quality of your product, the more eyes it attracts. This relationship is so simple that not understanding it is harder than grasping it! Improve your product’s quality, and reputable sponsors will come to promote it. In a sport like football, this product is high-quality, fan-pleasing play accompanied by team success. If you possess such a product, you won’t face much difficulty in today’s modern world. The synergy between your product and a major brand can significantly impact audience attraction, delivering a prestigious experience. Today’s global audience is mature enough to spend money on quality products. More audience means more revenue. Simplicity is the most complex concept, isn’t it?

Two Major Global and Continental Sports Sponsorship Examples

1. The Magic Formula in a Soda Bottle: Can you name a brand bigger than Coca-Cola? Perhaps Nike, Amazon, or Apple could compare, but Coca-Cola’s approach to embedding itself in major global events (with its slogan that drinking soda should be as common as drinking water, making Coca-Cola a guest at every table) is one of the greatest examples of sports sponsorship. Coca-Cola is actively involved in various sports events, including World Cups (rugby, cricket, and football) and the Olympics. They have been a FIFA World Cup sponsor since 1978. How is such a long-term relationship built? “Shared interests” are undoubtedly a key to creating a seamless professional partnership.
2. A Star from the East: Samsung is not only familiar to us but to the entire world. Their sports sponsorship journey began with a vision to support the 1988 Seoul Olympics, hosted by South Korea. They offered sponsorship to the International Olympic Committee (IOC) for a temporary partnership, which led to a long-term commercial seat at the IOC alongside giants like General Electric, Coca-Cola, Panasonic, Toyota, Visa, Intel, and Airbnb. Beyond the IOC, Samsung has intermittently sponsored prestigious leagues and events like Spain’s La Liga, NASCAR racing, and Major League Baseball (MLB) in the U.S. More notably, Samsung engages in professional team ownership in volleyball, football, baseball, and basketball, with teams in taekwondo, wrestling, table tennis, badminton, and equestrian sports. Can you think of better advertising? With Samsung’s name attached to each team (e.g., Suwon Samsung Bluewings football club), it’s instant promotion. As long-term relationships like Coca-Cola’s with the FIFA World Cup or Red Bull’s with Formula 1 show, sponsorship always holds a special place in sports. Through sponsorship, you can advance your sport, focus on infrastructure development, training, and event preparation, and attract more audiences, who will spend money on exciting, high-level events, bringing in more revenue.

Sponsorship in Football: From Barcelona to Anyang
Football is a massive, lucrative industry, with most large and small economic entities entering it to generate revenue or promote their products. Sponsorship of football teams goes beyond advertising on jerseys or sportswear, with teams having multiple sponsors advertising their goods and services in specific locations. For example, a visit to Barcelona’s website reveals that their main football team has three primary sponsors (Nike, Spotify, and Philips) and 30 secondary sponsors, including big names like Coca-Cola.

The contract values of primary and secondary sponsors differ, and even primary sponsors vary in their agreements. For instance, Spotify, as Barcelona’s main sponsor, appears on their jerseys and has leased the name of the Camp Nou stadium, now under reconstruction as Spotify Camp Nou. This makes Spotify Barcelona’s primary financial backer, with a contract enabling the club, which faced significant financial struggles over the past two years, to operate more freely. The annual sponsorship deal with the music and entertainment giant is worth €57.5 million—a win-win deal that brings both financial influx and appeal to Barcelona while integrating the music and entertainment industry into football. Prominent global music artists have appeared at key season matches under Spotify’s sponsorship deal, with the latest being the Rolling Stones’ appearance at this year’s first El Clásico, where Barcelona’s jersey advertisement switched from Spotify to the Rolling Stones’ logo.

If you consider Barcelona a global, unimaginable, galactic example incomparable to Asian or Iranian football, let’s look at Brentford, the 12th-placed team in the English Premier League, home to our own Saman Ghoddos. Brentford has four primary sponsors, two mid-tier sponsors, and 18 commercial sponsors, whose contracts fund the club while promoting their products. With these sponsorships, they built a new 17,000-seat stadium in 2020, now named after one of their primary sponsors, Gtech. Still looking for excuses? Let’s go to Cyprus. The small 14-team Cypriot First Division includes Aris Limassol, the third-placed team with an 11,000-seat stadium, two primary sponsors, and nine secondary sponsors, including the well-known Pizza Hut. You might ask, “If Cypriots sign deals with pizza chains, why shouldn’t Esteghlal sign with a mobile shop?” Perhaps advertising a mobile shop on a team’s jersey isn’t odd, but not on one of Iran’s top two teams and one of Asia’s most popular!

Let’s leave Cyprus and head to Saudi Arabia. Right next door, Saudi Arabia, with its massive buzz and impactful financial backing from the Public Investment Fund under the Crown Prince’s direct oversight, has created a league that brought Ronaldo, Neymar, and Benzema to West Asia. Even in their 18-team league, less prominent teams like Al-Taawoun have 10 large and small sponsors listed on their website. Moving further, let’s visit South Korea’s second division and FC Anyang, a professional football club in the 600,000-person city of Anyang, owned by the local government. Founded in 2013, they finished third in the K League 2 last year. They play home matches at the 17,000-capacity Anyang Stadium, owned by the municipality. Check their website, and you’ll see 19 local and national sponsors—from banks and economic holdings to hospitals and recreational centers—supporting this lower-tier team.

Multi-Million-Dollar Jerseys
Since we’re talking about the front and back of club jerseys, let’s compare global figures with domestic contracts. The numbers for Persepolis and Esteghlal’s jersey sponsorships come from media reports, press conferences, managers’ statements, and scattered reports, as transparency remains the missing link in Iranian football contract figures. This year, after a change in Esteghlal’s management, it was reported that their minimum revenue from a sponsorship deal with mobile operator Rightel for the 2023-24 season is around 90 billion tomans, with potential increases if blue fans use Rightel’s services. The Amol mobile shop mentioned earlier is said to pay Esteghlal 40–70 billion tomans this year, according to news pages linked to the club. How a mobile shop can afford to pay 40 billion tomans annually to Esteghlal is another matter. Meanwhile, IranCell, the other mobile operator sponsoring Persepolis, is reportedly paying the reds around 120 billion tomans this season. The total value of these contracts is about 250 billion tomans. Assuming a euro exchange rate of 55,000 tomans, the dollar equivalent of the reds and blues’ jersey sponsorships is less than €5 million. Let’s look at the scope of sponsors and similar contract figures in European football.

1. Premier League: In England’s Premier League, jersey sponsors come from eight economic sectors, with eight teams tied to betting companies and four to financial holdings. Last season’s champion and runner-up (Manchester City and Arsenal) continued with Emirati airline companies, while real estate, telecommunications, and car manufacturers are absent from this market.
2. La Liga: In Spain, telecommunications companies sponsor four teams, the highest share, followed by travel companies with three. Technology, finance, real estate, and food and beverage industries each sponsor two teams. Sevilla and Real Sociedad are two La Liga teams playing without jersey sponsors. Betting company ads on jerseys are banned in La Liga, and commerce, automotive, insurance, and energy sectors are absent this season.
3. Serie A: In Italy, jersey sponsors are mainly tied to travel and finance, supporting four and three teams, respectively. Telecommunications, car manufacturers, and energy follow, each with two teams. Lazio, Rome’s major club, still lacks a jersey sponsor, but Roma recently signed with a Saudi state company promoting tourism and social events in Riyadh. Like Spain, betting company ads on jerseys are banned, and commerce, real estate, and insurance sectors are absent from this season’s market.
4. Bundesliga: Germany’s league hosts a diverse range of companies sponsoring football teams. Telecommunications and insurance companies each support two teams, while eight other sectors sponsor other teams. Interestingly, finance and energy sectors are absent from this season’s Bundesliga market.
5. Ligue 1: In this season’s French league, real estate and travel are the only sectors investing in three teams each. Two teams carry logos from recruitment, finance, real estate, and betting companies, while commerce, finance, automotive, insurance, telecommunications, and technology sectors have no teams this season.

Why Is Sports Sponsorship in Iranian Football “Ineffective”?
Sponsorship is a commercial, two-way transaction that must benefit both parties. Since football became an industry and economic entities realized its “added value,” they’ve strived to enter it, benefiting football while promoting their products or services. Examining the revenue sources of the world’s top clubs shows that “matchday revenue,” “commercial activities,” and “broadcasting rights” are the three main income streams. About 40% of top clubs’ revenue comes from commercial activities (sponsorship), 43% from broadcasting rights, and 17% from direct and indirect services on matchdays, relying on the club’s brand (ticket and merchandise sales) alongside academy, store, restaurant, and hotel revenues under the club’s name (e.g., Chelsea at Stamford Bridge or Real Madrid at Bernabéu).

Which of these three main revenue streams exists or functions properly in Iranian football? I’ve previously written at length about broadcasting rights. Matchday revenue is a known issue: most Iranian clubs lack dedicated stadiums, copyright laws don’t protect them, and their branded merchandise is sold at the lowest quality and prices in stores nationwide. Their training grounds are borrowed or rented, municipalities have repeatedly boasted about gifting half-finished stadiums only to reclaim them, and transparent financial statements are nonexistent. Their presence in the stock market is purely decorative and unprofessional. With this in mind, what rational investor would pour money into a club that controls neither its match venue nor its broadcasting rights and whose managers’ positions are so unstable they might be gone tomorrow?

Moreover, Iran’s poor economic climate, marked by stagnation and massive inflation, discourages economic entities from entering risky new fields like football. Most large companies and holdings in Iran are state-owned or quasi-private, further complicating their entry into football. Even those operating publicly with a nationwide audience (e.g., mobile operators) are so powerful that they’ve often clashed with the red and blue clubs in past seasons. If they do pay the clubs’ dues, their interactions often lead to disputes, with clubs complaining to the Sports Ministry about unequal contract values compared to their rivals.

In this chaotic market, if a sponsor approaches one of the big teams (especially red or blue), their traditional rival, often sharing the same state owner, steps in and pressures the unfortunate sponsor to sign with them too, or else they’ll encourage their fans to boycott the sponsor’s products! This year, for example, Esteghlal reached an agreement with Pegah Industries and nearly signed a contract, but Pegah backed out after Persepolis threatened to launch a campaign urging fans not to buy Pegah’s products if it sponsored Esteghlal.

Additionally, large, wealthy (mostly state-owned) companies, due to their monopolistic nature and lack of need for advertising, show little interest in markets like football. The poor state of Iranian football and the absence of supportive laws and policies for investments further ensure that even companies willing to take on these risks have no confidence in the return on their football sponsorships. As a result, Iranian football’s bewildered caravan continues to lag behind the developing football of rival and neighboring countries, growing ever more distant each day.