Manchester United Football Club (NYSE:MANU) announced a new sponsor last week. And this deal marks a record amount being paid for a premier league team. That new sponsor, replacing Chevrolet, is TeamViewer (ETR:TMV), a German software company. This is a five-year deal, starting next season. TeamViewer will pay the team £235 million in return for the company name on football team shirts. Unfortunately, TeamViewer’s stock plunged 16% on the news.
It seems the share price fall could be a shortsighted reaction to a little understood partnership. However, this collaboration could unlock massive potential for consumers and businesses alike to explore TeamViewer’s range of products.
It could also provide fantastic networking opportunities for the company to raise its revenue streams. Read on to discover how this unlikely partnership could benefit both parties exponentially in the long run.
What does TeamViewer do?
TeamViewer uses video conferencing, remote IT support, and the Internet of Things (IoT) to support customers. Its offering to individuals is free, but it makes money on its subscription-based Software as a Service (Saas) enterprise product.
An example where TeamViewer is used in an enterprise setting could be in the process of a Frontline remote expert taking part in an augmented reality (AR) medical treatment, using xAssist to guide the clinical staff correctly through the procedure using smart glasses.
TeamViewer’s Frontline also includes xPick, which is used for logistics and order picking, xMake is used in assembly lines and manufacturing and xInspect is used in maintenance, service and inspection. Meanwhile, TeamViewer Tensor is an enterprise remote connectivity cloud platform.
When TeamViewer first went public its core profits were close to doubling and it was growing its margins. The pandemic has brought new and unexpected business to TeamViewer’s door. Many organisations forced into unforeseen home-working had to jump on tech solutions. TeamViewer’s Tensor became a possible answer for internal support in the financial services sector thanks to its stringent security standards.
TeamViewer went public via initial public offering (IPO) in 2019. It’s now one of Europe’s biggest technology stocks.
It went public at just over €24 a share, today it trades around €37. After the March market crash last year, the TeamViewer share price rose 98% to a high of €51.48 in June but since then it’s fluctuated lower.
The company has a €7 billion market cap, forward price-to-earnings ratio of 39.3 and no dividend. Its sales estimates for the coming years are €556.22 million for FY2021, €713.17 million for FY2022 and €902.67 million for FY2023.
In its recent Q4 earnings call, the company stated it had exceeded its results for the full year. Total adjusted EBITDA came in at €261.4 million, which amounts to 48% constant currency growth.
Prior to IPO the team intended for enterprise sales to become a more significant part of the business and it can now say this is true. Q4 became its strongest enterprise quarter marking 12% of the billings for fiscal year 2020.
The company doesn’t expect its growth rate to keep pace with 2020 as it grew significantly from €17 million to €53 million in one year. However, it has room for further growth in the Americas.
Recent acquisitions include Ubimax and Xaleon, which it believes will help the enterprise business to outgrow the rest of the business.
The company operates in a variety of sectors and therefore has considerable competition. Microsoft (NASDAQ:MSFT) Skype and Teams, Zoom (NASDAQ:ZM) and Slack (NYSE:WORK) are competitors.
BeyondTrust and LogMeIn are its rivals in the remote connectivity space. Citrix (NASDAQ: CTXS) and countless others are VPN competitors, while SolarWinds (NYSE: SWI), Kaseya, and ConnectWise provide remote monitoring solutions. Microsoft Azure and Amazon (NASDAQ: AMZN) Web Services compete in cloud offerings.
The company really needs to concentrate on further growing its revenue and profits if it wants to increase shareholder sentiment and raise the share price.
Searching for a sponsor
It’s not just the pandemic that’s created tough times for sports teams seeking sponsorship deals. In the past tobacco, alcohol and gambling were the sponsors of choice as they aligned with fans interests and were a great way to reach an extensive audience.
But in recent years regulatory restrictions have made these kinds of deals difficult or impossible. This has reduced the likelihood of the club achieving big money for sponsorship deals. Airlines were another popular sponsor, but they’ve had their earnings upended by Covid-19, again making them an unlikely candidate.
Some reports show that Manchester United has been looking to replace Chevrolet for close to two years. So to have finally found a match will be a big relief to the team. Having hit upon such a unique new partner, could prove it’s been well worth the wait.
How will Manchester United help boost company coffers?
At £47m per season, this equates to the biggest shirt only deal in the Premier League. However, it’s significantly less than the team were reportedly hoping for. Prior to the announcement speculators expected around £70 million a season. The collaboration will begin in July 2021, with TeamViewer the Official Shirt Partner of Manchester United.
While TeamViewer is to be the main club sponsor and will appear on the team shirt on match days, the club is also still seeking a new training kit sponsor. Which industry this sponsor will be from is unknown, but it means the club may well achieve over £70 million per season in time.
In comparison, Liverpool has a training kit deal in place with AXA, which is a three-year-deal worth £20 million.
It’s estimated that the pandemic has cost the club around £100 million in income. If Manchester United do well in future tournaments, such as the Champions League, then they will be in line for a far bigger revenue stream. This in turn would lead to far greater exposure to TeamViewer on an international scale.
Integrating the fanbase with the ultimate match experience
But the TeamViewer deal does not hinge solely on fronting the team kit. For TeamViewer will also be powering many parts of the Manchester United setup, integrating the relationship between team and fans to another level.
“Through Augmented Reality, TeamViewer will enable the club to bring its fans even closer to their team and players. Old Trafford will be upgraded with state-of-the-art industrial IoT solutions.”
Besides this, Manchester United’s club locations will be enhanced with remote access and support solutions to allow the club to monitor, track and protect connected devices. This will be a showcase for modern digital innovation in sports. It could also be the start of something bigger if other clubs want to follow suit.
When a brand becomes a verb
Microsoft Teams and Skype were dominating the video call space until the pandemic came along. Then Zoom appeared from nowhere and we hear ‘let’s Zoom’ rather than ‘let’s Skype’. But not just literally referencing Zoom’s product, now people everywhere refer to video conferencing in general as zooming, no matter which conferencing tool they’re using.
That must be frustrating for Microsoft and Google developers. But it’s hardly a new phenomenon. The word ‘Google’ transitioned into a verb for online search and ‘Hoover’ famously became the universal word for vacuuming. What it does stand for is success. A widespread acceptance and awareness of your product, which is what every brand is striving for.
So, could this be the game plan TeamViewer has in play with its Manchester United sponsorship deal? It could well be. It’s certainly a pretty great place to start.
A symbol of success
The club has the biggest fan base in the world and they’re incredibly loyal too. If fans discover they like the integration TeamViewer can bring to the fan/team experience, then this could be a gamechanger for immersing fans in the ultimate football experience while also exponentially boosting TeamViewers mass appeal and market cap potential.
For TeamViewer, increasing sales revenue and profitability is clearly the end goal.
People relate to things that encompass what they like, so by associating with something popular, the popularity can rub off. If TeamViewer builds up a strong association with the Manchester United football team and its fans can use its products or services in some way, they’ll be more inclined to want to because in the fans mind, the name TeamViewer will conjure images of their favourite football team.
Think about Red Bull, that brand would never have the mass consumer awareness and recognition it has today if it wasn’t for team sponsorship. Over the years its cultivated highly successful sponsorship deals with Formula 1, Football, Rallycross Racing, Ice Hockey, Sailing, Skateboarding and Mountain Biking.
Networking opportunities galore
But it’s not simply about the fans. Manchester United has a massive business to business (B2B) network. Throughout each season, TeamViewer could potentially build partnerships and cultivate sales opportunities through networking along the way. Then of course there are all the competing teams that may also want a piece of the action.Will this deal boost TeamViewer’s investment case?
An Adobe image for Manchester United
Whether sponsoring Manchester United boosts TeamViewers investment case very much depends on how successful the club are in the coming years.
Sponsoring the team, gives TeamViewer global exposure, which could effectively lead to an increase in business. Manchester United reportedly has a community of 1.1 billion fans and followers. That’s an extensive reach with explosive possibilities.
However, the team hasn’t been doing so well of late. Covid-19 decimated its earnings, with Old Trafford empty of fans. Plus, it crashed out of the Champions League, which has cost it money. It has the Europa League, quarter-finals to look forward to and TeamViewer will be hoping for success.
Manchester United managing director Richard Arnold said:
“We are tremendously proud to be establishing this partnership with one of the most exciting and dynamic global software companies. We are looking forward to working with TeamViewer to bring to life our vision for a partnership built on smarter ways of connecting people and businesses.”
Meanwhile, TeamViewer chief executive Oliver Steil commented:
“We are very excited about this partnership, as it will significantly expand our brand positioning and it will help us to market our comprehensive solutions portfolio to all customer segments globally.”
If Manchester United bounces back with renewed vigour, winning the Europa League and bigger and better events, then this could lead to much more exposure for TeamViewer and its investment could pay off handsomely. In that case they could be getting a very good deal, on their investment, but it really comes down to how well the club performs in time.
Embracing Augmented Reality
Back in October last year, Manchester United announced it was launching a TikTok channel to pioneer its use of Augmented Reality by creating channel-exclusive content.
This includes behind-the-scenes stories, #challenges, stadium takeovers and other brand collaborations at televised matches. Via this TikTok channel fans can also see short-form video clips of the first team squad, Under-23s and Women’s players, all from a never-before-seen perspective.
This is helping the club stay relevant and up to date in the eyes of a younger generation of global fans. But this partnership with TeamViewer could take Augmented Reality to a whole other level. By bringing fans ever closer to the team they love through ground-breaking AR solutions and remote access to the club.
TeamViewer’s upskill offering could result in fans enjoying the ‘theatre of dreams’ experience, watching the game from the manager’s dugout or from the executive boxes, all whilst sitting elsewhere. With AR, the possibilities are endless, particularly when considering the size and reach of Manchester United.
Exploring new revenue streams
Another potential suggestion is utilising a subscription model to bring a regular revenue to the club while providing added value to committed fans.
TeamViewer kit could transport fans to sit in on the club’s monthly press conference with the manager right there talking directly to them. Or immersed on the training ground taking part in the action.
Manchester United has always been streets ahead of other sports teams when it comes to maximising its revenue. If they pull this off as the ultimate in fan enjoyment this could be a pivotal moment in the teams profit making potential.
The club has a huge fan base in places like China, so if it can bring this immersive experience to far flung parts of the planet the result could be revolutionary.
It’s one thing getting consumers to buy memorabilia for gifts, pleasure and investment, but getting fans to commit to paying a regular subscription fee may not be quite so easy.
Nevertheless, the possibilities really are endless. With a full team of celebrities at its disposal, the club has a multitude of revenue spinning opportunities to explore and it gives TeamViewer a doorway in for such endless collaborations too. For instance, it could woo new clients by having Marcus Rashford head up a meeting.
At the end of the day, if TeamViewer can boost its future sales through this collaboration, in turn it will grow its market cap. Then indeed it will be money very well spent.