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Brand Match

FT Wealth, December 06, 2013

By By Hesham Zakai

“I don’t have it, I don’t have it. Have you got my watch? I don’t have my watch.”

Andy Murray’s first words after beating Novak Djokovic in the 2012 US Open final – ending Britain’s painful 76-year wait for a male Grand Slam singles tennis champion – were a little underwhelming, even by his restrained standards.
But this was no ordinary timepiece he was scrambling around for – it was his $4,000 D-Star Automatic Chronograph made by sponsor Rado.

Both he and the Swiss brand would have been relieved Murray found it in time to slip on his wrist before lifting the trophy. Murray fulfilled his obligations and Rado secured the pictures in the press it had dreamed of when tying the player down to a reported multimillion-pound endorsement contract.

This type of product placement has taken on a greater role in the sports arena, reflecting a wider trend in the sport sponsorship industry where exclusivity and luxury are critical.

Murray’s rival Rafael Nadal brought his own slant to the idea that “time is money” when he struck a sponsorship deal with luxury watchmaker Richard Mille that typifies this evolution in sport star-sponsor relations.

The Spanish tennis world number one worked with the company to create a limited edition tourbillon timepiece: the RM27-01. Made from titanium and a lithium alloy used in aerospace and Formula One, it weighs just 18g – so light that Nadal wears it while playing.

“Sponsors are looking at athletes and asking themselves, ‘How can we stand out? How can we structure a deal so that it is not just writing a cheque but more of a relationship with the athlete?’” says Jim Andrews, content director at IEG, a global sponsorship consultancy based in Chicago. “It is important to present something that is going to capture the imagination of the media and consumers.”

The RM27 has certainly fulfilled the second aim: the first version of the watch sold out, and sales of the $690,000 limited second edition are reported to be strong.

Richard Mille, the French owner of the eponymous company, is delighted at the effect Nadal wearing the watch on court has had. “[The public sees] that this is a watch that can go into battle,” he says.

Simon Rines, founder of International Marketing Reports, a sports marketing analyst and publisher, says that when executed correctly, the luxury endorsement avenue can provide good value for sponsors. “The deal with Richard Mille appears to be a payment in-kind: the $690,000 watch. Typically, an individual of Nadal’s stature would be demanding $1.5m-$4.5m per endorsement,” he says.

Buying a luxury watch has always been an expensive undertaking, even for wealthy individuals. Lesa Ukman, co-founder of IEG, believes watches have also benefited from recent technological developments. In an age in which mobile phones are ubiquitous, the primary role of watches – telling the time accurately – has diminished. The luxury end of the watch market has become “more image-intense than ever”, Ukman explains. “The decision to buy and wear a luxury watch, especially for men with limited clothing and jewellery choices, is a statement.”

The US Open tennis itself is a world of luxury brands. The silver trophies given to winners are handcrafted over a period of five months by jeweller Tiffany & Co, which also sponsors the event. Ralph Lauren, the tournament’s official apparel sponsor, designs all the clothing worn by on-court staff. Carmaker Mercedes-Benz supplies the official vehicles for the tournament and transports the players, special guests and VIPs in a fleet of limousines and sports utility vehicles. Champagne house Moët & Chandon is also a US Open sponsor.

Research by Kantar Media, the media analysis and research company, illustrates why the luxury sector sees certain sports as a good investment. Kantar found that in the UK, approximately one in four people earning more than £100,000 a year watched the US Masters, one of the major golf championships, compared with just one in 10 earning less than £30,000.

Richard Brinkman, global head of sports at Kantar, says such data should not be taken in isolation. “While certain sports and events offer sponsors a natural platform to reach a luxury market, they also need athletes with the charisma to take advantage of it or, in sports with a relatively poorer demographic following, transcend it,” he says.

These trends have not supplanted the ever-growing sponsorship sums from sports equipment makers themselves, especially for particularly charismatic individuals. Golfer Rory McIlroy, for example, this year signed a 10-year deal with Nike thought to be worth $250m. His brand stablemate, footballer Cristiano Ronaldo, is being paid $9m a year to sport such designs as Nike’s CR7 Mercurial Vapor IX signature boot, whose design features a print of the vela supernova – exclusivity that is “out of this world”.