After GM Fires Marketing Chief, Can It Capitalize On Costly Manchester United Deal?

on July 31 2012 4:52 PM
Manchester United 2012/13 away kit
GM will be sponsoring the Manchester United kit in the 2014 season. manutd.com

The global marketing chief for General Motors Co. (NYSE: GM) was ousted because of an expensive, poorly negotiated deal with Manchester United, the world's most popular soccer club, according to a report.

Marketing chief Joel Ewanick was fired on Sunday for improperly vetting a deal with Manchester United that could cost the automaker as much as $600 million over the next seven years. The deal is expected to cost between $60 million and $70 million and comes with a $100 million activation fee, according to Reuters.

That is double the price that insurance broker Aon Plc had been paying for its deal that runs through the 2013-14 season. Aon will continue a partnership with the team beyond when its jersey deal runs out.

GM Spokesman Greg Martin told The Wall Street Journal that Ewanick "failed to meet the expectations the company has of its employees." Alan Batey, vice president of U.S. sales and service, will replace Ewanick.  

The 52-year-old Ewanick joined GM in 2010 as a marketing wunderkind after boosting sales at Hyundai through a buyback program in 2009. His success at Hyundai led him to one of the most powerful positions at GM, where he made a series of interesting decisions.

He spearheaded the "Chevy runs deep" advertisements, voiced by actor Tim Allen, that were generally panned during the 2010 World Series. He also decided to cut the company's Facebook and Super Bowl advertisement budgets -- an estimated saving of $20 million of the company's $4.5 billion global advertisement budget.

His bold decisions were expected to revolutionize a slugging company, but seemed to create more enemies than friends in his efforts. Reuters reported an unnamed former GM executive told the news outlet he was sent an email about Ewanick's departure entitled, "Ding Dong, the witch is dead."

But it was his deal with Manchester United that is the believed cause of his dismissal. Ewanick was trying to tap into Manchester United's estimated 659 million fans around the world through their popular jersey kits, in hopes of boosting Chevrolet's popularity worldwide, but might have overpaid in the deal.

"Joel was good for shaking up the staid GM marketing function and he made a real positive difference in just two years, but this episode, whatever it turns out to be, has tarnished his reputation overnight," Peter DeLorenzo, editor-in-chief of auto website Autoextremist.com, told Reuters.

Eric Smallwood, the senior vice president at Front Row Marketing Services, believes GM needs to be getting more than just its logo on the front of Manchester United's jerseys if it wants to get full value from its investment. That could mean rights to use images in advertisements or perhaps signage within Old Trafford, the team's stadium.

"There has to be more to it -- if you are paying 60 million -- there has to be more," Smallwood said about GM's deal to become the new jersey kit sponsor.  "I'd be hoping they'd get more value than just the kit."

He believes that the deal makes sense if there is more along with the jersey sales, given Manchester United's incredible popularity throughout Europe and Asia, but it is impossible to know what kind of return on investment GM can get without knowing the specifics of the deal.

It is also impossible to know whether Ewanick made a good deal until all details are known and some time passes to see the type of value GM got in the deal, but one sport marketing expert believes that it makes sense why an American automobile company would want to align itself with such a popular sports team.

"This is another step in the globalization of brands that are thought to be very American," said Joe Favorito, a lecturer at Columbia University. "This is the next step you are going to see -- American brands trying to access fans of very elite clubs.

"You come up with a partnership that's not just slapping a logo on a jersey. It's about tying your brand to them all over the world."

Favorito suggested television advertisements, social media pushes and other methods would be necessary to truly get all of the value out of a partnership with Manchester United. It will get a boost no matter what because of Manchester United's popularity, but it will need to think creatively if it wants to truly capitalize on the world's most valuable team.