Aon Aims To Increase Global Goals with Man U Sponsorship

I guess it was actually announced about a year ago, but a story just last week in the Chicago Tribune revealed to me that Chicago-based insurance giant Aon will replace disgraced insurance giant AIG as the primary sponsor of English soccer behemoth Manchester United.

Although the image above is just a rendering, created by Zoran and showcased on his Football Kits Design blog, the Aon logo will become the main imprint on Man U's uniform (or "kit" as per the Brits).

Although Man U won three English Premier League championships and one Champions League title in the four years of AIG's sponsorship, repercussions from revelations about AIG's derivatives trading--including its need for a $180 billion federal bailout--precluded the New York-based insurer from renewing its agreement.

After Manchester United--itself embroiled in a bit of controversy ever since American billionaire and Tampa Bay Buccaneers owner Malcolm Glazer bought the team in 2005--sent out a sales pitch to possible successors, Aon, led by CEO Greg Case, decided to pony up $80 million for the 4-year rights (the Tribune article says $80 million, but this Telegraph article from June 2009 says 80 million British Pounds, which today equals about $116 million).

If this isn't the largest soccer shirt deal ever, it's certainly well up there. Though it sure sounds like a lot of money in the midst of a recession, according to the Tribune's Greg Burns, Aon had both the money and incentive. "Having jettisoned low-margin underwriting for more profitable reinsurance, the company wants global clients to view it as a broad-based professional-services consultancy."

I won't pretend to know much about the global insurance industry, or English soccer for that matter, but it seems like a pretty good investment to me. Consider these factoids, from the Tribune article, the Telegraph article and an Aon website about the new partnership, which officially begins on June 1 although the new jersey won't debut until after the World Cup ends in July:

• Manchester United is the #1 brand in the #1 sport in the world
• 333 million fans worldwide follow Manchester United, which claims to have 6 times more fans in India than the UK
• The Manchester United web site has 60 million web page impressions per month — 70% outside of UK 
• In 2009, Man U sold more than triple the sales of all NFL jerseys combines
• Approximately 6.6 million Man U shirts are sold each year (official/non-official).
• After one year's sponsorship of Manchester United, the AIG brand was entered as the 47th most recognized brand in a survey of globally recognized brands
• AIG then jumped from 84 to 30 on Barron's most respected list

So not only does Aon get its logo seen by millions of "football" fans worldwide, they also get over 6 million "walking billboards." Yes, the expense seems a bit daring, but the exposure should be tremendous.

For a company that made $7.5 billion dollars last year (ranking #298 on the Fortune 500), but has considerable room to grow, putting itself top of mind--and front of chest--to Man U, its millions of supporters and myriad other observers seems like a shrewd way to get a real worldwide "kick."

Netflix Presents A Rosy Picture

Although the stock market had a big upswing today after last week's drastic decline, it's still not an idyllic time to quote any company's stock price.

For instance, after closing on Friday at $91.09 per share, Netflix (NFLX) rose over $6 today to $97.50. But just two weeks ago, on April 26, 2010, Netflix hit $108.17 on the Nasdaq market.

So this story might have been a good deal more impressive then, but even at today's $97.50 price, its pretty eye-opening to note that at the start of 2009, Netflix was under $30 per share. Given the state of the economy over that time, that's rather phenomenal growth for a video rental company with no storefronts competing with an ever-growing spate of on-demand cable television movie watching options.

Clearly, Netflix has been doing something phenomenally right in a highly-changing industry. Just today, Movie Gallery, Inc., which operates the Hollywood Video chain, announced it is closing its remaining stores (2,400+ in the U.S.) and liquidating its operations. Meanwhile, longtime video rental behemoth Blockbuster, which has 9,000 stores in 25 countries, has been said to be contemplating bankruptcy and its stock price today is at 39 cents. This equates to a market capitalization--essentially what the company is worth to a buyer--of just under $81 million.

Netflix, with no real estate holdings except the distribution centers from which it sends out 89 million DVDs to 14 million customers (averaging 2 million DVDs sent daily) has a market cap over $5 billion based on today's stock price. By that measure, Netflix is 60 times bigger than Blockbuster, even though its total revenue for 2009 was more than $2 billion less.

While through-the-mail delivery of physical DVDs (including hi-definition Blu-Ray discs) is still the core of Netflix' business, and CEO Reed Hastings recently forecast that this distribution system--which enables customers to receive their chosen discs within 1-2 business days--will remain in place for another 20 years, from my layman's perspective, it is through its burgeoning selection of movies available for instant streaming that Netflix is really poised to take over the world.

Who needs HBO, Showtime, Starz or Cinemax? Not me anymore. 

Although I have long been a huge movie buff and happy to slowly-but-surely jump on most new technology bandwagons, I only became a Netflix customer this January, about 10 years after its DVDs-by-Mail concept hit the mainstream.

Given that I own nearly 1,000 DVDs, including more than a few that I still haven't watched, and can rent for free from my local library's extensive selection and for just $1 per night from RedBox--which has also led to the downfall of Hollywood Video, most Mom & Pop video stores and the crippling of Blockbuster, which charges over $4 per rental at its retail outlets--I never could justify paying Netflix' base $8.99 monthly fee to have 1 movie out at a time.

While Netflix' instant streaming has become more widespread--both in customer use and movie selection--I've never enjoyed watching movies or TV shows on my PC, so that never really abetted my inclination to try Netflix. But in January, I bought a Blu-Ray player (this one), which beyond the ability to watch HD movies (not such a priority), has enabled me to stream Netflix through it. In my living room, I have the cable box and Blu-Ray connected to a projector rather than a TV, making for a low-rent home cinema that allows me to watch television on my wall.

Although far from Blu-Ray quality and likely not even quite as good as a standard DVD, the resolution of Netflix streaming is more than adequate even when viewed at over 100 diagonal inches, as the photo below should illustrate.

What the photo also is meant to illustrate is that I recently watched a little-known movie from 2006 called The Wind That Shakes The Barley. The day before, a couple of friends were talking about a  British film director named Ken Loach. I had never heard of him, but after looking him up on IMDB and AllMovie.com found that Netflix had 10 of his movies that I could get mailed to me, and one of his most recent and best reviewed films available to watch instantly. So I watched it the next day and it was excellent.

I believe Netflix has over 17,000 titles available for instant streaming--out of a total selection of over 100,000 movies & TV shows--which can be accessed through a computer, Blu-Ray players of many makes & models and XBox 360, PlayStation 3 & Wii gaming systems. Always growing, including through an arrangement with Starz, this selection is tremendously greater than any options offered on-demand by the premium cable channels.

So with my cable plan coming due for a price increase--after the expiration of a special promotion for a package including HBO, Showtime, Starz and Cinemax--not only did I realize that I was now doing the bulk of my at-home movie watching via Netflix, both streaming & by mail, but I took note of all the movies currently available through Comcast On-Demand that I might want to watch. There were only about 20 and all but one of them is also available via Netflix streaming. So I watched the one that wasn't--Body of Lies, which I could've gotten by mail and wasn't that great anyhow--and canceled all my movie channels.

This took $70/month off what my cable bill would've been going forward. For Netflix, I pay $10.99/month as I pay $2/month to be able to get Blu-Ray movies by mail. Tons more selection for $59 less each month seems like a pretty good deal to me.

Though I know many people enjoy the original TV series offered by the premium channels--such as True Blood, Weeds, Dexter, The Wire, etc.--I've never really gotten into any except HBO's Curb Your Enthusiasm, and past seasons of most of these shows can be rented on DVD through Netflix, with several old episodes available to be watched instantly.

So it seems obvious that Netflix bears watching, even if only from an economic standpoint. Not only has it destroyed Blockbuster and its brethren, it relatively soon might render HBO, Showtime, etc., largely obsolete. I wouldn't even be shocked if Netflix eventually gets into developing its own TV series and low-budget movies, although there might be prohibitive rights restrictions and business reasons not to do so.

What Netflix has done in little over 10 years--and its distribution methodology, consumer marketing and customer service are all textbook caseworthy--is rather amazing, but I think it might only just be getting started. And it sure sounds like a success story for which someone should buy the movie rights.