What Wimbledon tells us about the power of global brands

SW19. When a humble postcode gains global currency thanks to a sporting fixture, you know it’s truly captured the world’s imagination.

Founded in 1868 as The All England Croquet Club, Wimbledon hosted its first tennis tournament in 1877 – a men’s singles-only competition for which the organisers had modest expectations.

The three wooden planks that had been provided for spectators proved wildly inadequate for the 200 attendees, offering a clue that tennis would rapidly gain a vast following. Wimbledon local Spencer Gore won the inaugural championship, despite admitting he was more of a cricket man at heart.

Going global

You won’t be surprised to learn that a lot has changed in the intervening years. Today, Wimbledon is widely regarded as the most prestigious event in the tennis calendar, and it has financial significance to match. The prize purse for the 2024 championship is £50 million, and the boost to London’s economy has been estimated at £200 million.¹

The championship also provides an analogy for the outsized financial influence of the City. The ‘Wimbledon Effect’² describes the phenomenon where an institution can be highly successful despite a lack of strong native competition.

Just as very few Britons have won Wimbledon (since the ‘open era’ that allowed professionals to compete, only Anne Jones, Virginia Wade and Andy Murray have lifted the cup), domestic companies are dwarfed by foreign giants in London’s financial markets.

Sponsors in the spotlight

Just like the prizes for the winning players, the logistical costs of putting on a global sporting event like Wimbledon are huge. Sponsorship is therefore crucial in balancing the books, enabling the tournament to run year after year.

The sporting and cultural significance of the event has led to long-term sponsorship deals that go beyond simple display advertising and instead aim to create a sentimental link between the sponsor’s products and the tournament. Here are just a few of the regulars:

• IBM* – technology partner for more than 30 years, brings innovation to the entire digital operations ecosystem
• American Express* – new payments partner, offers an ‘upgraded experience’, where card members can access onsite benefits and experiences and can access the hospitality presale
• Pimm’s (owned by Diageo*) – a good example of the sentimental link mentioned above, the brand’s ‘Pimm’s O’ Clock’ slogan capitalises on the ‘quintessentially British’ associations of the tournament
• Evian (Danone*) – for something as commoditised as water, the association with a major sporting event is crucial in creating a powerful and widely recognised brand

Of course, it’s not only the tournament organisers that benefit from lucrative sponsorship deals. Companies also sponsor the players to the tune of millions of dollars, with Roger Federer’s endorsement portfolio worth an estimated $95 million, making him the world’s highest-paid athlete in 2023.³

Carlos Alcaraz, last year’s winner, is believed to have secured his first sponsor, Rolex*, aged 10. He has since won sponsorships with BMW* and Louis Vuitton*.

Although it might appear like one-way traffic with brands piggy-backing on the popularity of sports stars in exchange for cash, the reality can be more nuanced. As well as top-of-the-line sports equipment, sponsorships can provide athletes with access to elite training facilities and support staff. Their association with highly regarded brands can also lead to additional opportunities and support their reputation as a top-flight player – Serena Williams’ longstanding proximity to Nike* is just one such example.

A virtuous circle

A strong brand can add significant intangible value to a company, allowing it to increase sales volumes, margins, or both.

Brand equity isn’t only important for the consumer discretionary and luxury sectors. IBM, American Express, Diageo and Danone are all heavily invested in their brands as something that sets them apart from the competition, whether that’s in the bottled water industry or the computer hardware sector. According to BrandFinance®’s Global 500 2024 ranking⁴ of the aggregate value of the brands they own, IBM takes 71^st place globally, American Express 42^nd, while Diageo and Danone are both within the top 100.

When sponsorship is successful it can lead to a virtuous circle where a top brand attracts talent and financial success, and vice-versa. As we have seen in the Wimbledon example, this value creation can extend far beyond the perimeter fence, potentially providing an economic boost to an entire city.

As you enjoy this week’s matches, you’ll be witnessing not only the pinnacle of competitive tennis, but also the successful collaboration of individual sporting excellence and the world’s most valuable brands.

*For illustrative purposes only. Reference to a particular security is on a historic basis and does not mean that the security is currently held or will be held within an LGIM portfolio. The above information does not constitute a recommendation to buy or sell any security.

1. Source: https://www.standard.co.uk/news/london/wimbledon-london-economy-boost-britain-biggest-sporting-earner-tennis-b1091314.html 

2. Source: https://en.wikipedia.org/wiki/Wimbledon_Effect 

3. Source: https://www.forbes.com/profile/roger-federer/?sh=476bb15e14ba&trk=article-ssr-frontend-pulse_little-text-block 

4. Source: https://brandfinance.com/insights/global-500-2024-report