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Neymar transfer is PSG brand’s first-class ticket to China

04 August 2017
This article is more than 3 years old.

• New market research study suggests Neymar can help PSG brand grow in China

• Neymar is the 3rd most popular footballer in China after Ronaldo and Messi

• Only 1% of Chinese fans place PSG among favourite clubs, showing potential for growth

In Brand Finance’s recently released market research study: Understanding Chinese Football Fans, Neymar was identified as the 3rd most popular player in the country, with 20% of fans identifying him among their favourite players. This number is likely to rise following the media interest that Neymar’s record-breaking transfer from Barcelona to PSG has generated. Currently, only 1% of Chinese fans place PSG within their top 5 teams, which evidences the club’s potential for growth in this key market. English, Spanish, and German clubs like Manchester United, Real Madrid, and Bayern Munich have led the way in successful market entries as their popularity and revenues in China continue to increase. However, the French Ligue 1 remains relatively unknown in the country, with only 46% of Chinese fans aware of the league and 23% having watched a game (compared to 83% and 66% for Premier League).

Finn Dowley, Sports Analyst at Brand Finance, commented: “Building on the worldwide media interest generated by the transfer, PSG can use Neymar’s popularity to promote the club internationally. The Brazilian’s native South America is an obvious choice, but PSG should not ignore China, football’s biggest growth market. Neymar’s popularity in the country can help leverage PSG’s brand. The player’s high-profile visit to Shanghai earlier this week on a promotional tour proves his commercial value in China.”

With a brand value of US$1.011 billion, PSG is currently ranked 7th in the Brand Finance Football 50 league table. Neymar’s transfer should bring an increase in merchandise sales and new opportunities for sponsorship deals. Furthermore, with the addition of Brazil’s biggest star, PSG will hope to achieve its ultimate goal of Champions League success and the resulting commercial benefits would further boost the club’s brand value.

Finn Dowley added: “The Qatari investment in PSG has been monumental, propelling the club to the global top 10 in terms of brand value. Neymar’s transfer could be the landmark move that sees the club cement its status as a global heavyweight, both from a sporting and a brand perspective.”

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Konrad Jagodzinski
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Brand Finance
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Associate Communications Director
Brand Finance

About Brand Finance

Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations of all kinds make strategic decisions.

Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes nearly 100 reports which rank brands across all sectors and countries.

Brand Finance is a regulated accountancy firm, leading the standardisation of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671, and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.

Methodology

Definition of Brand

Brand is defined as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services, or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.

Brand Strength

Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.

Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.

Brand Valuation Approach

Brand Finance calculates the values of brands in its rankings using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.

The steps in this process are as follows:

1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity, and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.

2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, while in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.

3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.

4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.

5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.

6 Apply the royalty rate to the forecast revenues to derive brand revenues.

7 Discount post-tax brand revenues to a net present value which equals the brand value.

Disclaimer

Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.

The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.

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