The PB Interview: Grahame Chilton: Global visibility

As I acknowledged the receipt of a Manchester United shirt from Aon, the US in-house public relations person beamed to me "wear it with pride", rather blind to the vagaries of supporting English soccerball teams.

Cultural misunderstandings aside, the Aon-Manchester United campaign has been successful so far. Within Aon, the company has been pulling together under its slogan 'We are united', with Grahame Chilton assuring me that staff of all allegiances queued up for their Red Devils shirts: each employee was given one free.

Some would argue that Manchester United's fans are far less united, given the stance of the green and gold movement against the Glazers' controversial ownership of the club, particularly concerning debts.

The Glazers might consider the reaction of the green and gold movement as galling given the recent successes of the club: winning the UEFA Champions League in 2008; reaching the following year's final; and taking the Premier League title three times in a row between 2006-7 and 2008-9. Debt concerns for the red half of Manchester also come at a sensitive time, with local rivals Manchester City enjoying seemingly unlimited finances from Sheikh Mansour's Abu Dhabi investment house. However, Manchester United still remains the most valuable football club according to Forbes, which values it at £1.19bn (Real Madrid were second and Arsenal third).

Sponsoring the biggest football club in the world is not cheap: Aon paid £80m for four years, of which over £35m was paid upfront, making it one of the largest football sponsorship deals of its kind and propelling Aon into the global marketing limelight. Although Manchester United has several other sponsorship agreements with the likes of Nike, Hi Seoul, Hublot watches and Betfair, only Aon is on the shirt. Two statistics demonstrate the effectiveness of the coverage that shirt sponsorship generates: Manchester United sell over 6.5 million shirts each year and the football club reportedly have 300 million supporters.

Intriguingly, the office where I meet Chilton also houses Brit, which has recently upgraded its cricket sponsorship to cover the England national team, showing how insurance is becoming one of the dominant forces in UK sports marketing. Recent link-ups with Premiership Rugby by QBE and Aviva are further evidence of this trend. There are also many brokers sponsoring football and rugby teams across the country: sports and business are inextricably linked.

Pensions
The Aon-Manchester United deal was criticised for its timing - the company reduced pension benefits for its staff at the same time as negotiating the deal with the football club. In April 2009, the UK arm of the company capped its pension contribution for new staff at 6%, compared to a possible rising scale reaching 12% for older staff. The blow was softened, with Aon agreeing to increase its offering if staff placed more money in the scheme themselves, yet in order to gain the full 12%, staff would have to put in 8% of their salary whereas before only 2% was necessary. There were also a large number of job losses and office closures as the broker adjusted to the recession.

Then, much to the surprise of the broking world, after the latest reduction in pension benefits, Manchester United signed the most lucrative football sponsorship in history: more than Bwin at Real Madrid or T-Home at Bayern Munich and almost double Samsung's annual fee to Chelsea. Chilton defends the approach: "Our chief executive officer, Greg Case, needs to run the firm as efficiently as possible. Growing the group and keeping costs under control are two different sides of the equation." He adds: "These are tough decisions but we must build at the right margins."

The thinking behind the Manchester United deal is Aon's global reach. Generating revenue of $7.6bn in 2009, the broker has 36,000 staff in over 120 countries and, as the Fifa World Cup in South Africa showed this year, football is still the one sport that can unite nations. Manchester United is a club that has embraced its global potential with full force, as seen in recent pre-season tours to Asia and the US. In summer 2009, Manchester United travelled through China, South Korea, Indonesia and Malaysia in under two weeks. The club is prepared to put in the effort to capitalise on its presence in these markets, places Aon also sees as emerging for its insurance and reinsurance businesses.

South America too is a fast-growing market. Aon is prioritising growth in Brazil, one of the rapidly expanding, newly advanced Bric countries. Last year, Aon's sales grew 19% in the territory.

Aon is replacing another insurance giant on the shirt, albeit one that has since been humbled by failure and become a tainted brand. So was this a coincidence that one of AIG's key partners over the years became the next sponsor? Chilton says: "This was independent of AIG. Not many of our buyers understand our power or reach and we wanted to unify our brand at an external and internal level." He adds: "Our industry has been rubbish at what we are doing and has relied too much on the carriers."

Despite such huge spending, will the general public understand what Aon does? Surely Aon will have to spend additional millions to explain to potential customers what services it provides? Chilton appears relaxed about this, arguing that television advertising did not work for a competitor in the US and that the Manchester United deal to a large extent "does what we need it to do".

Ideal juncture
Chilton believes that the sponsorship itself will raise public thirst for knowledge about the company and insists that now is the "perfect time to do it", adding that the company has never found a more attractive opportunity. Aon has been pleased with the number of website hits that can be tracked directly from the sponsorship. AIG's previous sponsorship helped it chart in the top-100 brands and Aon will no doubt hope for similar results. He doesn't rule out further marketing campaigns but it appears that the vast majority of the marketing budget is already tied up in the Manchester United deal.

Chilton is keen to emphasise the broker's charity links with hundreds of schools, children's hospitals, orphanages and community centres, as well as organisations such as the Special Olympics, Unicef, United Way and the YMCA. Aon offices around the world have teamed up with local charities to help local causes such as the House of Hope orphanage in Botswana. They are also working with football skill centres, emphasising 'thrills and skills' for youngsters, in 10 areas of the world.

Several months since the sponsorship deal kicked in, Chilton is satisfied with its progress and, despite some industry figures' concerns that some football clubs do not treat their partners with the greatest of respect, he has no qualms with Manchester United's attitude. He says: "The logo stands out well and we are utilising the facilities. There are also unexpected benefits such as tertiary exposure, with Sky advertising its high-definition service by using Manchester United players. We have already reached the top five or six brands in sports marketing, with three out of the top five on football shirts." The new kit with Aon logo, only the fourth brand to adorn the shirt, was launched to great fanfare in Niketown Chicago this summer, with CEO Case in attendance.

Chilton insists that Aon wants to compete in the UK with regional brokers for mid-sized customers by offering a "different world of ability". He also wants the company to compete harder for small and medium-sized enterprise business and says that the acquisition of classic car specialist Footman James in January 2007 has reaped dividends.

Potential
Chilton is intrigued by the insurance implications of the Deepwater Horizon oil spill and how this could raise awareness of issues around the limitations of self-insurance; he believes it could lead to more interest in Aon's services from some large worldwide corporations. The group, though, does far more than broking: it has just bought human resources specialist Hewitt Associates for $4.9bn in a mixture of cash and shares, while in the US it is tripling the size of its consulting arm. The acquisition is part of an attempt to catch arch-rival Marsh and McLellan, which is larger because of its consulting arm.

There are two ways of looking at Aon's sponsorship of Manchester United. One view is of a huge amount of money spent in a recession, given to a football club at which many of its supporters are unhappy with its ownership. Another side to the argument is £80m spent to create countless marketing opportunities to generate interest in Aon that would have been impossible without such a bold move. Only time will tell, though the early signs are promising. Over to Wayne Rooney and the rest on the pitch to give the deal enhanced value. One thing is for sure, the world of insurance broking marketing will never be the same again.

Grahame Chilton
Grahame Chilton was chief executive officer at Benfield until it was bought by Aon for £935m, including £90m or debt. Chilton landed £76m for his 10.4% stake after he led a management buyout with John Coldman, former chairman, and the late Matthew Harding (who was also vice-chairman of Chelsea) in 1988. Floating on the london Stock Exchange in 2003 valued the firm at £574m. Following Benfield's acquisition by Aon, Chilton became vice-chairman of Aon Group, focused on strategy, marketing ad client development. He describes the deal as "industry changing". Benfield had a 50% holding in sports marketing company Benfield  Sports International until July 2004.

Insurance sports marketing
2009 - Aon sponsors Manchester Uniter for four eyars for £20m a season
2009 - QBE becomes official insurance partner to Premiership Rugby and, in 2010, becomes a partner to the Rugby Football Union
2009 - Amlin sponsors all rugby union on Sky Sports and the Amlin Challenge Cup, which is played across six European countries. In 2010, it becomes official sponsor of the Essex county cricket team
2010 - Brit replaces Vodafone as the official sponsor of the England cricket team.

Source: Professional Broking - September 2010