* Man United jersey deal valued at as much as $600 mln
* GM: former marketing head did not meet company
* Ewanick failed to properly report details of jersey deal
By Ben Klayman
DETROIT, July 30 The ouster of General Motors
Co's global marketing chief is related to a hugely
expensive sponsorship deal with England's Manchester United
soccer club for which GM is paying twice as much as the team's
previous automotive sponsor.
On Monday, GM, the biggest U.S. automaker, announced its
Chevrolet brand would sponsor the hugely popular club's shirts
for the next seven years. The deal is worth $60 million to $70
million a year and includes a $100 million activation fee that
brings the total value to as much as $600 million, said a person
with knowledge of the contract who asked not to be identified.
By comparison, insurance broker Aon Plc pays about
$31 million a year for the current jersey sponsorship, which
runs through the 2013-2014 season.
GM did not disclose financial terms of its agreement, which
was announced the day after the Detroit company said it was
removing its global marketing chief Joel Ewanick because he
"failed to meet the expectations that the company has for its
employees." Sources told Reuters Ewanick didn't properly report
financial details about the jersey deal.
Another source said the wording of the affected deal terms
was changed before the deal was made public on Monday. The
persons requested anonymity because they are not authorized to
discuss contract details.
GM, which spent almost $4.5 billion on advertising last
year, announced another sponsorship deal with Manchester United
in May. GM said then it wanted to tap in to Manchester United's
estimated 659 million fans around the world to boost the image
of the automaker's Chevy brand, especially in Asia. GM last week
also said it signed a four-year auto sponsorship deal with
Manchester United rival Liverpool.
While GM would not discuss Ewanick's departure, some
industry officials said a deal as big as the Manchester United
sponsorship agreements would have been signed by multiple
executives. They also raised the possibility that GM simply
wanted to dump Ewanick as the automaker's U.S. market share has
declined by nearly 2 points in the first half of 2012 compared
with the year before to 18.1 percent.
"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," said Peter DeLorenzo,
Editor-in-chief of auto website Autoextremist.com.
AGENT OF CHANGE
However, sources said GM was committed to Ewanick's efforts
to shake up the automaker's image. Ewanick, 52, was named vice
president and head of GM's U.S. marketing in May 2010, about
seven months before the automaker's blockbuster initial public
offering in November of that year.
Brought in by former GM chairman Ed Whitacre, former vice
chairman Robert Lutz and current North American chief Mark
Reuss, the high-energy Ewanick was given free rein to shake up
GM's marketing, which had been perceived as stale.
The first major effort under his watch was the "Chevy Runs
Deep" campaign that launched at the start of the Major League
Baseball's World Series in 2010. Critics say the campaign has
failed to connect well with consumers.
When he was promoted to global marketing chief in December
2010, Ewanick said the move was intended to give marketing a
seat at the executive conference table and a say in planning and
budgeting for new GM vehicles.
Ewanick, who was credited with helping drive Hyundai Motor
Co's fast growth in the U.S. market, steered GM back
to sponsorship of high-profile events like the Super Bowl.
In May, he announced GM would pull its paid ads from
Facebook days before the highly anticipated initial
public stock offering for the social networking website, and
said GM would not advertise on CBS during the 2013 Super
Bowl because they were both overpriced.
Ewanick also led GM's effort to drive down the ad fees paid
to broadcast TV networks during the advanced selling season that
ended in June, said Brad Adgate, senior vice president of
research at Horizon Media. The big four U.S. TV networks
garnered single-digit increases from advertisers.
With his aggressive cost-cutting and a hyper personality
some found off-putting, Ewanick clearly made enemies. One former
GM executive, who asked not to be identified, received an email
about the marketing chief's ouster with the subject line "Ding
Dong, the witch is dead."
GM Chief Executive Dan Akerson previously said the automaker
needed to focus more on marketing.
The "Chevy Runs Deep" campaign, which features the voice of
actor Tim Allen, has aimed to focus buyers on the positive
association many Americans had with GM before the long decline
that culminated in its bankruptcy and $50 billion bailout by the
Obama administration in 2009.
In April 2010, GM's Whitacre ordered the ouster of
Campbell-Ewald, which had handled advertising for Chevy for over
90 years in favor of San Francisco-based Goodby, Silverstein &
Partners, which is owned by Omnicom Group Inc and
best-known for the "Got Milk?" ad campaign. Goodby worked with
Ewanick at Hyundai.
Campbell-Ewald created some of the most memorable
advertising campaigns in U.S. auto history for Chevrolet,
including the "Baseball, hot dogs, apple pie and Chevrolet" ads
of the 1970s and "See the USA in your Chevrolet" in the 1950s.
Industry officials said agencies that were cut may see Ewanick's
ouster as a chance to get back in the door with GM.
Earlier this year, GM announced efforts to save $2 billion
over five years by pruning the number of ad agencies it uses.
Chevrolet sold 2.48 million cars and trucks in the first six
months of the year, and the U.S. market accounted for 42 percent
of that total. GM is pushing to boost demand for the mass-market
brand in China, Brazil, Eastern Europe and other regions.
Appealing to consumers overseas was a big reason for the
sponsorship deals with Manchester United, which set terms for
its U.S. initial public offering on Monday.
The soccer club's current jersey sponsorship deal is with
Aon, which pays for the right to put its name on the front of
jerseys worn by players during games. That practice is quite
lucrative for soccer clubs around the world, but is not allowed
by most U.S. sports leagues.
In a sign of how important the size of the deal is for
Manchester United, the club revealed in its IPO filing that its
revenue fell 3 percent to 5 percent in the year just ended to
315 million to 320 million pounds ($495 million-$503 million).
Based on those figures, the annual value of the shirt deal is
about 13 percent of the club's revenue.
In May, GM announced a five-year deal with Manchester United
for what is known as its auto sponsorship in which GM replaced
Volkswagen's Audi brand. Terms of that deal were not
disclosed, but analysts said it is likely worth at least tens of
millions of dollars.
Alan Batey, GM's North American vice president of sales, was
named the interim head of GM's marketing. The automaker declined
to make him available for comment.