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Imagine you are a sunburnt tourist from the UK walking through a market on your latest holiday. Perhaps it’s the gold bazaar in Istanbul or the Chatuchak Weekend Market in Bangkok.
A fake Stone Island polo takes your fancy at one of the stalls (you work in FX/CFDs). The stallholder looks up from the TikTok video he’s been watching on his Huawei phone. He catches your eye.
“Please welcome,” he says. “Where from my friend?”
You tell him you are from the UK.
“Oooh Engel-land,” the stallholder replies. “We hear very much of your Financial Conduct Authority. Such leverage restrictions and high level of corporate oversight is thing we can only dream of in this bazaar, my friend. I for one swear only to use the broker with this regulation.”
Now imagine exactly the same scenario but this time the stallholder replies….
“Oooh Engel-land,” he says. “We like very much your Frank Lampard and Wayne Rooney. I personally am Manchester City. But this young Jude Bellingham, he is quite a player, my friend. One day Ballon d’Or perhaps will belong to him.”
I’m going to take a guess and say that the first of these scenarios has not only never happened to you but will never happen to you. If it has then please let me know.
However, even if it wasn’t in a Turkish bazaar, I would be surprised if something akin to the second scenario has not happened to you at some point in time.
I am regularly amazed at the reach and level of fanaticism that the Premier League has globally. Earlier this year I was in a bar in Vietnam, getting spammed by ThinkMarkets billboard ads during a Liverpool game. A guy I met in Ethiopia was willing to pay me 4x the cost of a Wayne Rooney England shirt if I went and got it from Wembley and shipped it to him.
In contrast, I would imagine that a sizeable proportion of the UK has not heard of the FCA, let alone someone living in Bangkok, Istanbul or anywhere else in the world.
This may seem like an odd comparison to make but, since the UK left the EU, a lot of brokers seem to be pondering whether or not it’s actually worth getting an FCA licence. In some instances this seems to be more of a marketing exercise than an actual attempt to attract clients in a highly saturated UK market.
But then you have to ask, is this worth it? The difficulty you have with answering this question is that annoyingly cliched point about half of marketing spend being wasted, you just don’t know which half it’s going to be.
The logic would work something like this. You have an FCA licence which requires initial investment + ongoing fixed costs. But does this then provide any commensurate uplift in your activity elsewhere?
In other words, would the addition of an FCA licence mean you then start being better able to acquire clients in region X, which then offsets the cost of acquiring and maintaining that licence?
“From what I see, having a UK licence can have benefits on branding and for other things, like payments,” said a regulatory consultant based in Asia. “But overall I would say clients don’t care. China is the only market where having an FCA licence seems to be a value-add for brokers at the moment.”
In contrast, one figure thrown around for Premier League total viewers is 4.7bn. To put that in perspective, the entire global population is about 8bn. So if we assume those figures are accurate, more than half of the world watches a Premier League match each year.
This can also be looked at in more granular detail. For example, for some reason Nigerians love Arsenal – maybe because of Kanu. So maybe you want to appear on their billboards if you are doing business there.
Having said that, the key question most brokers will have is whether this actually ‘activates’ clients. This is hard to know without being able to look at broker numbers. However, given that Plus500 has…
1) Sponsored firms in target markets repeatedly
2) Continues to sponsor firms in target markets, including making new agreements
…we can assume there is some benefit in doing so. Other firms, with eToro probably being the most notable example, also sponsor a lot of Premier League teams and continue to renew and/or add to those relationships. Again, it is hard to imagine them doing that if they did not see some benefit from it.
A more depressing way of validating this is to look at the BBC documentary which covered EverFX and FXVC earlier this year. The former company had an agreement with Spanish team Seville, while the latter had a sponsorship agreement with English club Leeds. It is clear from the documentary that both companies were able to attract customers directly or gain a level of trust from those agreements when clients saw their ads elsewhere.
Seen in this light, it seems like sports sponsorship may be a better option. If you have no interest in getting UK clients and there was an equal or close to equal level of cost to acquiring a licence compared to sponsoring a Premier League team, then the latter seems likely to have much more reach and be more impactful.