Soccer jerseys, not bad advertising decisions, cost GM's CMO his job

The weekend press release announcing GM global marketing chief Joel Ewanick’s abrupt dismissal unleashed waves of speculation in the advertising and automotive industries as to why.

Today, answers began to emerge.

It wasn’t because of bad advertising decisions, though Ewanick made plenty of those in his two-year reign.

It wasn’t even because a grandstanding, take-no-prisoners, bull-in-the-china-shop management style was a poor fit for a go-along-get-along, consensus-driven corporate culture.

No, the reason was soccer jerseys.

You read it right — soccer jerseys.

See the UK in your Chevrolet?

According to various Reuters reports, Ewanick’s work on what turned out to be his final project was the cause of his unceremonious dumping.

That project was an exclusive, seven-year deal to put “Chevrolet” on the back of British soccer team Manchester United’s uniform jerseys, starting 2014.

Man U has an estimated 659 million fans around the world. But in many parts of the world where they have fans, there are no Chevrolets. In the UK, GM sells Vauxhalls. On the European continent, they sell Opels (though not all that many of them; the divison’s hemorrhaging red ink cost two heads of European operations their careers in as many years). In Australia, they sell Holdens.But the idea of the sponsorship wasn’t why Ewanick got fired. That decision was made above his pay grade, by CEO Dan Akerson, in the hope of making Chevrolet a global brand for some reason or other.

As with most deals, it was the money.

It cost how much?

“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 Vancouver Sun report, quoting “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,” the report added.

So thanks to Ewanick’s canny negotiating skills, GM paid about twice as much for the same thing. Plus that $100 million “activation fee” which, Micheline Maynard writes, “wasn’t part of GM’s original agreement with Man U six weeks ago. All GM got in that deal was the right to call itself Man U’s global automotive partner, plus some perks like putting its name on the sidelines.”

“[T]hat’s a lot of money to put the Chevy name on the jerseys of players who don’t trod [sic] American turf,” she adds. The American turf they don’t tread, incidentally, accounts for 42% of GM’s global car and truck sales.

Numbers that don’t add up?

According to other sources, though, the problem with the deal wasn’t its high cost, but the way it was accounted for.

“A source with knowledge of the matter said Ewanick failed to properly report financial details,” according to the Guardian. “When asked about the source’s observations on the sponsorship deal, Ewanick, 52, said in an email that he could not comment.”

Maybe that’s why GM didn’t disclose details of the deal when they announced it the day after Ewanick’s firing.

While some sources “told Reuters Ewanick didn’t properly report financial details about the jersey deal,” said the Vancouver Sun, “[a]nother 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.”

Do two negatives make a positive?

Regardless of the wisdom of the deal, it’s apparently a marriage of losers — money-losers, that is.

GM sales are up all of 4% this year to date — some 11% less than the growth of the automotive category. This gives them a 2% loss of market share.

“Manchester United…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),” notes a Reuters report. “Based on those figures, the annual value of the shirt deal is about 13 percent of the club’s revenue.”

The team had planned, then canceled, a New York IPO to pay off “some of the club’s massive debt,” according to Maynard. “It hoped the offering would raise about $100 million — the same amount that GM is paying in the activation fee, at least according to Reuters.” Last week, as the GM deal, now with the activiation fee, was coming to fruition, Man U postponed the IPO. Talk about coincidences.

So GM, having been bailed out by the United States government (Barack H. Obama, CEO), is paying it forward by bailing out a British soccer team.

Undoing Ewanick’s work

As mentioned above, GM renegotiated the Man U sponsorship right after Ewanick’s firing.

GM and Facebook executives are back in discussions to mend the fences Ewanick tore down.

And ad agencies that Ewanick’s massive consolidation cut from the GM roster are now lining up to try getting back in.

According to an official company biography, Ewanick “was responsible for improving the positioning of the Chevrolet, Buick, GMC and Cadillac brands and consumer consideration of GM vehicles in the United States.”

But according one e-mail circulating throughout GM’s executive offices in the wake of his ouster, the unofficial story is different. The e-mail’s subject line: “Ding Dong, the witch is dead.”