Business

Published: Thursday August 9, 2012 MYT 8:31:00 AM

Ex-GM exec kept Man U soccer deal's full US$559mil costs hidden


DETROIT: General Motors Co fired its global marketing chief last week for not properly disclosing as much as a third of the cost of a US$559 million sponsorship deal with English football club Manchester United, people familiar with the matter said on Wednesday.

Joel Ewanick was ousted after a whistleblower in the No. 1 U.S. automaker's marketing department questioned some aspects of the deal that will put the company's Chevrolet brand name on the shirts of the football club's players starting in the 2014-2015 season, said the people, who asked not to be identified discussing a matter that has not been made public.

There are no signs Ewanick profited personally from the deal, but GM continues to investigate not only this deal but other contracts he had agreed to, the people said.

Ewanick declined to comment on his ouster. GM also had no comment, but previously said Ewanick left because he "failed to meet the expectations that the company has for its employees."

Manchester United said last week that the seven-year sponsorship deal would bring in $559 million. GM will pay fees of $18.6 million in this year's and next year's season, before paying $70 million in the 2014-2105 season. GM's payments will rise 2.1 percent each season thereafter, through the 2020-2021 season.

After the deal was announced, sources said GM had renegotiated portions of the agreement for less money.

On Wednesday, people familiar with the matter said Ewanick had split the price of the sponsorship deal among several marketing budgets to avoid company spending limits.

Bloomberg reported details of Ewanick's exit, including the involvement of the whistleblower, earlier on Wednesday.

Ewanick denied he had sought to avoid alerting his bosses or that the deal's structure was unusual after he was confronted, the people said. The former marketing executive was questioned for two to three days by GM corporate counsel Michael Millikin, the people said.

GM executives have said repeatedly the company did not have an issue with Ewanick's marketing strategy and they would not change the direction the marketing department has taken.

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. He 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 and briefly worked at Nissan Motor Co, 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.

Earlier this year, GM announced efforts to save $2 billion over five years by pruning the number of ad agencies it uses. - Reuters

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