2015 February | FREE

Archive the month of February 2015

February 21, 2015

Unintended consequences of a mega-deal

In terms of commercialisation, the Premier League is definitely a league of its own. By managing to sell the rights for live TV broadcast of games for a total of 5.14 bn pound (almost 7 billion euro) for three seasons, it has reached a new dimension. You could almost hear the champaign corks popping in the clubs’ headquarters, but it is perfectly possible that this windfall may not only make all of them richer, but also have some unintended consequences.

On the surface, the first reaction is of course the panic that is rising in the other European leagues, especially among French and German clubs. Experience tells them that each substantial raise in revenue for the Premier League is very likely to be poured directly into players’ salaries and transfer fees. In boardrooms across the continent – with the exception of Madrid, Barcelona and Munich, presumably – presidents and managers are scared to death they won’t be able to compete any more with what Burnley, Hull or Stoke have to offer and that the most talented players will soon have left for England.

But this fear is no doubt exagerated. After all, the Premier League’s salaries and the UK tax system have always been widely more attractive in financial terms than any other European championship. Moreover, the aggregate number of players in the 20 top-tier clubs is not going to increase, which means that there is a limit to the number of would-be football migrants from the continent. The frantic search for new ways of imitating the Premier League is not only doomed to failure but not even necessary in the first place.

The real change inducted by this mega-deal could be summed up as ‘higher expectations’. Not necessarily from the worldwide spectator community – the Premier League already provides brilliant entertainment and drama enacted by global star players. What is much more likely to change is the regard of society. The way English football business is conducted will be scrutinised much more closely by the critical eyes of the public. The demand for good governance, the insistence on fair and decent treatment of employees, affordable ticket prices, redistribution of money to grassroots football, funding of community programmes. In short: now that football has really become big business, the call for serious, credible, and sustained Corporate Social Responsibility is a logical consequence.

In a forthcoming German book (to be reviewed on this blog in March), former DFB president Theo Zwanziger, recalls how, in 1992, ‘social responsibility’ all of a sudden became an issue in the world’s largest sport organisation: ‘Commercialisation played a considerable role, especially the earnings opportunities that arose from TV rights. In this context, it became clear that the DFB could not only cash in, but also had to be willing to assume social responsibility.’

And that was peanuts compared to the amount of money that is circulating today! Club owners in England are likely to insist on their ‘return on investment’, but society is likely to remind them that the revenues are generated by supporters’ investment, i.e. expensive pay TV subscription, in the first place. Chances are the clubs are not getting away with some nice alibi philanthropy this time around.

Post by : Albrecht Sonntag in the category : Governance - No comment

February 10, 2015

Naming, re-naming and de-naming

Since the early 2000s, with the World Cup six years ahead being a good pretext to modernise the football stadia infrastructure across the country, German clubs and cities have been eager to generate revenues through ‘naming’. From the famous ‘Allianz Arena’ to the ‘Signal-Iduna-Park’, the traditional names often simply referring to geography have been replaced by references to corporate partners or brands.

The old Volksparkstadion on a rare sunny day.

Some have been re-named in the meantime, such as the perfectly named ‘Easy-credit-Stadion’ in Nürnberg (2006-2012), which has now become the ‘Grundig Stadion’. But the prize for the most rapid and frequent turnover goes to the stadium of the HSV (Hamburger Sportverein – please be so kind as to pronounce ‘Hah-Ess-Fow’), the only club that has played the entire 51 seasons of the Bundesliga (see the ticking of the clock at the bottom of the club’s homepage and in the stadium itself). The place has carried four different names in the only fourteen years since its complete renovation in 2001.

Initially baptised ‘Volksparkstadion’ after the big municipal park in which it was built in 1925, it was destroyed by WWII air raids and rebuilt as a traditional German track-and-field stadium on the rubble of the bombings in 1953. In 1974 it saw the legendary defeat of the national team to East Germany, in the first round of the World Cup.

The Volksparkstadion between 2001 and 2015.

At the beginning of the new century it was decided to rebuild it completely as a pure football stadium, and in 2001 it was inaugurated as the ‘AoL Arena’, the naming rights being sold to the Hamburg-based internet provider AoL Deutschland. In 2007, after AoL shut down its main business on the German market, the club turned to a bank, signing a contract for the name of ‘HSH Nordbank Arena’ for the period of 2007-2013. Due to the financial crisis, however, the bank had to drop out in 2010, and since then the stadium has been named after a soulless Dutch conglomerate Imtech.

What is truly revolutionary, however, is the recent decision by the club’s new sponsor Klaus-Michael Kühne, co-founder and CEO of the huge Kühne & Nagel Logistics group, who was ready to purchase 7,5% of the club’s shares for no less than 18,75 million Euro, but only under the condition that the stadium would be called Volksparkstadion again as of summer 2015! Mr Kühne will be forever loved for this by tens of thousands of Hamburgers. And the HSV thus becomes a pioneer in a new business model, which consists in generating revenue by ‘de-naming’…

Very clearly, in today’s Europe of football, tradition has its price. Real Madrid and FC Barcelone would be well advised to resist the temptation to damage their incredibly powerful brands ‘Santiago Bernabeu’ and ‘Nou Camp’. But perhaps their planned re-naming into ‘Abu Dhabi Santiago Bernabeu’ and ‘Qatar Airways Nou Camp’ is part of larger plan, with a powerful future sponsor waiting in the shadow to invest some millions in ‘de-naming’? Who knows, Hamburg might have started a new trend!

Post by : Albrecht Sonntag in the category : Posts - No comment