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Branding in Soccer

In: Business and Management

Submitted By laiertim
Words 3836
Pages 16
Branding in Soccer
Light and Shadow
Branding in Soccer
Light and Shadow

Introduction

“Some people think football is a matter of life and death. I assure you, it's much more serious than that.” (Gloves, S. 2012)
This much quoted comment of the former, British football manager Bill Shankly describes exactly my view of football. I am a big fan of the most popular sport in the world. Sure I know that this comment is exaggerated, but football becomes more and more important. Not only for the fans and the sportsmen, also for the global economy. (Hamil, S. and Chadwick, S. 2010) In professional football the success goes hand in hand with money. Today it is almost impossible to win a big trophy like the UEFA Championsleague without investing lots of money. The FC Barcelona is ranked as the best team in the world and invested in the last five years an average of 40 Million Euros per annum in new players. (Transfermarkt 2011) But where does all that money come from? According to Uli Hoeneß, the president of German football club FC Bayern Munich, only 15% of the twelve million DMs (6.1 Million Euros) revenue were out of broadcasting, marketing and sponsoring when he began in 1979 his career as a manager. (RP online 2011) His aim was to make his club independent from earnings from the spectators. As you can see in the following diagram he achieved his aim. In the year 2010 Bayern’s matchday earnings were only 21% of the total revenue. The biggest part is now coming from the commercial with 53%. (Sports Business Group 2011)

Bayern Munich: Revenue Sources and Percentages (€m)

Picture: Bayern Munich: Revenue Sources and Percentages (€m)(Sports Business Group 2011)

So the biggest part of a modern club’s revenue is sponsoring. But why do big companies like Coca Cola and many others sponsor football clubs? The first thing that passes through my mind is “branding”.
According to Philip Kottler branding is “a seller’s promise to deliver a specific set of features, benefits and services consistent to the buyers.” (Microfinance Marketing 2009) So branding is the promotion of a name - a brand - to increase the propensity of people for this name.
But how is that to relate to football?
The companies use the popularity of football to get themselves more popular, too. For instance more than 400 Million people saw “el clasico”, the match between Spanish giants FC Barcelona and Real Madrid in 2010. (Spox 2012)
So also more than 400 Million people saw advertising of several companies and those companies could expedite their branding. This is a part of how branding works in football. But branding in football is vastly more.
In the following research paper I want to highlight the various aspects of branding in football. In particular I want to figure out how branding influences transfers and if there are conflicts coming up. I also want to describe how the name of a football club can be handled as a brand.

A football club as a brand

Because sponsoring is a huge revenue provider of football clubs, they need to get more and more sponsors from all over the world. So they try to make their club more and more popular to be more and more attractive for potential sponsors. In addition to selling the team jerseys they sell nearly every product you can imagine with their emblem on it worldwide. However this is not enough. Branding in football goes beyond that.

For instance German record champion FC Bayern Munich does every year an Asia-tour. The only reason is the promotion of the name “FC Bayern Munich”, so branding. They want to conquer the Asian market, for Bayern’s CEO Karl Heinz Rummenigge the most important market in the world. (Spiegel 2008) This project had its climax in the year 2011, when the Bavarian club bought the Japanese Takashi Usami. (Euronews 2011) The nineteen year old winger is talented but he was only assigned for one of eighteen matches. (Transfermarkt 2012) The club bosses knew already in front of the transfer that this could happen. But the reason of this transfer was not to enhance the team. The reason was to attract the attention of Japan and whole Asia to oneself. This plan paid off. When the Munich football club presented Usami they had to relocate the presentation from their training ground to the Allianz Arena because 200 journalists from Japan had announced themselves. This is a good example for successful branding of a club.

Another example is set with French club Paris Saint Germain. The football club of France’s capital pulled off sheik Tamim bin Hamad al-Than, chairman of Qatar Sports Investment, as sponsor in 2011. He is aiming to make PSG to one of the best clubs in the world. But nobody seems to be interested in the current leader of the Ligue 1. (Anderson M. 2011) In this winter transfer period he tried to sign English superstar David Beckham whose contract with Los Angeles Galaxy ended in December 2011. The former international is 36 years old. So he is not of the age to help a club to grow to a giant. So why bid him an offering about eighteen million dollars? (Ruthven G. 2008) The reason is branding.
Where the English superstar appears, there are journalists from all over the world, because the hype around him is rather like the hype around a popstar or filmstar than around a normal football player. Beckham is a brand himself. Indeed he cannot make PSG to one of the best clubs in the world but unequivocal one of the most interesting. And this branding is despite the eighteen million dollars not expensive.

When Beckham joined Real Madrid in 2003 for a transfer fee of 35 million Euros (The Economist 2003) the Spanish club calculated that alone with selling jerseys and the better merchandising they would earn more than they paid. And the plan worked out. After the four years Beckham played for Real, they paid him 61 Million Euros salaries and bonuses but earned 81 Million Euros with marketing of the English superstar. (Gansäuer L. 2009)
As we know now the transfer of David Beckham from LA Galaxy to PSG failed. Maybe because of “family matters” like he proclaimed. (Dailymail 2012) But maybe another reason was crucial. Beckham is the figurehead of German textile manufacturer Adidas. Paris SG is sponsored by Nike. “How would Adidas feel about having its flagship star playing in the logo of its biggest rival?”, Graham Ruthven, journalist of the New York Times, asks legitimate. (2012) Did Nike influenced this transfer and can brands generally influence transfers?

Influences that brands have over player-transfers

In today’s world of football, gifted players get more and more expensive. This is a consequence of takeovers by investors of football clubs. The best example is Roman Abramovich, the owner of FC Chelsea London. When the Russian billionaire wants to buy a specific player, the delivering club calls up a very high price because everybody knows about Abramovich’s capital. See that incredible prices get paid by the investors, the market values of all players rise. For teams without investors it is hard to go along with this, because they have to pay the same high prices. If Chelsea bought a player X for Y Euros, no other club will sell a player with the same skills for less than Y. Regardless of whether a club with- or without investor wants to buy him.
For normal football clubs without owners the only way to be able to pay those prices is to get help from their sponsors. Especially outfitters like Nike, Adidas, Puma and many others help clubs with money, connections or special offers to sign players.
When German international Miroslav Klose played for Werder Bremen in the year 2006 he was ensnared by Bayern Munich. A club sponsored by Adidas. But then the striker decided to extend his outfitter contract with Nike, despite the fact that Adidas as well wanted to sign him as advertising partner. That is why for FC Bayern’s CEO Karl Heinz Rummenigge a transfer of Miroslav Klose from Werder Bremen to his Munich club was over. (Tagesspiegel 2007) He did not want to have a conflict with Adidas so he decided to look for another striker who promotes branding of Adidas by wearing their shoes with the three stripes. At this time Adidas brought trouble upon every club, they were sponsoring, that signed players being advertising partners of other brands. But when German textile manufacturer softened its defaults in 2007, all their partner-clubs were allowed to sign every player, independent of his favorite shoe brand. So also Bayern Munich and Miroslav Klose came together in the same year.

A current example is the transfer of German international Marco Reus. The 22 years old striker is one of the best players in Germany this season. For his club Borussia Mönchengladbach he scored ten goals in only fifteen matches. After great performances German giants Borussia Dortmund and Bayern Munich wanted to sign him for the next season. Both were willing to pay 17.5 Million Euros transfer fee. (Spiegel 2012)

During the winter break he decided to join German Champion Borussia Dortmund. This amazed the whole German football world. Everybody was sure that Reus would change to Bayern Munich where he could earn more money than in Dortmund. According to Reus he “decided this way because I feel there is potential for more to play in Europe, and measure myself against the best. In my view, Dortmund is a better club.” (Footballkey 2012)
So he is nearly the first football player who takes a pass on money. But does he really?

It is a fact that the Munich football club pays higher salaries as the competition from Dortmund. But it is also a fact that Dortmund will be sponsored by German outfitter Puma as from July 2012. (AD HOC NEWS 2011) The same brand is also sponsor of Marco Reus. When the poker about signing the German international began, Puma made also an offer for him. They wanted him as the new face of their Puma-King-Campaign. (Ebert P. 2011) But only if he joins Borussia Dortmund. The same does not apply for a change to Adidas-partner Bayern Munich. In Munich branding would not be as successful as in Dortmund because Reus would always be in the shadow of superstars like Franck Ribéry or Arjen Robben. So his shoes would also be in the shadow of those of the superstars. In Dortmund Marco Reus will be the superstar himself. So everybody will look at his shoes with the wildcat.

A transfer of Reus to Dortmund is also better for Puma’s branding because the striker will help the club to play in the Championsleague on a long-term basis. If Dortmund will be present in Europe’s highest league, their outfitter Puma will be as well.

For German journalist Björn Brodermann, the outfitter could be the crucial factor for Marco Reus to decide in favor of Dortmund, because of the honor to become an advertising icon. (2011)
I agree with his opinion that Puma could have been the crucial factor but as far as I can see it is not only because of honor. With that deal he can earn the same money as he would have earned in Munich. So due to the coming advertising partner of Borussia Dortmund the transfer was not a financial disadvantage for Marco Reus.

Shoe-Conflict between DFB and Adidas

Adidas is outfitter of the “Nationalelf” since Sepp Herberger won the World Cup 1954 in Switzerland with the German Team. Legend relates that during this Championship Adidas-incorporator Adolf “Adi” Dassler invented the first cleats for the successful team.
(Knatterer, U. 2008)

In the year 2006 the German Football Association (Deutscher Fußball Bund “DFB”), had a dispute with their outfitter Adidas because some German internationals wore shoes of competitors like Puma or Nike in matches of the German National Team during the World Championship 2006 in Germany.
The DFB had a contract with Adidas till 2011. This contract contained a right for the company that all the players are wearing Adidas football shoes while playing for the DFB. But a few of the internationals did not because they had their own contract with other outfitters. For example Miroslav Klose, the best scorer of the World Cup 2006, has a very profitable contract with Nike. According to Nike-Spokesman Olaf Markhoff “this agreement comprises a clause to wear our shoes.” (Tagesspiegel 2007)
The DFB and Adidas created a solution for this problem. In an oral settlement they decided to extend their contract till 2014 similar in terms but without the clause that every international has to wear Adidas shoes. So every player got the right to have his own advertising partner.
This settlement should have been the end of all differences between DFB-Teammanager Oliver Bierhoff and the German giant sports clothing company. But before anybody could sign any contract, Oliver Bierhoff and the whole German Football Association were surprised by an irresistible offering by another global playing outfitter: Nike!

DFB-Outfitter Conflict

The American corporation, which was founded in 1972, wanted to displace the German competitor with the three stripes with an offering about more than 60 Million Euros per annum. (Focus 2007) They wanted to collaborate with the German National Team for eight years.
The Nike bosses were well informed about the conditions of the contract between Adidas and the DFB. And they knew that they would not get an acceptance because of a one-million-better bid as the competition from Herzogenaurach, Germany.
So they decided to afford a giant offering. Seeing that Adidas paid “only” eleven Million Euros per annum this time, you can really talk about a “giant” offering.
It is very comprehensible that the DFB-leadership could not just refuse this bid. They thought about and saw on the one hand a lot of money but on the other hand a German Company and collaboration for more than 60 years.
More than sixty years teamwork versus more than sixty Million Euros.
Tradition versus money.
Adidas versus Nike!
It was a fundamental decision which led to a National discussion because lots of people were involved. In addition to the DFB-Bosses the bosses of the Bundesliga-Clubs (which are participated by 18% of the earnings), the players and their advisers.
“Manchmal ist es gut wenn von draußen ein frischer Geist reinkommt“, said DFB-Boss Dr. Theo Zwanziger to “Frankfurter Allgemeine Zeitung“. May be he meant the fresh money, coming with the Nike-Deal, by talking about “a fresh ghost“. (2007)
When Adidas heard from the plans of their competitor, they insisted on having the oral acceptance by Zwanziger for a new contract till 2014. For the DFB-Boss it was only declaration of intent, not a commitment. (Zorn, R. 2007) But he also explained in an interview with TV-News-Channel N-TV, that they will first talk with their partner Adidas and that it is more a question of money than a question of tradition. (N-TV 2007)
It seemed like he wanted to pressurize the outfitter, to get a higher offering from Herzogenaurach.
One person who could not understand how the DFB-Bosses could only think about signing a contract with Nike and forget every tradition was the CEO of FC Bayern Munich, Karl-Heinz Rummenigge. The former international and his Munich football club are working together with Adidas since 1974. The clothing company bought 9.1% of the FC Bayern Munich shares in the year 2001. (Scherz, G. 2009) Most of the Munich Superstars are advertising partners of Adidas. “Wenn der Nike-Deal kommt, werden wir unsere Spieler selbstverständlich für die Nationalelf abstellen. Aber sie werden im Nike-Trikot an keinem einzigen Werbetermin des DFB mehr teilnehmen. Herr Bierhoff soll ruhig kommen, wir sind juristisch gerüstet.”, explained Rummenigge. (Spiegel 2007)
It is comprehensible that he wants the best for his German partner but considering that the Nike offering was to such an extent, his reaction was excessive.
Bayern Munich’s CEO should have considered what is possible for the DFB with so much money. For example the promotion of young people. Also the Bundesliga-clubs would have financial advantages because of the 18% equity holding.

Despite all discussions the German Football Association was in a comfortable initial position for new contract talks with Adidas.

After lots of proceedings the responsible persons of the DFB decided, against the wishes of the representatives of the German Football League (DFL), to sign a new contract with Adidas for further eight years. (Spiegel 2007)
Adidas improved their offering. Instead of eleven Million Euros- they were disposed to pay with immediate effect twenty Million Euros- and as of 2011 up to 25 Million Euros per annum. (Spiegel 2007)
In favor of tradition the German Football Association forwent about 250 Million Euros.
This dispute between Adidas, Nike and the DFB was a demonstration that branding in football is not only a question of money. Sometimes, like in this case, it is also a matter of values like solidarity and of course – tradition.

Conclusion

Summarizing I can say that branding is today a key element in the football business. Just because of the importance of money in that business. On the one hand branding contributed a lot to increasing the popularity of football by making the sport more attractive. But on the other hand we must clearly see the negative aspect that branding has distorted the sportive competition. The one who has the money is the one who will win in the end.
As a fan I appreciate the globalization of football (Bridgewater, S. 2010) because of the increasing attractiveness but I am not sure to like the development of the influences of branding to my sport.

The debate is open….

List of References

Gansäuer, L. (2009) Darum lohnen sich die Mega-Transfers 20 Minuten Online [online] Available at: http://www.20min.ch/sport/fussball/story/11306270 [Accessed: 12th Jan 2012]

AD HOC NEWS (2011) PUMA becomes technical kit supplier and sponsor of BORUSSIA DORTMUND [online] Available at: http://www.ad-hoc-news.de/puma-becomes-technical-kit-supplier-and-sponsor-of--/de/News/22537937 [Accessed: 9th Jan 2012]

Anderson, M. (2011) PARIS SAINT-GERMAIN OWNER DREAMS OF JOSE MOURINHO, PEP GUARDIOLA AND ARSENE WENGER – LIGUE 1 NEWS, Bettor [online] Available at: http://blogs.bettor.com/Paris-Saint-Germain-owner-dreams-of-Jose-Mourinho,-Pep-Guardiola-and-Arsene-Wenger-Ligue-1-news-a96794 [Accessed: 16th Dec 2011]

Sports Business Group (2011) The untouchables Football Money League.
Manchester: Deloitte, p.14

Euronews (2011) Japan's Takashi Usami joins Bayern Munich [online] Available at: http://www.euronews.net/2011/07/19/japan-s-takashi-usami-joins-bayern-munich/ [Accessed: 27th Nov 2011]

Zorn, R. (2007) Das Mega- Angebot von Nike macht dem DFB zu schaffen FAZ [online] Available at: http://www.faz.net/aktuell/sport/fussball-das-mega-angebot-von-nike-macht-dem-dfb-zu-schaffen-1407591.html [Accessed: 7th Jan 2012]

Focus (2007) Einigung mit Adidas [online] Available at: http://www.spiegel.de/sport/fussball/0,1518,501859,00.html [Accessed: 6th Dec 2011]

Bridgewater, S. (2010) Football Brands. Hampshire: Palgrave Macmillan, p.130-134

Footballkey (2012) Reus: Dortmund better than Bayern [online] Available at: http://footballkey.com/german-bundesliga/reus-dortmund-better-than-bayern/ [Accessed: 9th Jan 2012]

Dailymail (2012) Beckham's PSG move is OFF as midfielder looks certain to extend LA Galaxy stay [online] Available at: http://www.dailymail.co.uk/sport/football/article-2081662/David-Beckham-Paris-St-Germain-collapses.html [Accessed: 20th Jan 2012]

Hamil, S. and Chadwick, S. (2010) Managing Football an international perspective. Oxford: Elsevier Ltd., p.104-105

Ebert P. (2011) Marco Reus wirbt für Puma-King“. Medienhandbuch Sport [online] Available at: http://www.medienhandbuch-sport.de/index.php/item/188-marco-reus-wirbt-fur-puma-king.html [Accessed: 9th Jan 2012]

Knatterer, U. (2008) Adi Dassler - Der Erfinder der Sportschuhe und Stollen Medienwerkstatt-Wissen [online] Available at: http://www.medienwerkstatt-online.de/lws_wissen/vorlagen/showcard.php?id=15650&edit=0 [Accessed: 6th Dec 2011]

Microfinance Marketing (2009) Branding for MFIs. [online] Available at: http://mfimarketing.blogspot.com/2009/01/branding-for-mfis.html [Accessed: 16th Nov 2011]

Brodermann B. (2011) Reus: Puma wohl das Zünglein an der Waage Nach dem Spiel ist vor dem Spiel [online] Available at: http://www.nach-dem-spiel-ist-vor-dem-spiel.com/?p=3873 [Accessed: 9th Jan 2012]

Ruthven, G. (2011) Beckham, Branding and a Player's True Value New York Times [online] Available at: http://goal.blogs.nytimes.com/2011/12/05/beckham-branding-and-a-players-true-value/ [Accessed: 16th Dec 2011]

N-TV (2007) Adidas Angebot zu niedrig [online] Available at: http://www.n-tv.de/sport/Adidas-Angebot-zu-niedrig-article208607.html [Accessed: 7th Jan 2012]

RP (2011) Interview mit Uli Hoeneß [online] Available at: http://www.rp-online.de/sport/fussball/bundesliga/ich-geniesse-mein-leben-in-vollen-zuegen-1.2661716 [Accessed: 5th Jan 2012]

Scherz, G. (2009) Großaktionär: Audi übernimmt neun Prozent des FC Bayern München Short News [online] Available at: http://www.shortnews.de/id/801633/Grossaktionaer-Audi-uebernimmt-neun-Prozent-des-FC-Bayern-Muenchen [Accessed: 6th Jan 2012]

Spiegel (2007) “Bierhoff sauer auf Rummenigge“ [online] Available at: http://www.spiegel.de/sport/fussball/0,1518,462291,00.html [Accessed: 7th Jan 2012]

Spiegel (2007) “Widerstand aus der Bundesliga“ [online] Available at: http://www.spiegel.de/sport/fussball/0,1518,500622,00.html [Accessed: 7th Jan 2012]

Spiegel (2008) “FC Bayern geht im Mai auf Asien-Tour” [online] Available at: http://www.focus.de/sport/fussball/bundesliga1/fussball-bundesliga-fc-bayern-geht-im-mai-auf-asien-tour_aid_273304.html [Accessed: 27th Nov 2011]

Spiegel (2012) “Vom Schnäppchen- zum Bayernjäger”, [online] Available at: http://www.spiegel.de/sport/fussball/0,1518,807218,00.html [Accessed: 6th Jan 2012]

Spox (2012) El Clasico - Rückblick. [online] Available at: http://www.spox.com/myspox/group-blogdetail/El-Clasico---Rueckblick,108492.html [Accessed: 21st Nov 2011]

Tagesspiegel (2007) “Klose ohne Streifen”. [online] Available at: http://www.tagesspiegel.de/sport/nike-oder-Adidas-klose-ohne-streifen/972774.html [Accessed: 6th Dec 2011]

The Economist (2003) Branded like Beckham [online] Available at: http://www.economist.com/node/1900131 [Accessed: 12th Jan 2012]

Gloves, S. (2012) Flag-waving patriotism. Fine for football - but is it good for international trade? The European Business Review [online] Available at: http://www.europeanbusinessreview.com/?p=1969 [Accessed: 11th Nov 2011]

Transfermarkt (2011) FC Barcelona - Player Changes [online] Available at: http://www.transfermarkt.co.uk/en/fc-barcelona/transfers/verein_131_2007.html [Accessed: 7th Nov 2011]

Transfermarkt (2012) Marco Reus Performance data [online] Available at: http://www.transfermarkt.com/en/marco-reus/leistungsdaten/spieler_35207.html [Accessed: 6th Jan 2012]

Transfermarkt (2012) Takashi Usami - Performance data [online] Available at: http://www.transfermarkt.com/en/takashi-usami/leistungsdaten/spieler_111881.html [Accessed: 9th Jan 2012]

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