FC Bayern’s failure – early onset decline?

ALTHOUGH the Real Madrid-Chelsea tie captivated the continent, the seismic news was actually the shock elimination of Bayern Munich at the hands of Villareal. Defeat by a Spanish club is not unknown to FCB, indeed in the last decade, they have gone out to La Liga representatives six times, but usually, its Real Madrid, Barcelona or Atlético Madrid that have inflicted the damage.

Villareal are managed by Unai Emery, who has bounced back from his unhappy time at Arsenal to win the UEFA Europa League and now reach the last four of the Champions League. There may more than a few Arsenal fans who now wonder if the likeable Emery deserved more time than 78 games to turn the Gunners into something credible.

But nobody really expected Villareal to turf Julian Nagelsmann’s team out of the Champions League, even when the “Yellow Submarine” won the first leg of the quarter-final tie by a solitary goal. Now, people are starting to ask if 34 year-old Nagelsmann has arrived at the Allianz Arena too early in his somewhat charmed career. The Bayern top brass will undoubtedly decide whether the gamble has worked. After all, the club may well win their 10th successive Bundesliga title, but that will be the only piece of silverware to be polished in the close season.

Bayern are currently nine points ahead of second-placed Borussia Dortmund, with five games to go. The two sides meet on April 23 at the Allianz. Over the previous nine years, the average margin between Bayern and the runner-up in the Bundesliga has been more than 12 points. This year it may be similar, but Bayern’s goalscoring has declined. The nine-year average is 91, but the past two years have seen Bayern score 100 and 99 respectively.

The team that drew 1-1 with Villareal included four players who are at the veteran stage of their careers, including Manuel Neuer (36), Robert Lewandowski (33) and Thomas Müller (32). This trio has been pivotal in the Bayern story and there are hints that Lewandowski, whose contract runs until June 2023, will not sign a new deal and will move to Barcelona. Müller, who missed a golden chance to clinch the tie in Munich, and Neuer, also come to the end of their current deals in 2023.

The rest of the squad includes a cluster of players – the likes of Pavard, Kimmich, Goretzkam Coman and Gnabry – who are probably at their very peak. It’s only two years since Bayern last won the Champions League, but have this collection got another victory within them given Lewandowski, for example, will need to be replaced soon? The prolific Pole has scored 235 Bundesliga goals in his time with Bayern, representing 33% of their total output.

Bayern have the money to find a replacement and potential heirs to Lewandowski’s throne include Bayer Leverkusen’s Patrik Schick (26), Stuttgart’s Sasa Kalajdzic (24) and Benjamin Sesko (18) of RB Salzburg. Bayern have spent € 747 million over the last 10 years, less than Borussia Dortmund, but the position of the Bundesliga is underlined by the expenditure of Manchester City and Chelsea, whose gross outlay is around double the total spent by Germany’s biggest two clubs. Dortmund have made their name in selling talent, hence their income from transfers over 10 years is dramatically higher than Bayern’s. While their income was higher than their expenditure, Bayern had a net spending deficit of € 376 million. Basically, they don’t need it to be any other way as the club has made a profit for 29 consecutive years.

So it is clear – Bayern can win Bundesliga titles quite comfortably given their financial model and cultural position in Germany, but where does that leave them (indeed, Germany) in Europe? We have seen the power of the Premier League over the past three seasons and the 2021-22 final may well be another all-English affair, but Germany is increasingly becoming a little uncompetitive at the very highest level. This season, three of the four Bundesliga teams went out at the group stage (Leipzig, Dortmund and Wolfsburg). In 2020-21, German interest ended at the quarter-finals. In 2020, Bayern were champions and Leipzig semi-finalists. There has been something of a decline, which may be temporary or may become exacerbated by the Premier’s economic advantages.

Furthermore, Bayern’s dominance in Germany may not necessarily be good for them in terms of making them competitive beyond their domestic league. RB Leipzig and Borussia Dortmund are their biggest rivals, they have occupied positions two and three in the Bundesliga for four of the last five years, but they are way behind FCB on and off the pitch. As for the rest, few clubs are consistent (or rich) enough to put excessive pressure on Bayern.

Whether Nagelsmann can ride the stormy weather ahead is open to question, although it cannot be denied Bayern have, at times, played superbly in 2021-22. Yet some Bayern fans want him to leave and others don’t always warm to his demeanour. Nagelsmann has said his first campaign has not been a success, but that inevitable Bundesliga title will be his first major trophy. One big landmark for a relatively young man, one small step for his employer.

Barcelona go for renaming the Camp Nou

SPOTIFY are in the process of agreeing a € 280 million deal with Barcelona that will include shirt sponsorship and the renaming of the iconic Camp Nou. The transaction, undoubtedly just what Barca need in their current situation, may not prove to be a popular one with the fans, at least not in the short term. If there is a stadium indelibly linked to a club, it is surely the Camp Nou.

Spotify, who recently announced they generated € 9.7 billion of revenues in 2021, have over 400 million users worldwide. They have a strong profile that is instantly recognisable and after some bad publicity, they arguably needed some good news. The marriage of Spotify and Barcelona may be a compelling mix for the modern age, but will Spotify’s deal prove beneficial for the company? Is it realistic to expect people to start calling the vast bowl the Camp Nou Spotify?

This is a case of caveat emptor because there are four main cultural pillars in the football club story: the name; the logo/badge; the stadium; and the colours. Tamper with these elements and you risk alienating your audience. However, there are rich pickings to be had in naming rights and not many clubs outside of Germany have really exploited their potential.

With so many clubs suffering from the pandemic in terms of reduced revenues and rising debts, there may be a more flexible sentiment around selling naming rights. It is certainly easier when a club builds a new stadium as the legacy has already been disrupted, hence when Arsenal moved into a new arena, adding the name Emirates wasn’t seen as a heinous crime. It would have been a different tale if their former ground, the much-loved Highbury, had been renamed.

Similarly, Manchester City’s adoption of Etihad was seen as part of their takeover by Abu Dhabi. It would seem unlikely that Liverpool and Manchester United would ever rename Anfield and Old Trafford respectively. United’s board has said in the past that it would not sell its name, but cynics might argue that if a deal came along, everything has its price in football.

Everton, when they move to their new dockside venue, will have an opportunity that would have been difficult to even suggest at Goodison Park. Tottenham have yet to sell rights for their new ground, but having incurred big losses, the moment cannot be too far away.

Barcelona’s proposed deal will yield € 93 million annually for three years and is aimed at replacing Rakuten as the main sponsor, whose agreement expires at the end of this season. Rakuten will depart after paying the club € 55 million per year for the past five years, but they were reported to be less than satisfied with the sponsorship deal, claiming their objectives were not fulfilled.

Since Barca have been embroiled in talks with Spotify, the club’s CEO, Ferran Reverter, has resigned, “for personal and family reasons”. Reverter had been with the club less than a year and was a pivotal figure in the financial recalibration of Barcelona. Doubtless, some will link the Spotify talks with his departure.

Another major club, Argentina’s River Plate, have also announced plans to sell naming rights to their El Monumental ground, the venue of the 1978 World Cup final. They are also expanding the capacity to 81,000. As the club doesn’t currently have the financial resources, the rights, which should generate around US$ 20 million, will fund the project. Favourites to agree a deal are the supermarket chain Chango Más.

Of the top 30 clubs in Europe (source: Deloitte), 11 have sponsors as part of their stadium name, including Bayern Munich, Manchester City, Juventus, Borussia Dortmund and Atlético Madrid. 

Some companies have developed a taste for buying-up rights, such as German insurers Allianz. The Munich-based company has what it calls a “family of stadiums” and has its name on football arenas in Munich (Bayern), Turin (Juventus), Sydney, Minnesota, Nice, São Paulo (Palmeiras) and Vienna (SK Rapid Wien). The Allianz in Munich is one of the great football sites in the world and is the most visited tourist destination in Bavaria as well as Bayern Munich’s home. The Aliianz family seems to have one thing in common, they all seem to be state-of-the-art constructions. They also have an impressive appearance.

Germany has embraced the concept of stadium sponsorship more than almost any other country – only a handful of current Bundesliga clubs do not have deals in place. And in typical German corporate fashion, backing comes from some of Deutschland AG’s big names, such as Volkswagen, Mercedes-Benz, Deutsche Bank and Bayer.

Some sponsorships do work very well, the Allianz Arena, for example, rolls of the tongue and nobody blinks an eyelid when you mention Emirates and Arsenal. This is the challenge for Tottenham, and indeed for Barcelona, to secure a sponsor that becomes seamlessly linked to the brand of the football club. In Barca’s case, the Camp Nou is such a significant brand of its own that grafting any other name to it will be hard work. There should be no shortage of takers for big club rights, for the mass appeal and media coverage of the game should benefit modern, multi-faceted companies. 

The biggest corporate brands in the world are predominantly tech-orientated, such as Apple, Amazon, Google and Microsoft. We’ve yet to see much activity around football club sponsorship, although partnerships have been established, such as Apple and Bayern Munich and Microsoft and the England team. 

The key to any deal, or indeed anything that threatens the integrity of a club’s brand, is sensitivity and recognition of the cultural aspects of the game. Clubs like Barcelona, Real Madrid, Manchester United and Liverpool will be only too aware of the problems that can emerge from a badly-handled deal that devalues the brand in any way. Right now, with clubs feeling the impact of the pandemic, the need to come up with elegant solutions is arguably more important than ever before, so we can probably expect more to leverage the power of their historic and modern football landmarks.

Stadium naming – a coming explosion?

STADIUM sponsorship is an area of the football market that has yet to fulfil its full potential. While some clubs, such as Arsenal, Manchester City, Bayern Munich and Juventus have stadiums that bear the name of a sponsor, some countries have been reluctant to embark on a relationship that, while lucrative, could tamper with the identitiy of a club.

But clubs may now find themselves under pressure to “sell” their stadium name, even those that have grounds that have formed part of their heritage for decades. With the pandemic causing some clubs to aggressively cut costs and reassess their business models, the incremental income from a long-term stadium deal could be a necessity rather than a “nice to have”.

Buyer’s market

Even though stadiums have been empty for months, which would affect the price of a potential naming rights deal if lockdown conditions persist – it is a buyer’s market – a stadium’s name offers significant repeat airings and the cachet of close association. 

For example, Arsenal’s Emirates Stadium has become almost as identifiable as the club’s old home, Highbury. Similarly, Bayern’s Allianz Arena has done the their brand no harm whatsoever. It’s Bayern’s stadium, regardless of the sponsor’s name being the first thing spectators see when approaching the eye-catching ground. Two have become one – arguably the intention of the arrangement all along.

Stadiums have various types of name: locational; a connected name unique to the club in question; commemorative; the club’s name; and now a commercial tie-up. In the case of location, sometimes these can be vague but invariably the stadium’s name represents the street or road where it stands or once stood – for example, Elland Road (Leeds). Commemoration is a big part of football’s culture and some stadiums are named after notable individuals, such as the Johan Cruyff Arena (Ajax). Molineux, the home of Wolves, was named after a local merchant, Benjamin Molineux.

A football ground can also have an idiosyncratic address, such as West Bromwich Albion’s The Hawthorns, so-named because a collection of hawthorn bushes were removed from the site when the stadium was built.

Whatever the origins, there is a peculiar and romantic attachment between the fans and the place where they go every fortnight to see their favourite team. Any attempt to change a name is greeted with resistance and that’s probably why rights have never taken-off in the United Kingdom, whereas in Germany, where many stadiums were originally municipal, renaming has never been a major issue. Indeed, Deutschland AG’s big names, such as Allianz, Deutsche Bank, Mercedes, VW and Bayer have all welcomed the chance to embark on sponsorship deals.

A stadium is part of the trinity of cultural icons that have traditionally defined a club: football ground (including location thereof); club colours; and badge/crest. Changes to any of these totems invariably spark off indignation among purists. Newcastle United changed the name of St. James’ Park to the Sports Direct Arena, but when Wonga became the club’s main shirt sponsor, they also bought the rights to the stadium and decided to restore the old name. This was not only a sign of a company respecting the club’s history, but it also made the fans very happy.

In the modern game, stadiums are an asset that can be sold in order to fund relocation, recapitalisation or a bail-out. At lower levels, monetising ownership of a ground has often saved clubs from catastrophe. Furthermore, the possibility to leverage the stadium’s position, name and attraction could be a strong, ongoing revenue stream. 

Prestige

The most lucrative deal across world football is Manchester City’s deal with Etihad, which yields more than € 17 million per annum. This is almost double the second highest, Atlético Madrid’s € 9.6 million annual income from Wanda’s sponsorship.

It is no coincidence the most successful naming deals have involved new stadiums rather than traditional football homes. Tottenham Hotspur’s excellent new ground has yet to sell its rights, although it is well known the club intends to do so. Before the pandemic took root, there was talk of a £ 250 million deal with Amazon, but this has not yet materialised. The ground is currently called the Tottenham Hotspur Stadium, a decidedly neutral holding name until Spurs chairman Daniel Levy can secure the right agreement.

There are a number of prestigious stadiums that have yet to be sold, but these things do not move fast because they have to be structured over a reasonable long time period otherwise the value is limited. There’s also another factor to consider, that the sale of an established, historic name may not benefit the sponsor. Old Traffford will always be known as Old Trafford even though a company like Chevrolet or AIG might be willing to buy the advertising patch.

Barcelona, whose financial problems have become well known since the covid-19 virus changed the face of football, have decided to sell the rights to the Camp Nou and donate the proceeds to charity – a superb public relations move. Barca’s rivals, Real Madrid, are hoping to sell the rights to the Bernabéu, which is expected to assist in the major refurbishment programme being undertaken by the club. La Liga has a low level of naming deals, only 15% of clubs have so far ventured into this market, which is less than the Premier League (20%), Serie A (20%), Ligue 1 (20%) and the Bundesliga (78%).

Consultants Duff & Phelps estimated that clubs like Real Madrid and Barcelona could earn around € 36.5 million annually from a stadium deal. The company believes that football has so far undervalued the potential of such transactions – with the exception of the Bundesliga, no European league can match the US appetite. Around 80% of NFL (American football) clubs have sold their stadium name.

When football eventually comes through the pandemic, the squeeze on club revenues may prove to be the catalyst for a new approach to maximising income, which could also see a drive to sell stadium rights. Before clubs leap into deals that can help solve a problem or two, elements such as reputational risk, brand alignment and suitability will need to be considered. The money may be very useful in the current climate, but in the 21stcentury, how a club (company) is perceived by the public is equally important. As we saw with the aborted takeover of Newcastle, people can be very sensitive about who their club is partnering with. Get it right, though, and a club’s stadium name change can be a seamless exercise that reaps dividends for both parties. 

@GameofthePeople