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German football sets the bar

German football supportersAs Germany claim football’s ultimate prize, one team back home will be paying careful attention to the ‘assist’ of an international profile.

Who is the most recognised football club in the world? Manchester United? Real Madrid? Barcelona? Chances are you didn’t name a German team – and certainly not Borussia Dortmund.

But the extraordinary global success of the English Premier League (EPL) and the Spanish La Liga, their expansion into foreign markets and the wealth of accompanying sponsorship, is now encouraging Germany’s top teams, including Dortmund, to seek similar opportunities.

It’s a bold departure for “Die Borussen” as the club is known. While it makes perfect sense to extend the global reach of a team that since 2011 has won back-to-back Bundesliga titles and finished runners-up in the UEFA Champions League, this is not how German football historically operates. Bundesliga clubs are owned locally and employ largely German players, which even at current league champions Bayern Munich has kept ticket prices affordable and preserved their local identity. In contrast, the ceiling-less wealth of the Premier League has swamped England’s top clubs with foreign owners, managers, players and sponsors, making them more global brands than teams representing a local community.

Bayern and Dortmund have already made tentative steps into the US and Singapore, and now Die Borussen are further embracing the concept. And based on his latest research, lifelong Dortmund fan, Christoph Kühler (MBA, 2013), thinks it is a good move.

The research carried out by Kühler and his MBA team focuses on macroeconomic indicators; it used SWOT analysis to analyse the size and popularity of sports industries and the media landscape in China, Japan and America, to illuminate how fans and sponsorship interact in these markets. “In all these markets, selected macroeconomic indicators are favourable and football is growing rapidly,” Kühler says.

Dr Philip Stiles, a CJBS faculty member in Organisational Behaviour who advised on the MBA team’s research, says the Germans face an interesting challenge. “Dortmund don’t have the brand awareness or the globally-known history of, say, Manchester United or Real Madrid,” he says. “So they need star names to sell, particularly in the Far East. When David Beckham moved from United to Madrid (in 2003), sales of replicas of his new Madrid shirt went through the roof in China and Japan. International fans tend to be less loyal to a club but they are loyal to a player. Dortmund has a star manager (Jürgen Klopp) but it has few star players.”

But while the most important universal element is the combination of sporting success and star players, and an acceptance that that star names are needed to make initial in-roads into new markets, there is also a general acknowledgement that it will take more than just a few big signings to fully establish a club in the target markets.

At Dortmund other factors come into play; it does have its stars – Japanese midfielder Shinji Kagawa helped the team win the Bundesliga before moving to Manchester United – but the research highlights the importance of keeping the club true to its brand, its history and the traditional make-up of its fans. “Many Dortmund fans are working class people, aware of the club’s roots and tradition,” he says. “You can’t just rely on buying star players – you have to maintain that rural identity and that working class authenticity.”

Happily, the team’s analysis suggests that maximizing international opportunities does not have to mean abandoning its ethos. “Borussia Dortmund can promote and deliver its values to fans in the target market, [not least because] physical proximity and contact with local fans builds on one of the club’s core brand values: Bonding Force,” he says. “They can tour the countries to play exhibition games, send ambassadors – past and present players – and link up with travel agencies to bring overseas fans to Dortmund games. The club can also work with sponsors on creative, interactive web campaigns to build engagement.”

Benedikt Scholz, Dortmund’s Head of Business Development, is excited about the opportunities highlighted in Kühler’s report. “About eight years ago, Borussia Dortmund faced such a hard financial crisis that no-one thought about anything but survival. But since the league titles, and the all-German Champions League final against Bayern, this is a fantastic time to roll out our brand globally. The Bundesliga is getting more widely known and Bayern, ourselves and probably Hamburg and Schalke 04 all have opportunities to engage fans overseas.”

But what impact would huge foreign investment have on the Bundesliga itself? In six seasons around the launch of the English Premier League, five different clubs won the title. In almost 20 years since, just four have. Five different German teams have won the Bundesliga since 2004 – so would major international investment in Dortmund and Bayern make the league less competitive?

Scholz is adamant it won’t. “The Bundesliga is a much more level playing field than the EPL,” he adds. “We have a 50+1 rule that means that at least 51 per cent of shares must always be held within the club itself – so we won’t get wealthy foreign owners like at Chelsea or Manchester City.”

The MBA team’s research is just the start both for Dortmund and CJBS, says Dr Stiles. “Dortmund are looking to build on our findings and hopefully we can help them do that,” he says. “But we have plans to develop other projects around football – branding, marketing and into the players themselves, their culture, their team spirit. We want to find out what makes a good team. At the World Cup the players of the lesser-rated teams – such as Algeria, Nigeria, USA and Costa Rica – wouldn’t get near the first team of Brazil, Argentina or Germany, yet they have consistently given them a real scare. What makes that happen? We want to go into clubs – maybe even into the dressing rooms for the team talks. If we can measure something like team spirit, we think clubs will be very interested.”

And in the meantime Dortmund will strive to grow, while staying true to their roots, says Benedikt Scholz. “We are looking for opportunities overseas and will want to become a big international club,” he says. “But our key focus will always be our home market. That is our number one priority and nothing will change that. We will always be the club that our fans grew up with.”

Christoph Kühler is a current MBA student at CJBS. He undertook research at Borussia Dortmund as part of The Global Consulting Project, an essential feature of the Cambridge Judge Business School MBA.