How money from EURO 2024 circulates

2024-06-13 08:43:00, Kosova & Bota CNA

The wording is not figurative: A scream was heard throughout the land. What happened? The German national football team has been on the field for 70 years in a row with T-shirts produced by the Adidas company. But very soon this will end. On March 22, the German Football League (DFB) announced that after 2027, Nike from the USA will be the company that for seven consecutive years will equip the German football team. This business will bring in at least double the money that the partnership with Adidas brought in, the DFB announced.

With the introduction of football boots in the 1954 World Cup, Adidas contributed greatly to the victory of the German team in the matches that took place in Switzerland.

How money from EURO 2024 circulates

With this kind of boots, new at the time, the Germans had a huge advantage over the Hungarian team, which was the team expected to win in the match played on the rain-soaked grass of the Bern stadium. In the decades that followed, the DFB's partnership with Adidas turned into an almost symbiotic partnership.

Many football fans were speechless, in business circles there was a lack of understanding, members of the German government criticized the DFB. Health Minister Lauterbach (Social Democratic Party) told X (former twitter) that "I think it's a wrong decision, where trade violates a piece of tradition and a piece of the homeland."

Economy Minister Habeck charged that "Adidas and the colors black-red-yellow have been one for a long time. They have been part of the German identity. I wish we had a little more patriotism about it." ."

Unwanted market participants

A few weeks later there was another shock for the traditionalists: the Chinese car manufacturer, BYD, will be one of the main sponsors of the European Men's Football Championship and has already made available a fleet of electric cars. BYD – and not Mercedes or VW! In fact, not a big sensation, because during the matches held on its own field for the 2006 World Championship, it was the Korean company Hyundai that took the place of the German car manufacturers.

It is not easy to learn about the reasons that led to such a decision. The DFB declined to respond to questions from Deutsche Welle and said questions should be directed to the championship's organizer, the European Football League, UEFA, which is based in Nyon, Switzerland. But there, too, no one wanted to answer Deutsche Welles' questions.

How money from EURO 2024 circulates

They sent a short list of the five partners participating in the business: Adidas produces "the game balls and equipment for volunteers and employees", the automobiles are responsible for the information technology during the matches, and BYD has made available "a fleet of automobiles already electrical". Also lined up are Coca Cola ("which makes sure fans, volunteers and officials don't get dehydrated") and German rail transport company Deutsche Bahn, which offers "special price" tickets for the championship.

A study conducted by the University of Hoffenheim under the direction of Professor Markus Voeth, published in June, says that Adidas is more recognized than all other sponsors: About 56 percent of Germans know that the sports goods manufacturer is a sponsor of the championship . While "much less known are enterprises such as Betano and Atos, which sponsor about 3 percent of the championship, but are little known by Germans as such."

Advantage China

To learn something more important about sponsors, we ask Professor Henning Vöpel. This economist, director of the Center for European Policy, thinks that the call for German firms to sponsor an activity that takes place in Germany, such as the European Championship, is strange. He told Deutsche Wellen: "Consumer goods are extended global markets and football has a global spread, especially during an event such as the European Championship. It is very clear that the sponsor market also works globally. The globalization of the economy and commercialization of football go hand in hand."

But Vöpel says not all of UEFA's partners come from overseas. And for the right reason: "Anyway, alongside sponsors from around the world, there are also national sponsors. Through this differentiation UEFA is able to maximize the profit from sponsorship and at the same time preserve the "feeling" of the national spirit.

And how is the decision made by event organizers to accept or not accept a sponsor? "Uefa basically makes a decision according to two criteria," says Vöpel: "Who offers the most? And who is more interesting from a strategic point of view?" It is therefore no surprise that five global sponsors come from China: "They are more interested and therefore offer greater willingness to pay in such sponsorship."

Market movements

Sports sponsorship is not a business that starts and ends overnight, but is a strategic investment. Henning Vöpel says that: "Sponsorship does not mean immediate payment in cash. It is more about strategic positioning, market recognition and media attention."

And beverage conglomerates or sporting goods manufacturers often come from oligopoly markets, where a few firms have a monopoly on the market. There is a great temptation to not be intimidated by the few big competitors. What is required is presence in the country. The goal is to withstand the competition."

How money from EURO 2024 circulates

That's why we have to talk once again about the example of Adidas, the company that has been the symbol of the DFB, but also the other way around. A certain strategic relationship may make sense, "because this is how trust and values ??are better developed in the market." But there comes a day when these effects diminish. This is how new movements are created in the markets."

It's better not to talk about money

One of the questions remains open: Why don't the participants talk about the money they receive? One of the explanations for this is that talking too much about money can damage the basis with which football officials enter into negotiations. On the one hand, football clubs are often non-profit organizations and therefore pay low taxes. During major championships, such as the one currently taking place in Germany, it often happens that the income during the championship does not need to be taxed in the country of the organizer.

On the other hand, many fans may be outraged if they hear how large the sums of money are that go to the number of club accounts. If they become aware of how much money is actually given for a game and especially for other things surrounding the game, then they may feel cheated. Both of these things are not good for customer relations.

Speaking to German television WDR, marketing expert Dr. Peter Rohlmann explains the high price of fan loyalty this way: "Emotionality makes the rationality of the price take a back seat". This is well known to football clubs and organizations and the companies that cooperate with them.

They ask for their products as much money as the fans are willing to pay. But Rohlmann thinks that the maximum has been reached, it cannot be more expensive than that: "The limit should not be exceeded. What is known is that the limit is slowly being exceeded."

Is the sponsorship worth it overall?

Half of the money that is given for advertising is money that is thrown out the window, industrialist Henry Ford once said. Only he didn't quite know which half is the one that gets thrown. The study done at the University of Hohenjahm (Hohenheim) says the same. The scientists say in it that: "Today, more than ever, the question of whether it is worth it for enterprises to sponsor remains unanswered."

Markus Voeth, who analyzed in an online survey the data obtained from 1000 people who were asked, says at the end that: "There is no direct impact on the sale of products. Only 12 percent of the respondents look at the companies that sponsor the European Championship, when they buy products or services."/ DW