Euro sponsorships prize profits over patriotism

A development in the world of football ruffled a few feathers here in Germany recently. For more than 70 years, the national football team had played in Adidas jerseys. 

But, on March 22, the German Football Association (DFB) announced that the US sports manufacturer Nike is to equip all German national teams for at least seven years as of 2027.

According to some reports, the DFB will earn at least twice as much money as it would have in the partnership with Adidas, which was reportedly worth €50 million ($54 million) a year.

With the introduction of football boots with cleats, Adidas played a significant role in the German team's triumph at the 1954 World Cup in Switzerland.

The new type of boot gave the Germans a huge advantage over the favored Hungarians on the rain-soaked pitch in the Bern stadium. In the decades that followed, the DFB-Adidas partnership became almost symbiotic.

The deal with Nike left many football fans speechless — and German businesses aghast. German politicians weighed in, criticizing the DFB.

Health Minister Karl Lauterbach, of the Social Democrats, voiced his disappointment on X (formerly Twitter). "I think it's a bad decision," he wrote, "where commerce destroys a tradition and a piece of home."

And Economy Minister Robert Habeck, of the Greens, said: "Adidas and black, red and gold have always belonged together for me. A piece of German identity. I would have liked a bit more local patriotism."

Unwilling market participants

The next shock followed just a few weeks later, with the announcement that the Chinese EV manufacturer BYD would be one of the main sponsors of the Euro 2024— not Mercedes or VW.

Though that may have come as a surprise to many, the development has precedent. South Korea's Hyundai was chosen over German car manufacturers as one of the main sponsors for the "home World Cup" in 2006.

Attempts to find out what prompted the decision have proved difficult. The DFB refused to answer DW's questions and referred us to the organizer, the European Football Association UEFA in Nyon, Switzerland. They too refused to answer any questions.

Instead, DW received a short list of five business partners involved in the Euro 2024 championship.

According to that list, Adidas is providing the "match balls and equipment for volunteers and staff," Atos (a global digital services provider) is responsible for IT during the tournament, and BYD is providing "a fleet of electric cars." The other sponsors are Coca-Cola and Germany's national rail operator, Deutsche Bahn.

A study on the European Championship published in June by the University of Hohenheim led by Professor Markus Voeth confirms that Adidas is the best-known sponsor: 56% of Germans know that the sporting goods manufacturer is supporting the tournament.

The study goes on to say that "far behind are companies such as [digital betting operator] Betano and Atos, with around 3% each, which are official sponsors of the Euro 2024, but are only known to few Germans."

China secures an advantage

To find out more about the selection process of sponsors, DW turned to Professor Henning Vöpel, director of the Centres for European Policy Network.

He considers the call for German companies to sponsor an event taking place in Germany such as the Euro 2024 to be "unrealistic."

"Consumer goods markets are largely global markets, and football has a global reach, especially for an event as important as the European Championship. The globalization of the economy and the commercialization of football go hand in hand," he said.

Vöpel noted that not all UEFA partners come from overseas. "There are national sponsors as well as global ones. This differentiation allows UEFA to maximize its sponsorship income while maintaining the 'feeling' of a national focus."

And how does the organizer decide for or against a sponsor? "Basically, UEFA decides according to two criteria," Vöpel said. "Who offers the most? And who is strategically interesting?"

It is no surprise, he said, that five global sponsors of the tournament come from China. "They have the greatest interest and therefore the highest willingness to pay for such sponsorship."

Movement in the market

Sports sponsorship is not a day-to-day business, but a strategic investment.

"Sponsorship does not mean that it pays off immediately in terms of cash flow. It's about strategic positioning, brand awareness and media attention," Vöpel said.

And beverage companies or sports equipment suppliers "often come from oligopoly markets," Vöpel said. "There is a particularly strong incentive not to lag behind the few global competitors. The aim is to outdo the competition."

A certain strategic bond could make sense for Adidas, he said, "because this is the best way to develop trust and brand value. At some point, however, these effects will diminish. And then there will be movement in the market again."

Don't talk about money

One question remains: Why are the people involved in sponsorships reluctant to speak about them?

One explanation is that too much talk about money could erode the business foundation that football officials rely on.

For one thing, sports associations are often organized as nonprofit organizations and therefore only have to pay a small amount of tax. At major tournaments, they negotiate terms whereby they don‘t have to pay tax on their income at the tournament in the organizer's country.

On the other hand, many fans may feel repelled by the sums of money that flow into the associations' accounts. If they realize how much money they actually spend on a match and on the surrounding events, they might think they are being exploited. Neither would be conducive to customer loyalty.

Is sponsorship even worthwhile?

The US industrialist Henry Ford is said to have remarked that 50% of the money he spent on advertising went down the drain. He just didn't know which half that was.

The University of Hohenheim study offers a similar take. "Whether sponsorship is really worthwhile for companies, however, is more questionable than ever," the authors stated.

According to Hohenheim University's Voeth, who analyzed the data collected in an online survey of 1,000 respondents: "This hardly triggers any direct purchasing effects. Only around 12% of respondents primarily look for brands that sponsor the European Championships when purchasing products or services."

This piece was translated from the original German.