Due to a rigorous cost savings approach initiated by its new CEO, Volkswagen’s sponsorship engagement in the Bundesliga could come under scrutiny after the emissions scandal.
The emissions scandal
The emissions scandal is an unprecedented disaster for automotive giant Volkswagen. More than 11 million vehicles are affected and a so hardly built reputation was shattered in less than one day. The company has already put aside 6.5 billion euros to cover recall costs and fines, but considering potential US Class action and a decline in sales, the total amount is yet to be defined.
As they say, when it rains, it pours.
The Volkswagen scandal could have quite an impact on German football, too. Do you know why?
Volkswagen’s engagement in the Bundesliga
Let’s have a look to the relationship between Volkswagen and the Bundesliga.
Volkswagen is the owner of Vfl Wolfsburg and has through its subsidiary Audi an 8.33% stake in FC Bayern Munich and a 19.94% stake in FC Ingolstadt 04. Moreover, Volkswagen supports other Bundesliga clubs (among them Schalke 04, Hamburger SV and Werder Bremen) and is one of the official sponsors of the German Cup (DFB Pokal).
Even if it would be unlikely to see an immediate withdrawal of Volkswagen from the football industry, there are already some dreadful warnings.
Warning signs of a VW sponsorship reduction
During one of his first public appearances, the new Volkswagen CEO Matthias Müller told employees that company would have to be more careful about costs. All current and future spending are to come under scrutiny.
If that wasn’t enough, Vfl Wolfsburg’s sport director (Klaus Allofs) recently revealed that the construction of a new youth training center will be postponed. Not directly relating to the Volkswagen scandal, he stated that “it is understandable that it is suspended for the time being at least”.
It seems as if the top-notch infrastructural project with an estimated cost of around 40 million euros is the first victim of the rigorous cost saving plan of Volkswagen CEO Müller.
What is going to happen next?
Will there be a domino effect? Will Volkswagen cut its generous sponsorship of the Vfl Wolfsburg (reportedly 90 million euros per year)?
Hans-Gerd Bode, Volkswagen’s spokesman said that “Wolfsburg is not an issue at all”. Yet he stated that they are currently evaluating “the benefits from Volkswagen engagements”.
It is hard to make accurate predictions on future developments, but for the sake of the Bundesliga it will be crucial that the new Volkswagen CEO and his senior management team will see a positive return on investment on Volkswagen’s sponsoring of German football.
Did you know? Emirates, sponsoring multiple teams (Arsenal, Real Madrid, Paris Saint-Germain, AC Milan and Hamburger SV), invests 115 million euros per year to put its logo on football jersey.
References: Fortune, Foxnews, Dpa International, Timefreepress
Pictures: WSJ, Die Presse
4 thoughts on “Will the Volkswagen scandal affect the Bundesliga?”
Very interesting. I think that if product sales drop, the scandal will definitely affect the Bundesliga.
VW shouldn’t make the mistake like other big brands and cut down its marketing expenditure in a crisis. This will just lead to a further decrease in sales. Kind of a vicious circle.
I absolutely agree with you. Cutting down on marketing spending just to decrease costs would speed up the downward spiral.
Something is already happening. VW brand Audi was understood to be doing a deal with Red Bull as F1 engine supplier, but this plan went up in smoke when the German manufacturer became embroiled in the car emissions scandal.
As they are involved in the Endurance Serie it would have been a feasible and cost-contained process (convert successful eTron engine to current F1), but they aborted the whole project.
Cutting down marketing expeditures is shortsighted, for sure. Hope they’ll realise before it’ll be too late.