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Protests & Progress: The Continued Rise of RB Leipzig

In September 2014, I wrote a blog about how RB Leipzig were sending shockwaves through German football as they reached the 2. Bundesliga. The team have since continued with their rapid rise, climbing into second place in the Bundesliga, only behind Bayern Munich on goal difference. Yet their ascent of German football has brought negative attention for both the club and the business model, highlighted by their recent number 1 ranking on a list of the most unlikeable professional clubs in Germany. Much of the animosity stems from the current culture and structure of German football, where fans are members and no one owner can dictate the future of a club. The Red Bull ownership model has challenged this tradition, allowing the Austrian energy drinks company to fund their rise to the top tier of German football. Opposition fans have found a variety of methods to display their resentment, including Union Berlin fans dressing in black, Dortmund fans boycotting the match, and Dynamo Dresden fans going even further, throwing a severed bull’s head from the stands. Much of the anger directed their way can be put down to their nouveau riche status and the particularly rapid ascent of the club. However, even their own stablemate, Red Bull Salzburg, has started to feel the effects of Leipzig’s success, as players, coaches and even kit have swapped Salzburg for Leipzig, whilst future investment is may also be directed into East Germany.

Out of the controversy, there have been glimmers of positivity towards the club, likely due to the emergence of a club from the former East Germany to rival the likes of Bayern Munich and Borussia Dortmund. In fact, they are the first East German club to reach the Bundesliga since 2009 and there is hope that their ascent will, in due course, lead to the development of more East German players – Toni Kroos was the only member of ‘Die Mannschaft’ in 2014 that won the World Cup.

The club has won plenty of admirers amongst footballing purists, as they play an exciting, swashbuckling brand of football, with the introduction of plenty of young, homegrown talent – the club have a policy of only signing players under the age of 24. The club has national team players at every age level and investment in their academy is aimed at creating a sustainable platform so that outward investment in players is minimal. Their progress has been overseen by Ralf Rangnick, who is respected throughout German football and has been previously touted for the England job.

Off the pitch, they are starting to gain respect too, with a number of independent fan groups including Rasenballisten - who are trying to create an identity with loyal, passionate support: “The Rasenballisten stand for football, Leipzig and fan culture, not for sponsors!” Beyond the fan groups, the club received a lot of credit for its support during the 2015 refugee crisis, supplying 60 containers from its training centre as emergency accommodation, a donation of €50,000, with the players even donating clothing to the cause. The success of the team has also led to an improved economic outlook for the city and local area, with €35m invested into the RB Leipzig academy facilities, a regularly sold out sports venue and thousands of jobs created within the local community. The Leipzig Chamber of Industry and Commerce estimated that, in 2014, the club generated €50m for the city and surrounding areas, a figure that will now surely rise following their promotion to the top division.

The controversy remains however, and it’s a journey that has caused a good deal of reflection within football communities in Germany. One self-proclaimed ‘football philosopher’, Wolfram Eilenberger, has argued that fans are venting their frustrations over their own club’s failures: “He who hates Red Bull (Leipzig) hates himself”. There will be many neutrals who would like to see Bayern’s dominance dismantled and it is interesting to see Bayern President-in-waiting Uli Hoeness state that “if it works, it is good for all football, not just for the East”. Whilst not all are enamoured by RB Leipzig’s success, there is much to admire about the progress of the club. Red Bull’s support of football clubs in Austria (est. 2005), Brazil (2007), Germany (2009), Ghana (2008) and USA (2006) points to solidarity and continued investment, which is not to be taken for granted...and something which many football fans would welcome at their club.

Whichever side of the divide you stand, it seems likely that given the financial support and sustainable model overseen by Rangnick, RB Leipzig will be a regular name in the Bundesliga for years to come.

ESports: It’s in the Game

Banana, Fenrir and ppd. No, that’s not a profound spellcheck error, but actually three superstar players who, as part of separate teams, competed for $10.1m in prize funds at a single tournament earlier this year. To make a comparison, this is only 19% less than what UEFA paid out to Real Madrid for winning La Décima in 2014.

Unlike Bale, Benzema and Cristiano Ronaldo, however, you probably haven’t heard of them, their teams or even the sport they play. They won their money playing Dota 2, an online multiplayer battle arena game, think digital chess combined with fantasy gaming, and they represent top members of the growing eSports community.

ESports is a catchall phrase for what is essentially competitive computer gaming: organised tournaments, put on either by game producers, game players or independent bodies. The range of competitive games is, as you’d expect, huge, but they mostly fit within competitive categories; from the lesser-known computer-based multiplayer games, such as League of Legends and the aforementioned Dota 2, to major console gaming titles such as Call of Duty and the EA Sports FIFA Series.

ESports have long been part of gaming culture, but as this generation of tech-savvy gamers has grown up with high-speed Internet in conjunction with the growth of free-to-use video stream sites, such as YouTube and Twitch, the growth of the competition and consumption elements of eSports has sky-rocketed. We spoke with Kyle Bautista, General Manager of compLexity Gaming – one of the world leaders in competitive gaming – who told us: ‘Players and teams have been competing in these games for decades, but the problem was being able to expose a large enough audience to them to get people to know they existed, let alone sustain any substantial growth. The biggest contributor to the growth of eSports is likely Twitch and other livestreaming services.’

Following its growth in 2014, which saw its number of visitors surge by 513% from 371m to 1.9bn, Twitch was purchased by Amazon, and whilst the parent company’s influence has so far been minor, Twitch’s recent purchase of the company ‘Good Game’ – which manages eSports teams ‘Evil Geniuses’ and ‘Alliance’ and also curates eSports tournaments – suggests that Twitch is looking to integrate itself even further into eSports culture.

Amazon will be hoping to replicate Google’s success with YouTube (which sees successful content creators having their streams and videos sponsored by advertisers) on Twitch as a long-term monetisation programme. The advertising streaming option is beneficial as it promotes both great content creation from its users, as they receive a cut of the money, but also encourage brands to spend their valuable ad money on successful channels. To make Twitch as accessible as possible for brands, however, it has to rely on its predicted growth coming to fruition and provide detailed audience segmentation for brands to tap into.

Unlike traditional sports, whose history lies within live events and then TV or radio broadcast, eSports have grown out of an Internet-connected audience and their users exist almost exclusively online. Where big sporting rightsholders have been catching up with new Internet consumption habits, eSports were moulded by them and will continue to grow because of them. It’s unlikely that those habits are going to break, with Vice President of eSports at Riot Games Dustin Beck describing eSports fans as ‘a generation who aren’t consuming their content on TV’, going on to describe TV as ‘not a goal or a priority’.

These changing habits reflect the wider change in content consumption in the Western world: the same access of high Internet speeds that spawned the success of eSports also created a Netflix generation who watch what they want, when they want and on the platform of their choosing. In the future, as this generation matures, the consumption rates of eSports will continue to grow: it already surpasses the likes of NBA Finals and the MLB World Series in viewing figures.

The average eSports fan consumes 10.5 hours of content a week compared to traditional sports fans who watch 7.5 hours a week. Furthermore according to IHS, eSports video will bring in $300m in online advertising revenue alone in 2017, with consumption of eSports to double in size to 6.5bn.

Whilst the access to and usage of Internet-enabled devices has had a major part in the growth of eSports, so has the public perception of gaming as both a pastime and art form. Corporations such as Sony, Microsoft and Nintendo have helped power a global growth in console gaming, popularising a wealth of highly intelligent and beautifully designed games.

This, in conjunction with the proliferation of home PCs, has helped make gaming, as a mainstream activity, become more socially acceptable. As growth in ownership of powerful devices such as smart phones, tablets and consoles continues, so will the perception of gaming itself. For the masses, eSports still represent a niche corner of the more acceptable scene. As growth continues, however, this is likely to become a more widely accessed sporting event.

Where previously the sponsorship of eSports has been dominated by endemic brands such as Alienware – whose activations have been mostly restricted to logos on apparel and a few sponsored streams – we’re now seeing the likes of Coca-Cola, Red Bull and American Express stepping into the space and bringing their unrivalled sponsorship experience to the fore.

Coca-Cola has a large following on its @CokeESports Twitter account, delivering both a Millennial-focused platform for Coke Zero, alongside a few simple activations such as printing out fans’ League of Legends characters on bottles and cans at tournaments.

Meanwhile, American Express released personalised debit cards for fans, citing the hard to reach Millennial demographic being the exact reason for their sponsorship. ESports for these brands offer unique opportunities to access a global consumer audience, mostly Millennial, who are bypassing traditional advertising routes. For Bautista, these big brands create an entirely new proposition for eSports: ‘The addition of someone like a Coca-Cola, a MasterCard, or Nissan certainly brings a higher level of expectation to an event or team, but it also opens up more doors. The ability of a blue-chip company to create an extensive and innovative interaction between their world-renowned product and their targeted audience is what makes the non-endemic sponsors so exciting.’

It is debatable, however, how both the non-gaming public, Media and Government would welcome heavy brand investment in a move towards more sedentary ‘sporting’ activities. Here in the UK, the Government pushes a number of healthy living initiatives, notably Change4Life which encourages movement, whilst stories about the apparent ‘obesity crisis’ are never far away from the news.

Meanwhile, to the concern of many, sedentary gaming activity appears to be on the rise. A recent study by Nielsen revealed that on average US gamers play for 6.3 hours a week, an increase of over one hour since 2011; moreover a UK Government briefing reported that 55% of English boys play video games for two hours or more every day. Overly heavy brand sponsorship of this sedentary activity, therefore, has a certain risk factor; with the wrong PR and communications angle, it could have a negative impact on the brand’s relationship with both stakeholder groups. The latter especially might lead to a reduction in brand perception metrics, in particular trust.

Admittedly it is true that major sporting events, such as the FIFA World Cup or the Olympics, are often watched in sedentary (and arguably unhealthy) environments at homes and pubs. However, the key difference is that these traditional events have the potential to inspire movement (in children especially); Coca-Cola GB, for example gave away one million footballs during the 2014 FIFA World Cup, and McDonald’s, as a sponsor of the Home Nation FAs, are heavily involved in the grassroots game. ESports, on the other hand, lacks an obvious link to promote physical activity, over just simply inspiring more consumption of gaming and sedentary spectating. Sponsors, therefore, will have to work hard to come up with creative solutions if they are to fully justify their sponsorship with some important stakeholders.

Another point for consideration for brands must also be the perceived danger of video games on the psyche of young people. Over the past few years there has been a great deal of debate over the link between violent video gaming and real life aggression. Although Twitch users have to be aged 13+, and there are barriers (such as age gates and profanity filters) to underage consumption of adult-themed material and language, this is by no means foolproof. While the argument hasn’t been proved, the perception alone could damage a brand’s image; especially if the brand involved directly appeals to children and teens in other areas of their marketing.

ESports are the future, the next big sporting phenomenon set to eclipse some traditional properties in the coming years. 2015 has the potential to mark a dramatic shift in the sponsorship landscape, which provides a ripe opportunity for global brands to speak to millions of young people worldwide. It is a truly global platform that levels the playing field by taking no account of geo-political sensitivities.

Already, some big players are getting involved – Amazon’s purchase of Twitch TV is a sign of things to come – and more are sure to join the party in 2015. Now is the time, if done both sensitively and with due regard given to the dangers of encouraging sedentary behaviour, for brands to become synonymous with eSports before the wave crests.

Christian’s blog comes from Synergy’s Now, New & Next sponsorship outlook for 2015, which can be viewed in full here.

Red Bullies? Why Red Bull’s Ownership Model has Caused a Stir in German Football

RasenBallsport Leipzig may translate to ‘lawn ball sport’, but once you factor in their club crest (shown below), stadium (Red Bull Arena), and owners (Red Bull GmbH), it is quickly apparent that they are not your average lower league football team.

RB L

The club, owned and run by the Austrian-based energy drink company, is the fifth club to join the Red Bull stable of professional football clubs, and has caused a stir within German football since transforming the fifth division team SSV Markranstadt in 2009. After purchasing the licence and re-naming the club (which is abbreviated to RB Leipzig), the club colours were changed and the team moved to a new purpose-built stadium, with the goal of reaching the Bundesliga by 2016.

Opposition fans and teams have been quick to voice their displeasure, with 15 minutes of silence from 20,000 Union Berlin fans the most recent example. The reason for this is the apparent threat to the current, strict 50+1 structure of club ownership in Germany, whereby clubs are owned by members. At Bayern Munich, for example, adidas (€75m), Allianz (€110m) and Audi (€90m) all have 8.33% stakes, but the 75% majority is controlled by the members. Having progressed through the divisions so quickly, RB Leipzig have been criticised for making club membership expensive and hard to obtain. This is supported by the fact that the club currently only has 300 members, compared to approximately 250,000 members at Bayern Munich.

Nein zu RB

Multinational franchises aren't the exclusive domain of Red Bull though, with City Football Group taking controlling ownership of New York City FC and Melbourne City – formerly New York Metrostars and Melbourne Heart respectively - and a minority stake in Yokohama F Marinos. Many feel that being able to own more than one club is anti-competitive to other teams with fewer resources, and that it also restricts the opportunities for home-grown players. UEFA legislation stipulates that clubs with the same owner cannot participate in the same competition, a distinct possibility in the near future, were RB Leipzig and Red Bull Salzburg to both qualify for the Europa or Champions League.

Of course, Red Bull is now a familiar name within the world of sport, owning two F1 teams, ice hockey teams, and a wide portfolio of both extreme sports and more mainstream athlete ambassadors. Within the space of 10 years, Red Bull F1 has won the Constructors’ Championship four times, yet there has been comparatively little backlash against the company. Red Bull's creation of extreme events such as the Air Race, Cliff Diving and Flugtag series has also captured the imagination of many, and has widely been praised, so why the backlash in German football?

Historically, club ownership has been tied to the local area, and it is this nuance that allows a couple of Bundesliga teams to be owned by multinational corporations. VfL Wolfsburg and Bayer Leverkusen are owned by Volkswagen & Bayer AG respectively, but this is permitted by the Bundesliga, as the clubs were formed from company factory staff. TSG 1899 Hoffenheim are the other club that RB Leipzig highlight in defence of their model, pointing out the role that major investment has played, and a growing acceptance of the club in recent years.

VFLWolfs

Certainly, Red Bull have a way go to quell the backlash from the majority of the football-supporting German public, but advocates would argue that the success of the model makes the league more competitive. Bayern Munich and Borussia Dortmund have won 16 of the previous 20 Bundesliga titles, and a new ‘challenger’ within the Bundesliga may actually be a benefit to German football, in the same way many feel - with justification - that Red Bull has enhanced Formula One.

It would be interesting to see how the English public would react should Red Bull turn their attentions to these shores, as rumoured in 2013. A Red Bull-owned Premier League team would undoubtedly bring worldwide recognition, prestige and controversy; something that Red Bull do not tend to shy away from, but I suspect that prohibitive costs and regulation may prevent investment. Given the UEFA legislation and relative cost for English football teams, I would imagine growth markets of Latin America or Australia are more likely sites for a sixth member of the Red Bull football family.