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36. Bull, Bear & Beyond – Borussia Dortmund executive interview Advertising
6 Plays1 year ago
In the third interview, Borussia Dortmund’s advertising revenue is the focus. Advertising, or sponsorship income, is the second most important revenue stream for the company, at 30% of the total in FY24. Thomas talks about the structure of the relationships with the various types of sponsors, how the company develops relationships with the sponsors and the growth drivers of sponsorship income.
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Original interview published on 16/12/2024 and reposted as a podcast
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Transcript
Advertising's Role in Revenue
00:00:07
Speaker
So advertising is the second most important revenue stream for the company. It's just about 30% of the total and and it's also grown well over the long term.
Sponsorship Tiers and Benefits
00:00:16
Speaker
So you have um various tiers of sponsorship relationships with your partners. Could you just talk about ah the different levels of those sponsorships, the benefits they receive, the nature of those relationships, please?
Importance of Sponsorship for Competitive Advantage
00:00:31
Speaker
Okay, first I have to express that sponsoring is relative if far ah very important for our relative competitiveness within the league.
00:00:39
Speaker
Because the national broadcasting is said ah distributed more or less or on the same level. But sponsoring is a difference from what you can make. We have a level nearly 150 million in sponsoring.
00:00:56
Speaker
and this is comparable high to all others. it is We are the second in the German market in respect of the level of
Key Sponsors and Strategic Partnerships
00:01:04
Speaker
sponsoring. but sponsorswi ah The different partners are, we have main partners like the name right out of the stadium, the the shirt sponsor, which is in our case Evodik and one in one.
00:01:19
Speaker
depending from for which competitions and as kids sponsor we are working with Puma. These companies are on the equity side of Bursadon, they are shareholders of Bursadon, they are strategic partners and we work very long term with these partners so they high importance for us and surely high economic impact in respect of what they're paying for their sponsorship.
Contract Types and Partnership Stability
00:01:47
Speaker
And they have very big rights they occupy. Then you have champions partner that varies between 10 to 14 champions partners you have under contract.
00:02:00
Speaker
These are mid-term contracts, three, five years, depending which you're working. And they have exclusivity for their branches.
00:02:12
Speaker
And then below this, you have the partner level. And there you have the premium partners with bigger packages, but bigger sponsoring packages.
00:02:22
Speaker
but first theres They're not that long-term, they're more mid-term, more short-term.
Developing New Partnerships
00:02:29
Speaker
But bigger packages than normal ordinary partners with smaller packages.
00:02:35
Speaker
But all over there are a lot of companies and this gives us us a stability and it's not so risk concentrating on a few partners.
00:02:48
Speaker
And this makes our sponsoring level relatively good predictable. and And how do you develop relationships with those new partners? Well, we have a department, a sales department, where a lot of people are working.
00:03:03
Speaker
they and we are also a contractor to marketing company, which is Sport5, with offices over the world. offices all over the world and they talk to potential partners.
Drivers of Sponsorship Growth
00:03:15
Speaker
And there are a lot of research they're doing and then developing of sponsoring packages for the purpose and needs of of certain sponsors and that we do all over the world with a lot of people.
00:03:32
Speaker
It's brand marketing what we're doing. So the obvious question for investors is, um where does the growth come from? but Presumably, believe there's a a maximum number of partners you can have because the existing partners don't want to be diluted in their exposure.
00:03:49
Speaker
Well, the first of all, as you develop yet the prices for you for your sponsorships over the time. And that depends on your sportive success. The more sportive successful you are, the better the higher the price tag on the certain rights you have. This
Global Brand Expansion Strategies
00:04:06
Speaker
is one thing. The other is you know you have a new world of digital digital digitalization and internationalization where you can do regional partners abroad in certain countries. digitalization on certain platforms you have digital rights to sell they're not that limited and ah though you have for example virtual advertising where you can sell an advertising in the stadium in the same time for a specific target market on the TV screen appears a different sponsors so there are multiple possibilities to develop sponsorship over time and
00:04:42
Speaker
ah abroad and this is important for that reason internalization and digitalization is a very important issue for us for our brand development to make ourselves from a European brand maybe in the the future to a world brand in football We talked earlier about the level of a football brands.
00:05:04
Speaker
We now are now at some kind of a sweet spot. We are still not the top but one of the top top brands in the international football, but we are working on internalization and digitalization to get it more and more developed.