Articles

Sports complexes are primarily seen as investment objects. Their business models are rated according to profitability and sustainability. This tendency is of great relevance for the market of leisure or big arenas as not only quality but also investment volume and density on the market explode within this segment.
This strategic analysis provides the explanation for the need of optimization regarding a sound business model, fixing of a suitable financing, integrating important parts of society and marketing with main emphasis on capitalization of the brand image.

This and similar headlines become more frequent in the analysis and statements of cultural journalists. Due to this fact, the image of a sector in crisis without future gets more and more solidified. However, does this opinion bear closer examination? A recent study of METRUM on the classical industry seriously challenges this opinion.

In his book "The Dream Society", the futurologist Rolf Jensen visualises the future concerning the essential motives that will motivate our civil society and its economic doing in the future. What does this "Dream Society" mean for our cultural institutions? What kind of significance will the advanced civilizations still have? Which chances and risks will the responsible persons in cultural institutions have to face? Who are the winners, who are the losers?

The German soccer league is in the most serious financial crisis since its foundation in 1963. Almost every team in the first division of the Bundesliga is concerned. The situation in the second division of the Bundesliga and the regional league seems to be even worse.

The authors and Jürgen L. Born - who is chief executive officer of Werder Bremen and has been working for Deutsche Bank in Latin America for 30 years - explains the varied range of measures financing a professional club. The authors deal with different methods of equity financing as well as debt financing and illustrate possibilities and limits of financing through cash flow.

Besides the financing strategy of Werder Bremen, the often disputed participating certificates developed by Jürgen L. Born is portrayed, as well.

The cultural institutions - as well as our culture - are under pressure from two sides: the changing demands of the audience with new value and leisure orientation and the real decreasing subsidies of the public sector. So, how can the support and protection of culture be successful under changing basic conditions? About it: five theses from the point of view of a consultant for cultural institutions.

In times, when industrial companies have to fight against declines in sales, depressed profits and increasing competition, the focus on the core business as a strategic draft proved itself. Is the focus on the "core business" also the strategically correct answer for cultural and sports institutions in times of reduced demand or decreasing public subsidies? What exactly is the core business of sports or cultural institutions?
Apparently, the core business of professional soccer clubs seems to be defined: creating a competitive soccer team and winning games. But as simple as this definition might seem to be on first view, as complicated is the question if you have a look at the details ...

FC Bayern München or Manchester United are setting benchmarks. But most of the other teams fail in the game of brand-value and brand-equity. METRUM demonstrates how business models have success in pro sports with brand strategies.

"Lean Management" or "Lean Thinking" symbolises an effective organisation where values without wasting are shaped. The basic idea is: all activities, all resources, which are not necessary to improve a product's value, are seen as redundant and should be eliminated just like stocks or stacks of documents waiting for processing. Thus, capacities are released that can be used for further increase in competitiveness and to ensure the company's future - for the enlargement of the range of products or the development of new products. Is it possible to transfer the great success of the industrial production to cultural institutions and non-profit-organisations?

The growing commercialism of pro sports causes drastic changes in the structures of top clubs. Strategic marketing considerations determine the proceeding. The exploitation of new markets and the brand's rise in popularity are discussed. More and more sports clubs are recognising the direct connection of brand strength and economic potential.

Top clubs succeed in constantly developing and sharpening their brand They stand for a clear brand profile. Market leaders like Real Madrid, Manchester United or FC Bayern München constantly reap the rewards of their labour for a consequent creation of a brand. They know: the brand is the "master maker".

In Germany sports associations have to manage more than 27 million members. However, they run the risk of losing connection to their core target group - teenager aged 14-19. Using European sports associations as example this article mentions the factors of success and illustrates where there ist need of action.

"Oh Lord, make us good, but not that good" - NEALE (1964) used this prayer for pro sports clubs. It is based on the exceeding significance of "cooperence" - the simultaneity of cooperation and competition - for sports competitions: although the participants strive for greater strength in performance in comparison with the competition, monopolies or quasi-monopoly status cannot present an option. Without suitable opponents, no marketable product can be offered. In contrast to other lines of business, pushing competitors aside does not lead to the revenue maximization but to a gradual cessation of the potential profit. The leagues often try to limit the imbalance between the teams through redistribution mechanisms, e.g. limit central marketing of TV rights and - following the argumentation - by means of connected increase of attractiveness to maximise the demand. The economic assessment of such institutional basic conditions is made possible in detail by the knowledge of the actual determinants of demands and their effectiveness. Accordingly, the interest in the development of models of demand in team sports is increasing. Those models make it possible for the club's management, their business partners and the management of the league to predict the spectators' reception and the proceeds to be generated, to estimate the effects of non-influenceable variables and to influence as precisely as possible the relevant factors by using suitable instruments.

There is nothing wrong with money - that was even known in the Roman antiquity. Money is not everything - that might be a reasonable civil belief. Money makes the world go round - that is the common law of public cultural institutions in Germany. The growing acting of one's own authority of public cultural media institutions is not exclusively, but more and more a question of money. If one wants to meet the requirements of one's educational and cultural objectives, one has to try to get increasing income and new sources of revenue and resources. Fantasy and creativity are demanded as well as entrepreneurial initiatives and a professional marketing.

Events, such as cultural or sports events, feel the full force of the changed attitudes of their audience: the new, surprising, exciting, unique is selling very well. Only live-events, which successfully face the threatening routine, have small chances.
A lot of companies in the sectors of culture and sports missed the chance to use the enormous potential of their appeal, for themselves and their partners.
The future challenge is the transformation from audience to customers and the constant acquisition fo customers.

In many leagues, turnovers as well as piles of debts have been increasing enormously over the last years. The first attempt at explanation for this is based on the effect of incentives as settled in the society's club constitutions. Thus, it is demonstrated that the club's managers possess systematic incentives of multiplying their social prestige by successes of their club which had been expensively bought before. The second attempt at explanation is based on the economic peculiarities of the league competition. It is shown that the danger of failing investments increases, the bigger the differences in income between the league's statuses get. The bigger the league is, the smaller the differences are in productivity between the clubs and the more the clubs are forced to invest simultaneously.

The expenditure for culture of state and municipalities dropped by 30% in some states like Mecklenburg-Western Pomerania between 2001 and 2005. In North-Rhine-Westphalia, Berlin, Saarland and Lower Saxony public subsidies for cultural institutions dropped by a two-digit percentage during that period. At the same time, the cultural institutions concerned have to face on the part of the expenditure a very high and rigid bloc of personnel costs. The mixture of decreasing public subsidies and rigid - or rather even increasing personnel costs - lead to a financial storm in the cultural institutions. How can cultural institutions get the turn before the storm?

The basic idea is: firstly, to identify and realise the quickly practicable reduction in cost; secondly, to identify and make full use of unexploited potentials for a rise in income and to reinvest the resulting savings and additional income in an intensified marketing.

"King Soccer" slightly fell out of step. Decreasing marketing incomes of TV and advertising place the paying fan more and more in the focus of management activities of soccer teams in the soccer league. In cooperation with Werder Bremen, METRUM started an extensive programme of customer relationship management. The project's aim is to gain new members, visitors and fans for the club and to bond already existing customers more closely.