As a rights-holder, Red Bull has a problem that it never really had as a sponsor – tribalism
Conrad Wiacek
Conrad Wiacek is the newly-appointed head of Sportcal Sponsorship. Before this he spent two years working at Kantar Media where he specialised in measuring the impact and value of commercial programmes in sport.
Red Bull's growing pains
21st June 2017, 13:37

We all know the story about the man taking a balloon to the edge of the Earth’s atmosphere and jumping out of it. What about the one where the guy jumps a 10-storey building in Las Vegas on a motorcycle? Or how about the one where the F1 car takes on an actual RAF Hornet Jet in a race?

Even if you don’t, you will definitely know the brand that set up all these stunts.

For years, Red Bull has marketed itself as giving you wings, building the idea that a caffeine-based drink can help you achieve anything. This is a concept that the brand’s marketing department has set out to prove in the most outrageous manner possible, creating some of the craziest stunts seen in sponsorship activation.

Therefore, perhaps logically, it was only a matter of time and money before Red Bull started to look at controlling its brand destiny in a much more proactive manner – by owning some of the properties it previously used in its marketing mix in order to better control the message.

But while many will be familiar with the eponymous Red Bull Racing F1 team and have clocked that Toro Rosso translates as ‘Red Bull’ in Italian, most will not be aware of the depth of engagement Red Bull has entered into with this strategy. The brand has, or has had, a stake in 26 sports properties across various sports around the world.


It was only a matter of time and money before Red Bull started to look at controlling its brand destiny in a much more proactive manner

While their acquisition has so far been aimed at developing the brand, that situation might now be about to change in two markets Red Bull sees as its domestic heartland: Austria and Germany.

In 2005, Red Bull purchased soccer team SV Austria Salzburg and rebranded it Red Bull Salzburg. In so doing, Red Bull airbrushed all traces of the previous team away, despite years of success, much to the consternation of a particularly hard-core element of its fan base.

This decision has led to a split among fans, with some even retaining the colours of SV Austria Salzburg (purple and white). Uefa was also unhappy – under the European governing body’s rules regarding sponsorship, Red Bull Salzburg cannot compete in European competition with that name, so the team competes as FC Salzburg.

In 2009, Red Bull purchased another soccer team, SSV Markranstädt and rebranded it RB Leipzig (RasenBallsport Leipzig). To circumvent German club ownership rules, only seven members formed the board – all of whom just happened to be Red Bull employees. This immediately provided critics with ammunition. The move has led to the club being described as a marketing project and flouting the ‘50+1’ German club ownership rule, designed to give fans a voice in the running in the club.


RB Leipzig has become the most hated club in Germany, but this has proved no hindrance to success

As a result, RB Leipzig has become the most hated club in Germany, but this has proved no hindrance to success. The club finished as runner-up in the Bundesliga in the 2016-17 season, meaning that it has achieved direct entry to the Uefa Champions League group stage, in line with its eight-year timeline. And it is here that Red Bull’s problems really begin.

As a sponsor, Red Bull has historically been able to utilise various marketing platforms to boost the brand and ultimately sell more product. To this end, Red Bull was able to create bespoke activations and drive interest in the brand – Felix Baumgartner jumping out of a balloon in a spacesuit certainly got my attention. These types of promotions have given the brand a ‘cool’ image, something that is very hard to achieve in today’s complicated marketing landscape with a cynical audience suspicious of a lack of authenticity.

As a rights-holder, Red Bull has a problem that it never really had as a sponsor – tribalism. Stunts like Baumgartner’s jump or BMX riders back-flipping over moving trucks while branded to within an inch of their lives don’t provoke the same emotional response as a player signed by a billionaire scoring against your team, which simply doesn’t have those resources.

In Austria, no one can match Red Bull’s spending power, while in Germany only Bayern Munich sit above RB Leipzig in terms of spending potential. Looking at the final 2016-17 Bundesliga table, only Bayern finished ahead of ‘manufactured’ clubs RB Leipzig and FC Hoffenheim (owned by billionaire SAP founder Dietmar Hopp) which is a telling story in itself.

In F1, Red Bull hasn’t attracted quite the same sort of rage as in soccer, but it’s clear that everything Red Bull gets involved in serves one purpose – to sell cans of energy drink.


If the two biggest soccer properties Red Bull owns cannot be branded to reflect their owner’s marketing aims in the biggest club tournament in the world, what is the point of Red Bull continuing to fund these ventures?

This is a key point, as the fundamental condition for Red Bull’s marketing is success, if not breaking (or even creating) world records. Red Bull is steadfast in its pursuit of excellence, perhaps best evidenced by co-founder Dietrich Mateschitz threatening to pull Red Bull out of F1 if his team wasn’t ‘winning’.

This creates a rather unique pressure on Red Bull ahead of the 2017-18 soccer season. If the two biggest soccer properties Red Bull owns cannot be branded to reflect their owner’s marketing aims in the biggest club tournament in the world, what is the point of Red Bull continuing to fund these ventures?

Given how jealously Uefa has previously guarded its commercial rights and the exploitation of those rights, as well as the rules surrounding multiple ownership of clubs playing in European competition, it is extremely surprising that it recently ruled that two teams owned entirely by the same company do not represent a conflict of interest.

This decision is likely to be scrutinised in future by other owners such as ENIC, the sports investment company that owns England's Tottenham Hotspur, which was found to be in breach of ownership rules with a minority stake in AEK Athens (42.8 per cent) and a majority stake in Slavia Prague (96.7 per cent) – a situation much less likely to lead to conflict than one company owning controlling stakes in two clubs.

The ENIC decision delivered by the Court of Arbitration for Sport stated that a company or a person has an ‘interest’ in a club when it has:

• The majority of the shareholders’ voting rights in another club in the same Uefa club competition;
• The right to appoint or remove a majority of the directors in another club in the same Uefa club competition; or

• The majority of the shareholders’ voting rights (through a Shareholders’ Agreement) in another club in the same Uefa club competition.

Now that Uefa has apparently disregarded this ruling, what is to stop another company from buying multiple clubs with a view to exploiting those clubs as a marketing vehicle? By allowing clubs owned by a single company to play against each other, Uefa has potentially made a rod for its own back in areas such as third-party ownership.

As for Red Bull, despite the ruling allowing its clubs to enter the Champions League, the brand still finds itself in a tricky situation. Does it continue to fund these soccer clubs while not being able to fully exploit access to a global audience, which is ultimately the point, or will these restrictions mean it will walk away and revert back to type in terms of being a sponsor with a penchant for daring activations?

Either way, it will be interesting to look at the development of Red Bull’s commercial strategy over the next few years to see how it addresses the challenges of being a rights-holder versus a traditional sponsor.

Sportcal

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