Business Game Time

Schalke 04 and Borussia Dortmund are arguably the biggest enemies in German soccer. The match between the teams from two cities that are just separated by a little more than 30 km (roughly 20 miles) was ranked on seventh place in the list of the biggest soccer rivalries in the World by World Soccer Magazine. It’s a match which supporters from both teams are waiting for all season long, the most important match of the year for them without any doubt.

This season, the match will take place on Sunday, September 19, but something is going to be different:

Way more than 200 supporter groups of Borussia Dortmund have signed an agreement that they will boycott the match and not travel to Veltins Arena, the stadium of their hated neighbors. What has happened that brings die-hard supporters to the point where they accept to miss the match of the year? Guess what, it is all about money.

In the German Bundesliga, a home team has to offer 10% of the tickets to fans of the away club. These nearly 6.200 tickets for Dortmund supporters are usually sold within seconds. This year however, Schalke has raised the prices for away supporters to 22 Euros for a standing ticket and 55 Euros for a seat and left Dortmund fans fuming.

If you’re living in the US and are used to ticket prices in the NFL or if you’re living in the England and are used to ticket prices in the Premier League, you probably won’t believe that people are complaining about a game ticket that costs just 28 dollars/ 18 pounds.

The German Bundesliga however is known for the rather moderate pricing of the tickets. The hardcore supporters on the standing terraces are not used to paying a lot more than 15 Euros to see a match, so the 22 Euro price tag Schalke is asking is 50% above what they would expect.

At the same time, the German Bundesliga is regarded by many as the league out of the big four or five in Europe where the atmosphere is the best, and it also leads the continent in average attendance per match.

Christian Seifert, CEO of the league, explains:  “The success of the Bundesliga is because of the ‘core value’ of the supporter coming first at its clubs. This is why tickets are kept so cheap. (…) [The clubs] are very fan orientated.”

Supporters in Germany are now afraid that these days will soon be over. They have watched the development in leagues like e.g. the English Premier League over the last twenty or so years rather carefully, during which teams have developed from local ballclubs to global brands, standing terraces have been closed, ticket prices skyrocketed, mostly rather well situated stadium visitors replaced the loud fans in the stands and the atmosphere changed from ecstatic joint chanting to an opera like “keep quiet and watch”.

In the letter explaining their boycott, Dortmund fans put it like this:

“Naturally it is hard for us not to support the team (at Schalke). But we want to make sure that even in the future there will be colorful and loud terraces and the following generations will be able experience the fascination of soccer and Borussia (Dortmund) at the stadium. This step is necessary if we really want to fight for this cause”.

The discussion is on. Who’s right, who’s wrong?

Obviously, Schalke will sell out the stadium anyway, and 6.200 Dortmund fans more or less won’t make a difference in a match for which they could easily sell over 100.000 tickets. And probably even the seats in the away fans section will be filled with Dortmund supporters, just not the die-hard fans organized in fan clubs, but richer individual fans that don’t care about a boycott or the fan community in general.

At first glance it looks like an economic no-brainer – raise the prices and still sell the same volume. But there’s a twist to it: Not all the customers are the same. The fans boycotting the prices are loyal and have become part of the product. Like any soccer league, Bundesliga’s revenue sources are match-day revenues, sponsorship receipts and broadcast income. When you try to increase match-day revenues, terraces may become less colorful and more silent as some those fans putting up the show every week today would be priced out of the stadium. That would reduce the atmospheric value of the product, make matches look less attractive on TV, potentially resulting in lower broadcast income and sponsorship receipts, and on the long run even non hardcore fans might miss something and rather stay in front of their TV set to watch the match instead of going to the stadium.

I acknowledge that this view is simplistic and rather black-and-white, and some in the German league claim that higher ticket prices would enable teams to buy better players, resulting in a higher competitiveness which could lead to higher revenues from international competitions and so on. Probably only one of these views will be right, and I don’t have the final answer either.

However my point is something different, and this time something you don’t read too much about in marketing textbooks: There is a choice. You can choose your customers. Do it wisely.

There are many instances in which you have the chance to change from your existing customer base to another one and improve short term profits. However, you don’t know your potential new customer base as good as you know the old one, you don’t know much about their motivation, their loyalty, and so on. There’s a risk that you bring in more profitable customers, replacing the old ones, but that these new customers move on soon, leaving you without old and without new customers and a business model that does not attract any of these two anymore.

Identifying this risk is hard, because in the short term you optimize your business, while you may put it at risk in the medium or long term. With KPI’s, reporting periods and residence times in management positions shortening, it is not easy to convince others not to choose the short term profit because of a fuzzy long term risk.

It seems like Bundesliga clubs and the league in general are currently facing the same kind of decision. On September 19, there will be a sellout crowd watching the match at Veltins Arena. But the atmosphere will probably not be as good as usual. It’s the clubs’ choice if this matters or not, just as much as it is your choice which customer group to target.

Related posts:

1. Choose your Customers Part 2: They are your Product!
2. Learning from a crazy Week
3. A horse, a noise, a Spaniard and emotions in economy
4. Tradition, or: 80.000 freezing people
5. Micro-Tactics: The Post-Ideological Future

Filed under: soccer (football) by Johannes Musseleck
on September 6, 2010 at 8:00 am CET
Tagged with: attractiveness • borussia dortmund • boycott • broadcast income • bundesliga • cheap • choice • christian seifert • colorful • core value • customer groups • customers • derby • english premier league • existing customer base • fan clubs • fan orientation • fans • fascination • fc schalke 04 • germany • kpi's • management positions • match-day revenues • nfl • product • reporting periods • residence times • risk • rivalry • rivals • short term profits • silent • soccer (football) • sponsorship receipts • support • supporters • ticket prices • tickets • veltins arena