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Volume 7 No. 149
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Volkswagen Forced To Reconsider Sports Involvements After Scandal, Expert Says

Volkswagen will be forced to reconsider its sports sponsorships following the company’s cheating scandal, according to a sports management professor. The German car manufacturer has been embroiled in a wide-ranging scandal since it publicly admitted to cheating on U.S. vehicle emissions tests of its diesel-powered cars. More than 11 million cars of the Volkswagen Group could be effected worldwide. The scandal has already led to the resignation of CEO Martin Winterkorn and tarnished the company’s public image. Christoph Breuer, a professor of sports economics and sports management at the German Sport University in Cologne, believes that the scandal will also soon impact the company’s bottom line. As a consequence, Volkswagen will be forced to implement efficiency policies, which are likely to impact the company’s sports involvements. “More and more sponsorships will be questioned about their return on investment,” Breuer said. “I think many sports sponsorships will be reconsidered.”

FOOTBALL DEALS IN LIMBO: In particular, its football deals will be affected, he said. The Volkswagen Group is a partner of 10 Bundesliga clubs and six 2nd Bundesliga teams through its brands VW, Audi, MAN, Seat and VW Commercial Vehicles. The main beneficiary of the company's football involvement is Bundesliga club VfL Wolfsburg. VW not only owns the club but is also the team’s shirt sponsor and stadium naming-rights partner. It invests an estimated €100M ($112M) annually in the club. The reason behind the sponsorship was VW’s plan to make the city of Wolfsburg -- site of VW’s HQ -- more attractive for the recruitment of engineers by the means of a successful Bundesliga team, Breuer said. A driving force behind this engagement was now ex-CEO Winterkorn, who is a passionate football fan. “This engagement will be questioned, especially if the new CEO is not such a big supporter of soccer.”

Christoph Breuer
Club execs commented on the scandal by saying they do not expect any changes. VfL Wolfsburg Sports Dir Klaus Allofs told German media, "We have not discussed the effects on VfL. I believe that's not necessary. The VfL commitment has a great meaning. And it will not be automatically questioned by a crisis. We know the value VfL has for Volkswagen." However, Breuer believes this is a short-sighted view. He said that many people at the club and at Volkswagen’s marketing department are underestimating the situation at the moment. “The financial performance of the company will be affected more seriously and as such shareholders’ calls for efficiency programs will get louder,” he said. “And efficiency programs will definitely lead to some changes.” Audi’s partnership with Bayern Munich -- the brand holds an 8.33% stake in the club -- will not be affected by those changes, Breuer said, as Bayern Munich is a major brand.

HANDS OFF MOTORSPORTS: Volkswagen is also unlikely to touch its motorsport programs, according to Breuer, as there is a natural link between the brand and motorsports. He also doubts that the target group of motorsport fans has a serious problem with the cheating as it is not the most sensitive in terms of environmental issues. “I don’t think we will see a lot of changes in the motorsport engagement,” Breuer said. A potential F1 involvement may therefore not be affected by the scandal. Volkswagen is also active in various other sports, including cycling, equestrian and city marathons. Out of those involvements, cycling is the one that could be scrutinized by changes to VW’s sponsorship strategy, Breuer said. "Volkswagen should now focus on sponsorships that show a more positive image of the company."

Volkswagen Group Brands