These days the Volkswagen ArenaWolfsburg’s ground, not only hosted two important matches of the eponymous team against Augsburg and Borussia Dortmund, but also an event of wider significance, which will probably decide much more than a few points in the league. It is about the negotiations between the management of Volkswagen and the union IG Metall for a new collective labor agreement, in the midst of a crisis.

Horror scenarios are circulating. There is talk of closing factories in Germany, of possible layoffs, of cuts of billions of euros. There is also concern among the staff of the football team, which is sponsored by Volkswagen. How long will the German car industry continue to support a team which, despite generous funding and occasional successes in the “Bundesliga”, has not managed to escape from 14th place in the standings this year?

“No question”, but…

VW sponsors Bayern Munich and the German national team, either directly or through its automotive subsidiary Audi. For Wolfsburg it is more than a sponsor, as it owns 100% of the shares. In September the group’s chiefs met with management, saying there was no question of canceling “current contracts”. But what exactly will happen from there on remains unknown.

For its part, the management of Wolfsburg, in a statement, assures that it will also contribute its share to VW’s savings program and that, in any case, the aim of the management is to manage the resources at their disposal ” in the most effective way’ and this is par excellence ‘in the light of recent developments’. Apart from this announcement, there is no official update.

Local newspapers speak of a “feeling of insecurity” among their football company employees, but also of disparaging comments on Volkswagen’s intranet, where some question “how the company funds such an expensive ‘game’ like a football team, when thousands of jobs are at risk work?” The mood certainly hasn’t improved following a recent appearance on reality TV by former Wolfsburg player Max Kruse, who mentioned that during his time at the club it was “raining down money”.

80 million the annual sponsorship

There are two main financial agreements governing Wolfsburg’s relationship with VW. The first sees Wolfsburg handing over to the parent company all the profits that enter the coffers from player transfers, for example when a player such as Belgian Kevin de Bruyne is loaned to Manchester City for €75 million. Conversely, however, when losses occur – whether in an unusual period such as the pandemic, or because it simply happened to be a bad year – they are borne entirely by VW.

The second deal sees VW support the team with a lump sum each year, which includes advertising and promotion opportunities such as stadium naming and shirt sponsorship. Previously, this remittance was around 100 million euros per year, in 2017 it decreased significantly, but this year it increased again. It is estimated that it is currently close to 80 million euros. For many teams competing in the ‘Bundesliga’, Germany’s professional football league, this sum is a midsummer night’s dream. On the other hand, it is clearly no longer enough to compete with the likes of Bayern Munich and Borussia Dortmund, who compete at Champions League level.

Looking for new talent

That is why, even before the big crisis broke out at VW, the team’s management had readjusted its strategy, reducing the cost of the “roster”. In recent years, he does not buy ready-made players with expensive contracts, but prefers new talents, who are asked to gain experience in the Wolfsburg shirt, to then be sold for a much better price.

Outstanding cases were those of Miki van de Ven and Lukas Nmetsa. The former moved to England’s Tottenham Hotspur and the latter to Borussia Dortmund, with Wolfsburg pocketing nearly €70 million for both. On the other hand, in recent years the team has spent a lot of money on players such as Matias Schwanberg, Sebastian Bornau and Vaclav Cerny, who have not shown significant development.

Despite this, the team’s new coach, Ralf Hasenheitl, has set the team’s exit to Europe as a clear goal. Speaking recently to the local newspaper Wolfsburger Allgemeine Zeitung, the Austrian technician states: “We are a part of VW. When VW and VW employees are doing well, then we are doing well.” Something that probably isn’t happening right now…

Edited by: Yiannis Papadimitriou