THIS AUSTRIAN BASED SPORTS DRINK COMPANY HAS ENTERED THE WORLD OF FOOTBALL BY OWNING A NETWORK OF CLUBS ACROSS THE GLOBE. HERE'S HOW.
BRAND STRATEGY
Red Bull has a history of dabbling in the world of sports by owning or sponsoring sporting events or teams.
It started by sponsoring extreme sports events like BMX races and Monster Truck events. This helped them in building a strong consumer base amongst young Americans. At that time RB was based in Europe & had just entered the American market.
It went on to create a niche for itself among sports enthusiasts by owning several sports franchises.
It owns two constructors' teams in f1 named Red Bull Racing (in collaboration with Aston Martin) & Toro Rosso (its feeder team i.e. an avenue for trying out an upcoming driving or some wacky innovation).
This feeder team strategy is not restricted to formula 1. It is clearly evident in the game of Football or Soccer as its known in USA.
This extensive investment in sports attracts more eyeballs to the Red Bull brand & helps it in expanding in new markets & creating consumer awareness.
This unique brand strategy also gives its founder Dietrich Mateschitz, positive PR as a sports promoter.
TALKING FOOTBALL & MONEY
As clearly portrayed in the cover image, Red Bull owns 4 football clubs based at Leipzig (its marquee club), Salzburg (the talent development club), New York (its commercial club) & Campinas (the talent spotter club).
Thus it has created a healthy ecosystem of 4 different clubs who co exist to facilitate one aim- achieve sporting success to promote the red bull brand.
These sports ventures have also emerged as a viable source of revenue as well as income for Red Bull. Traditionally, owning sporting teams ekes out cash but RB's systematic, coordinated, unconventional & data led approach has lead to rich dividends for the parent company diversifying its source of income.Given below is the financial statement of Red Bull Technology (subsidiary of Red Bull which takes care of its f1 operations) which clearly shows how the company made profit to the tune of millions in 2016.
In an industry where billions of dollars are spent every year, Red Bull has done well to outsmart the market. Its meteoric rise from the fifth division of German football to the first is well documented. They are big spenders in the Bundesliga (German top division) where they have challenged the old order of Bayern Munich & Borrusia Dortmund. Their transfer spending spree has attracted criticism but its data .led approach & much lower wages have been much ignored. They have also scooped quality young players from their other clubs bringing down player acquisition costs to a certain extent.
The multi-club structure has also been used by these clubs to their advantage. Any promising player can be offered a career path within the RB family. As a youth player, the youngster can develop at the world class facilities & top notch coaches at RB Salzburg in Austria. After proving himself at this level, he can move on to greater heights at RB Leipzig which is a top club in a premier European league (Germany). After having a fruitful & illustrious career at Leipzig, the player can spend the twilight of his career in the bright lights of New York playing in the MLS, topped off with a last grand paycheck. Thus a player can blossom on a financial & sporting level within the Red Bull ecosystem.
Another economic aspect is the four clubs can have a centralized scouting, data, coaching & commercial centre cutting down costs significantly.
These clubs also have access to the top management at Red Bull. So to head their commercial & administrative departments, these clubs have quality corporate leaders who have been in the business for a long time.
Football is something which has taken over my life recently. As the football season kicks off today, I wanted to blend two of my favourite pursuits: Football & Economics! On that positive note, I sign off.
Cheers!