Adidas deal adds to Beckenbauer's triumphs

When European champions Bayern Munich signed a partnership deal with sportswear giants Adidas Salomon AG which made them the world's richest club, Bayern president Franz Beckenbauer had every reason to grin.

"Adidas is a perfect partner," beamed Beckenbauer, Germany's undisputed football "Kaiser" who won the World Cup as a player in 1974, as a manager in 1990 and masterminded Germany's successful bid to host the 2006 World Cup.

Now Beckenbauer can also call himself a cunning business manager as analysts say that lucrative sponsorship deals are the way forward for soccer clubs seeking cash as share prices take a hammering.

"Certainly within the U.K. it's been difficult for listed clubs and the value of being listed and the reason for being quoted are being questioned," said Vinai Bedi, an analyst at Wisespeke in London.

"Also the potential for raising money using that route has been eliminated. A lot of people are looking to the continent, looking to European clubs which seem to get more from sponsorship," Bedi said.

The idea of seeking strategic partners is catching on in the traditionally conservative Bundesliga.

Unlike British or Italian clubs, where stock market listings are common, German clubs have been slow to seek listings. Strict rules means clubs cannot exceed a certain level of debt and rigid club structures make going to market more complicated.

Football analysts say Bayern's decision to let Adidas have a 10-percent stake in the club is a clever one as it leaves it in private hands but gives it the cash needed to fund its ambitions.

And in a sign that the idea is catching on, Bayern's rivals Bayer Leverkusen said that they too will open up their capital to an outside investor if the price is right.

Traditional Route
Bayern Munich have made no secret of their ambition to dominate European football as they did in the 1970s when they won three European Cups in a row from 1974 to 1976.

The club say that last May's victory over Valencia on penalties for the first European Cup triumph in 25 years was only the first step in a new golden age but funding this requires new sources of capital.

Soccer clubs have traditionally chosen the stock exchange route as a way of raising money to fund transfers and stadium developments.

Bayern said in July that they would complete their transformation into a joint stock company by next summer but they have shied away from pursuing a full stock listing and said they would start with the sponsorship deal.

Bayern, who have never spent more than 20 million marks ($9.37 million) on a player, have always been keen to promote an image of fiscal prudence.

The Munich club had previously hoped that a share offer would fortify their coffers and help them compete in the expensive transfer game against listed British clubs such as Manchester United and Italian and Spanish clubs with wealthy backers.

The club have always said they have no interest in buying big-name players but the demands of the Champions League have put them under pressure to make big signings, with Luis Figo, David Beckham and Rivaldo among the names being mentioned.

The club also wants to build a new stadium.

"For this you need serious financial back-up and we don't have that," Beckenbauer said.

However, listings by other clubs such as Bayern's Bundesliga arch-rivals Borussia Dortmund and Italy's AS Roma have had mixed results as the shares have been buffeted by the team's performance rather than their business results.

Dortmund shares have taken a battering in recent weeks after their defeat by Bayern in the Bundesliga and their poor performance in the Champions League.

"This partnership will help us accept the challenges of the future and make sure Bayern remain a top address in Europe and worldwide," Beckenbauer said of the lucrative deal under which Adidas will also remain Bayern's sponsor until 2010.

Markets not Convinced
Markets did not like the decision by Adidas, the world's second-biggest sportswear makers after Nike, to spend 75 million euros ($69 million) on the Bayern stake.

Shares fell more than eight percent on the announcement because analysts said the price was too high.

But Adidas said the move would help to stop their rivals from getting a firmer foothold in the German market.

They also pointed to the fact that Bayern are a rich club.

Bayern are expected to report 2001 sales of more than 150 million euros and earnings in the "double-digit" millions, making them the most profitable soccer club in the world, Adidas said.

Despite Adidas' difficulties convincing the markets of the wisdom of their decision, there are signs that soccer clubs are a lot less sceptical.

Reiner Calmund, commercial manager of Bayer Leverkusen, has said his team are considering the sponsorship route.

"Naturally the price has to be right but a partner could take a 10 or perhaps a 20 or 25 percent share," Calmund told Handelsblatt newspaper.

Currently the club is held by Fussball GmbH, a 100 percent-owned subsidiary of chemicals firm Bayer AG .

Among the candidates listed are the utility RWE AG , which is already a major sponsor.