Without a doubt, SV Darmstadt 98 has undergone an impressive development in recent years. Consistently positive financial figures, investments in infrastructure and general further development of the club at all levels. We spoke to Managing Director Michael Weilguny about the background to this positive performance.
The sales figures at SV Darmstadt 98 are quite constant, and there has also been an annual profit. In the difficult times of the pandemic, that’s not something that can be taken for granted. How did you manage that?
Since we were promoted back to professional soccer in 2014 and until 2021, we have always made profit – not only in the Bundesliga years, but also in the second league years. That has helped us get through the last two years of the corona crisis. We were even able to make another profit in the 2021 corona year. However, we will close the 2021/22 fiscal year with a low seven digit loss. This is due to the pandemic and also the development in TV rights, as there has been a new contract in Germany since the new season which unfortunately leads to a certain decline in overall marketing for us. We were of course delighted about the great clubs alongside us in the second league in the 2021/22 campaign – Schalke, Hamburg, Bremen and Co. But these clubs are largely listed ahead of us in the TV rankings, which is why we had to absorb a very high drop of around six million euros from the 20/21 season to the 21/22 season. You can’t counteract that in one year. We have to deal with it, but thanks to the previous years, we can cope well.
With total sales of 30 million, six million is no small matter. Nevertheless, how much potential is there for increasing sales?
In the case of TV rights, revenue increases by around five percent every year thanks to a staircase system. Of course, the annual battle for a place in the standings is also one for a place in the TV rankings. But with sporting consistency, we will again see a certain increase. With our own commercial revenues from sponsorship and merchandising, an increase of even 20 to 30 percent is certainly possible in the next few years. Thanks to the new stadium, we will have a better starting situation in the future: For the first time, there are boxes, there are more business seats and generally more third-party marketing opportunities. Of course, we are also working intensively on the topics of digitization and CSR strategy.
What is the approximate amount of these revenues?
We currently have around eight million euros in sponsorship. In merchandising, we are in the high six-figure range. The potential increase of 20 to 30 percent in each of these two areas won’t happen from one season to the next, but that’s definitely the goal over the next few years.
What would promotion mean financially?
The jump I just mentioned could even happen directly and independently of the other issues. On the one hand, because there are already completely different sums in the contracts. On the other hand, the Bundesliga would also make us interesting for national, supra-regional partners. Nevertheless, the biggest trigger in the Bundesliga is the media market, where we would increase from the current figure of around €12 million to around €30 million. That’s roughly a factor of 2.5.
So, are sponsors primarily local or regional at the moment?
That depends on the sector. We certainly have national and supra-regional partners: Krombacher, for example, a national beer partner, or Craft as a supplier. Recently we have announced the partnership with “28 Black”, the producer of the energy drink as well as our new betting-partner NEO.bet. But 80 percent of our revenues come from regional partners. That’s pretty typical for the second league. But with our new mission statement and clear positioning it is our goal is to become interesting for national partners. That’s the aspiration in the second league, too.
Can you give some more information on the mission statement?
Last year, we communicated a mission statement for the first time, with a clear vision and mission. The ambitious sporting goal for Darmstadt 98 is that we want to establish ourselves in the top group of the second league in the long term and also challenge the top 20 in soccer. However, we have also tried not to just put the sporting side in, but to emphasize that social values are important to us. We want to be a role model and take a clear stand against discrimination. We are a very diverse club with a very lively fan scene, and we actively support 50+1, reasonable ticket prices and so on. In summary, the mission statement is a triad of sport, social responsibility and economic stability.
When working on the mission statement, were there any specific issues where you have tried to set yourself apart from other clubs or other sports in the region? Saying, for example, “That’s not us, that’s what sets us apart from others”? Or was the focus purely on SV Darmstadt?
It would be a lie if we didn’t look left and right. But of course, every club has to look at what fits its own identity. You can’t artificially turn a 124-year-old football club around 180 degrees just to make its positioning on the market fit. But we didn’t want to do that either. That’s why we developed the mission statement from within the club. It wasn’t a decision made by the management or the executive committee alone; it was developed together with many stakeholders. First and foremost, the employees, the fans and the members. But we also asked journalists and sponsors how they see SV Darmstadt 98 and what development potential they believe the club has. We wanted to generate credible themes in the mission statement. We wanted to emphasize and focus even more strongly on the things that the club has already stood for in recent years. Many of the things that are now anchored in the mission statement were already clear in the back of our minds beforehand. However, by working them out and formulating them, this becomes clearer and more applicable in the daily work.
What other sports organizations are there in the region that are competitors? From which you must stand out or differentiate yourself?
In the Rhine-Main-Neckar conurbation, there are of course a number of competing soccer locations: Frankfurt, Mainz or Hoffenheim are all not far from Darmstadt. In other regions of Germany, it is possible that you almost have a unique selling point in soccer within a radius of 100 kilometers. Right in Darmstadt, we don’t have any competition from any other major team sport, we’re the only sport with a lot of spectators. And the region of southern Hesse, Darmstadt and the neighboring counties are large enough for us to do well here as a club in terms of acquiring sponsors and spectators.
You mentioned earlier that a CRM strategy is being worked on. What is the general situation with sales, distribution and sponsorship? Is that done internally or are there partners?
Basically – and this also applies to many other areas – we try to do things ourselves. We own 100 percent of all rights. That applies to both the stadium and the marketing rights, where we have never had an exclusive marketing agreement. That’s mainly because sponsorship is our second-largest revenue generator alongside TV revenues. That is our absolute core business. That’s why it’s incredibly important for us to manage this ourselves, to have a direct line to our partners. That’s why we decided to set up our own structures.
Let’s briefly return to the topic of increasing sales: In some areas, you are continuously developing and innovating. Are there also fields that can generate entirely new revenue streams, such as digitization?
Digitization is definitely a topic we are working on very intensively, both in the B2B and B2C areas. As far as the B2C area is concerned, we have very good reach on social media. Not only do the “classic” channels Facebook and Instagram play an important role, but now also TikTok, where we reach an exciting, very young target group. This is certainly still in the beginning, but thanks to the good reach, there is a lot of potential and that is why we are trying to market this even better and convert it into actual revenue.
In the B2C area, we have recently invested a lot in the basics: We launched a new app, the homepage will be completely redesigned at the end of the year, and we introduced a new CRM system. Overall, the aim is to become even better at addressing customers and ultimately generate further revenue.
What did the work look like before the new CRM system?
We had a smaller CRM system in the B2B area. In the different departments, for example ticketing, membership management or merch, we worked with different silos. Now we are trying to bring these topics together via a CRM system and thus become better in service and marketing. With the support of our main sponsor Software AG and its webMethods integration platform, we will be able to connect the various applications (App, Ticketing, Online Shop, CRM) in the future without having to invest in a completely new IT infrastructure. Single sign-on (SSO) will subsequently enable our fans to gain rapid access to the club’s services and offerings via a single authentication process. Of course, implementation takes time. We are in the middle of it, but we are also already trying to launch the first campaigns. We can’t provide any figures at the moment, but it’s promising and it’s obvious that this issue will have a positive impact.
Has this also created need for new personnel or is it just an innovation on the technical side?
There will be a CRM manager who will actively work with the tool, support all departments and be responsible for the digital campaigns.
Besides the new CRM system and social media, are there other topics in the area of digitization that are to be given greater focus in the future?
There is already a lot of scope in these two areas, and I think we would do well to focus first on developing these topics and understanding the possibilities. We want to get the things we tackle right, rather than being all over the place and then neglecting topics in terms of intensity.
In addition to the mission statement, is there a general corporate strategy that says something like how you want to move forward, where you want to be in five years, where the focus areas are, and the like?
We have already expressed much of this in the mission statement. For us, this is really an internal strategy that doesn’t just apply to the green lawn on Saturday afternoons, but to all departments. In addition to digitization, the topic of sustainability is particularly close to our hearts. We want to develop even further in this area, but we have also already done a lot in recent years. For example, back in 2012 – as the first third-league club at the time, as far as I know – we launched our first CSR campaign and thus built up a concept and a certain credibility. We want to keep at it and give ourselves an ESG strategy. Not just because the topic is “trendy,” but because it has always been part of the club’s philosophy. This should be emphasized even more strongly in order to arouse interest among national and supra-regional partners and to make a credible appearance.
The topic of sponsorship is also becoming more challenging: The days are gone when I only sold advertising time on the LED wall according to CPM. That still happens, of course. But there are many partners who, in addition to presence, are primarily interested in brand values, in a digital strategy, in sustainability strategies, and thus want to implement interesting concepts in the club. That is very important for us.
Who determines these focus topics in the club? Is that the responsibility of the management or is there a specialist for corporate development?
Basically, our structure is that of a registered club, and we want to keep it that way. This means that the elected executive committee is responsible for managing the club. The operational strategy is then developed by the management in consultation with the executive committee. In our case, there are two people: Martin Kowalewski, who is mainly responsible for marketing and sales, and me, mainly responsible for commercial issues and the stadium renovation. But the transitions are fluid and we are not organized strictly top-down. As I already mentioned, for example, in the development of the mission statement: When we decide on new focal points, this is preceded by a development process in which we involve all operational departments and also inquire about topics on an interdisciplinary basis.
Where do you see the greatest potential for further development at SV Darmstadt?
The stadium issue is definitely a huge step for us, even though other clubs have already taken it. We are now at around 80 percent in the marketing of boxes, hospitality seats and the like, and we are noticing that we can attract many new companies thanks to the modern infrastructure. In the first instance, this concerns the hospitality sector, but these are of course also partners with whom we are trying to enter into further cooperation agreements. That gives us an enormous tailwind, because it means we can expand our target group yet again.
In addition, we certainly see the potential in the clear positioning of the club, as mentioned in the mission statement. I would say that we already have a certain credibility, but that we still need to optimize the whole concept, expand it, and communicate it better.
How many non-sporting employees are there at SV Darmstadt 98 in total?
We have around 35 full-time employees who take care of management. We’re building that up slowly and growing steadily.
We’ve already touched on the subject of the top 20, but I’d like to go into more detail: How did this goal of attacking the top 20 come about? Ultimately, top 20 means a promotion spot in the second league.
That’s right, that’s our vision. But by definition, a vision is not a goal that can be achieved in the next year or two, but rather a longer-term goal. On the other hand, we have deliberately chosen an ambitious goal that is achievable but will not be reached in any case. We discussed this a lot. But setting ambitious targets is also part of our brand values; we want to be bold and ambitious. We haven’t done badly in recent years – sometimes surprisingly – and we’re not playing badly this season either. So, it was logical to aim for the top. The image of challenge of Darmstadt 98 appeals to many of our partners. I think with a vision you simply must go forward courageously and not emphasize the status quo, otherwise it wouldn’t be a vision. Of course, this is measurable in sports and you are also held up to it from time to time, but the bottom line is that it should motivate all departments to move forward courageously.
From a sporting point of view, it’s relatively easy to benchmark the goal of challenging the top 20. But how does that work on the economic side?
Among other things, we are guided by benchmark figures, for example from the annual DFL economic report. On the basis of certain clusters, for example in the areas of marketing, ticketing, merch, we can see where we stand. But it would be too short-sighted to compare sales on a one-to-one basis, because every club is different, and you have to be realistic. The figures do help us formulate our goals, and of course there’s the competition to consider. Ultimately, however, it’s a mixture of numerical targets and content-related issues, soft skills.
What are the current developments at the stadium, where a lot of construction work has been done in recent years?
The rapid promotion from the third league to the Bundesliga within 24 months was surprising for us ourselves, and the club infrastructure was in no way ready for professional soccer at the time. So since 2015/16, the club infrastructure has been completely turned around, so to speak. We started building training grounds, then the administrative buildings with one floor for all the office-staff and one floor for the professionals. It’s great and very motivating, especially for the office, to have a direct line to the coaching team, the manager and the players. This is not an anonymous office building at the other end of town, but we have everything together here: Stadium, training ground, administration building.
Since 2016, we’ve been rebuilding the stands piece by piece: First the two head stands, then the opposite stand and now, in the final construction phase, the main stand, which should be finished by the end of the year. And in between, in 2017, we built the youth performance center at the station. Infrastructure development is never finished and there will certainly be more projects, but for a second-division club we have already created a very good infrastructure. The stadium is also suitable for the Bundesliga. We have room for just under 18,000 spectators. We were also bound by the building regulations at the site. But that’s basically a figure that we can deal with reasonably here for the time being.
This development is impressive. How is it all being financed?
Of course, the stadium accounts for the lion’s share of the investment. We have received public subsidies from the city and the state of Hesse. But we invested the biggest part of over 20 million ourselves, mostly through loans, with smaller portions also through equity.
As far as the stadium is concerned, we and the city had no choice but to invest. The stadium was 30 years old, and due to the club’s negative sporting interlude in the 1990s and 2000s, nothing more was invested, of course. This affected not only comfort, but also safety regulations.
