Red Bull - Beverages, Extreme Sports and Football Clubs
Anjal Agrawal
M&A and Strategy at Virtusa || Ex-IB at Nomura (PPO) || IIM Shillong (17-19) || CA || Yes Bank FutureReady Scholar || Ex-JPM || Ex-Baker Tilly DHC || #ProudSINKWAD
The club RB Leipzig with its new name is relatively a new club which was formed in 2009. In 2009, Austrian soft drinks giant Red Bull made their investment in the German football, and struggling Oberliga (fifth-division) club SSV Markranst?dt, situated just to the west of the city of Leipzig, represented an ideal opportunity for its entrance. A new club – named RasenBallsport Leipzig was formed. RB Leipzig is also called RedBull Leipzig but the real name is “RasenBallsport”, literally meaning ‘lawn ball sport’ in English.
What came next was nothing less than miraculous. The rise of RB Leipzig from the fifth division to the UEFA Champions League semi-finals in 11 years. Today, RB Leipzig is the home or has housed some of the most well-known talent in the Football world globally. They are also UEFA Champions League regulars and probable title contenders in all the tournaments they participate in.
But to put things into perspective, Leipzig wasn’t the first football club that Red Bull has owned. Red Bull had a rough introduction in the Footballing world. This dates back to 2005 when Red Bull acquired Casino Salzburg. Some fans were optimistic that after years of struggle, Red Bull’s financial might would help restore the club, UEFA Cup runners-up and three-times Austrian Bundesliga champions in the 1990s, to former glories.
Instead, what Red Bull did, was seen as an attempt to erase the club’s identity and remake it in its own image. While changing the club name was not unprecedented – that was only the start of the Red Bull Salzburg relaunch. They took over the club stadium, Stadion Wals-Siezenheim, and renamed it to “Red Bull Arena.” The club’s badge was made to resemble the company’s logo, fans were told they were watching “a new club” with “no history” and the team’s traditional violet-and-white kit was switched to red and white to reflect Red Bull’s branding. Changing the club’s colours was widely seen as crossing the line, alienating a swathe of supporters so profoundly that, after trying and failing to negotiate with Red Bull via the umbrella group Initiative Violett-Weiss, they decided they had no other option but to go their own way. The disillusioned supporters broke away and set up a phoenix club, Austria Salzburg.
Interesting story, in September this year, Austria Salzburg met Red Bull Salzburg for the first time in a football match. RB Salzburg were welcomed by the home team with a banner displaying “For you only success and money count, you characterless bull-swines!” The origins of the feud made it hard not to view this as a clash between corporate power and fan power, cash and community, and two fundamentally different visions of the game. However, it was a comfortable win for RB Salzburg by 0-4, who are also the table leaders of the Austrian Bundesliga, the top-flight league of Austria.
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Understanding the acquisition of SSV Markranst?dt (now RB Leipzig)
History of Leipzig Football: The historical landscape of football in Leipzig is complicated, with several clubs having formed and disbanded since the founding of the DFB in the city in 1900. The Nazi regime, communist rule and subsequent reunification of Germany also led to varying league formats. FC Lokomotive Leipzig enjoyed success before the reunification, losing to Ajax in the 1987 European Cup Winners' Cup final, but, after a rebrand as VfB Leipzig, their relegation from the Bundesliga in 1994 spelled an end to the city's representation in the German top flight.
How did it begin for Red Bull? Red Bull’s initial plans were to invest in a different Leipzig side, FC Sachsen Leipzig. Given the precedence of Red Bull’s Salzburg acquisition, fans protested as Red Bull explored potential takeovers at St Pauli, 1860 Munich and Fortuna Dusseldorf, before reverting to the initial plan of acquiring a Leipzig-based team.
Acquisition of SSV Markranst?dt & Formation of RB Leipzig: In 2009, Red Bull made the strategic decision to take control of SSV Markranst?dt, a weak team in the fifth division of German football with a dream of making it to the Bundesliga in less than eight years. Red Bull planned to invest €50m to bring a radical transformation to the club, marking a pivotal moment in the club’s history.
For the acquisition to be ratified, the state of Saxony's football association stipulated that the new club must incorporate Markranst?dt's first team, reserves, oldest youth team and their senior selection. It was also stipulated that the team must also incorporate the four most senior teams of the FC Sachsen Leipzig youth academy, the club that Red Bull first considered for acquisition, which was now insolvent.
Under Red Bull’s ownership, RB Leipzig experienced rapid growth and success. The team’s logo and uniforms were replaced with Red Bull’s, a stadium that could seat 43,000 was purchased in the city and the construction of a brand-new training facility. The club strategically invested in player transfers, bringing in a blend of young talents and experienced professionals to strengthen the squad. With these enhanced resources and infrastructure, RB Leipzig rose through the ranks of German football and secured a place in the Bundesliga. This newfound success placed RB Leipzig firmly on the map of European football.
The Red Bull Talent Factory: Since Salzburg’s acquisition in 2005, and Leipzig in 2009, it is estimated that Red Bull has sold a combined ￡800m worth of talent between the two sides, with the billion-pound mark not far away. Some top-flight talent today, mark their origins from these two clubs. Listed below are some names –
This doesn’t even mention the fees rival football clubs have paid for coaches Julian Nagelsmann, Marco Rose, Adi Hutter and Jesse Marsch, showing that Red Bull does far more than just give you wings.
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Analysing the Sporting Portfolio of Red Bull
Red Bull is a force in multiple sports. In the past 15 years, Red Bull has established itself as a major force in world football, starting with the acquisition and rebranding of FC Red Bull Salzburg in the home market of Austria’s Bundesliga in 2005 before adding the New York Red Bulls (USA), RB Leipzig (Germany), Austrian feeder club FC Liefering and FC Bragantino of Brazil.
Before the development of the football portfolio, Red Bull’s first major sports investment was in ice hockey when they bought EC Salzburg in the Austrian Hockey League in 2000, adding EHC München in 2013. The group has also invested in motorsports with Red Bull Racing (Formula One) and Scuderia Toro Rosso.
Red Bull holds 100% of the shares in all their clubs, except RB Leipzig in Germany where their stake is 99% to get around strict DFB rules on supporter/member ownership and voting rights.
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A Wave of Corporate Investing in the Football World
As the Premier League started to become a more lucrative proposition in the late 1990s, corporations such as Granada/ITV, NTL and Sky initiated a wave of investments into seven Premier League clubs. A similar pattern emerged in France with M6, Pathé Frères, Socpresse, Canal+ and IMG France getting in on the action. More recently, Chinese firms Dalian Wanda and Rastar Group took stakes in La Liga’s Atletico Madrid and Espanyol respectively, and in 2009 Red Bull bought and renamed RB Leipzig in Germany. It is worth noting that three corporates have bought into each of Germany’s two largest clubs – with Adidas, Allianz, and Audi each holding 8.3% of Bayern Munich and Evonik Industries, Puma and Signal Iduna taking minority stakes in Borussia Dortmund.
As noted in one of my previous articles on City Football Group’s acquisition of Manchester City, the largest ownership group in terms of the number of clubs is CFG. CFG is closely followed by Red Bull, which has interests in football, ice hockey, and motorsport in six countries, primarily in Europe. Kroenke Sports & Entertainment has a diverse portfolio across five sports, but Arsenal FC is their only asset outside of the US. There are a further five groups or individuals owning three or four club assets, either focused entirely on football such as Vincent Tan and the consortium of Chien Lee and Pacific Media Group, or branching into multiple sports such as Liverpool owners Fenway Sports Group, Crystal Palace shareholders Josh Harris and David Blitzer, and Swansea City co-owner Jason Levien.
?This concludes the third case study in the series “M&As in the Football World.” The success stories of Manchester City’s acquisition by ADUG, AC Milan’s acquisition by Elliott Management, and Red Bull’s acquisition of RB Leipzig highlight the potential of transformation that mergers and acquisitions are in football. These cases demonstrate how strategic investments, combined with financial restructuring and long-term vision, can revive struggling clubs, elevate their profiles, and secure success. From the remarkable growth of Manchester City to AC Milan’s revival as one of the most successful clubs in Italian football history, and RB Leipzig’s rise from the lower divisions to the Bundesliga, these M&As have forever altered football.
In the next case study, we will look at the ongoing sale process of Manchester United – the club that celebrates one of the most glorious histories in the Footballing world and has one of the biggest fan bases globally. Until then, thank you for your time. Please post your feedback and comments.
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Please find below all the information sources that have been instrumental to the above article, along with some additional reading materials. Gratitude to all the creators –