Academic journal article New England Journal of Entrepreneurship

Entrepreneurial Strategies in Transitional Industries from a Resource Perspective: A Case Study Analysis of the Business Models of German Soccer Clubs

Academic journal article New England Journal of Entrepreneurship

Entrepreneurial Strategies in Transitional Industries from a Resource Perspective: A Case Study Analysis of the Business Models of German Soccer Clubs

Article excerpt

The recent transformation of soccer clubs in Europe from nonprofit organizations into for-profit enterprises constitutes an entrepreneurial event in transitional industries. In these industries, value has often already been created through alliances with other (for-profit) organizations. The central research question is therefore: How do soccer clubs seize entrepreneurial opportunities under the constraint of prior joint (bilateral) value creation but unilateral value exploitation? The authors adopt a resource-based perspective to analyze the entrepreneurial strategies and show that the existing theoretical concepts provide only insufficient answers. Based on an in-depth case study analysis, new propositions are developed that complement the resource-based perspective.

It was not until 1998 that German soccer clubs were allowed by the German Soccer Federation (DFB-- Deutscher FussballBund) to become for-profit enterprises. Up until 1998 soccer clubs had the status of sports associations with public duties such as promoting sports activities to improve the general health of the nation. The following (slow) transformation of soccer clubs as nonprofit organizations into for-profit firms can be understood as an entrepreneurial event. As entrepreneurship scholars understand it, the entrepreneurial process encompasses .all the functions, activities, and actions associated with the perceiving of opportunities and the creation of organizations to pursue them" (Bygrave and Hofer 1991). In its most general form, the constituting element is the entrepreneurial event that signifies the emergence of an organization (Gartner 1995), that is, the creation of a new firm or other organizational unit to capitalize on an opportunity (Gartner 1989; Gartner et al. 1992).

While the core business of soccer clubs remained attracting spectators and related TV revenues, these new firms had to decide how to seize new opportunities.1

This article focuses on the merchandising business and analyzes the entrepreneurial strategies of the two most important soccer clubs in Germany, Borussia Dortmund and Bayern Munich. These two clubs are regarded as young entrepreneurial firms because they have only been transformed into for-profit firms during the last few years.

In transitional industries, value has often already been created through links or alliances with other (for-profit) organizations. Research, however, has not addressed the question of how the actual joint-value created will be distributed between the parties after the entrepreneurial act (the creation of a for-profit enterprise) and how these new entrepreneurial firms will perceive and seize opportunities.

Background and Key Research Questions

Cooperative arrangements between sports clubs and corporate institutions have become increasingly important over time as vehicles to create joint value. Since the introduction of television and merchandising rights as new revenue streams, sport clubs are rapidly transforming from former nonprofit organizations into for-profit companies. This entrepreneurial phenomenon is most inherent in the European soccer industry. In the early to mid-1990s, English and Italian soccer clubs like Manchester United and Lazio Rome developed into stock-listed firms, focusing on sport as a financial business to exploit the economic value of "soccer" as a product.

In contrast, German clubs have been comparatively slow to seek alternatives to the "old" business models, mainly due to the strict rules of the conservative Bundesliga and inflexible club structures. The tremendous change in industry conditions is also reflected in the long-term relationships between soccer clubs and sports equipment manufacturers. Corporate sponsorship of sporting and especially soccer events has gained in importance as a marketing instrument due to the increasing value of the sports clubs brand equity. During the last decade, the brand values of European soccer clubs have reached an impressive level compared to other sports. …

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