New deal to stand ‘The Eagles’ in good stead
The German professional sports club based at Frankfurt, Germany – Eintracht Frankfurt – will have to pay a flat rental fee of eight million euros net annually for the 1st Bundesliga and meet up to 90 percent of all operating expenses of their home ground – the 51,500-capacity Commerzbank-Arena more popularly known by its original name Waldstadion.
The Waldstadion was renamed the Commerzbank-Arena on May 1, 2005. Surrounded by trees, the Waldstadion opened its doors in 1925.
This is part of a new deal which is beginning to take shape – a final decision on which is still pending. The present deal to run the stadium which was inked way back in 2005 between the Sportpark Stadion Frankfurt am Main Gesellschaft für Projektentwicklungen mbH and Stadion Frankfurt Management GmbH ends on June 30, 2020.
Following a letter of intent being endorsed between the city and Eintracht Frankfurt Fußball AG last year, the breakthrough followed recently. As per a directive given by the magistrate, Eintracht will be granted a new commercial contract which will run for 15 years starting July 1, 2020. The city councils are yet to decide on this.
Rental pact keystones
The contract proviso stipulates that Eintracht can use the venue 80 percent of the time and will receive the full marketing proceeds during this period. Exceptions to this are the income from events in the city, which is granted around 20 percent right of use.
Apart from paying the stadium rental fee of eight million euros, it will also have to pick up the tab as regards maintaining the stadium. As Eintracht board member Axel Hellmann has repeatedly announced, the digital expansion costs will also be borne by the club. For its part, the city is taking over around
10 million euros for the capacity expansion of the arena. Apart from this, it will redirect the areas previously used by the Bundesliga (the top tier of the German football league system) club as an office.
Hellmann told fans that the expansion, marketing and digital development of the Waldstadion is “one of the most important topics of the next two and a half years”.
In the driver’s seat
A city’s press release quoted Sports Director Markus Frank (CDU) as saying, “Our Eintracht belongs to Frankfurt, it belongs to the Commerzbank-Arena – and it belongs to a modern and future-proof stadium. The course is now being set.”
Underlining the need for expansion, Mayor of Frankfurt-am-Main (in Germany) Peter Feldmann of the Social Democratic Party (SPD) remarked, “New standing room for fans, freezing ticket prices for fans through Eintracht, additionally showing 1,000 cheap tickets for five euros for young people and ten euros for adults, that the path of our football is right.”
The old contract was a reasonable one for Eintracht at that time because the cash-strapped club shuttled between the 1st and 2nd leagues and had no funds to build the new arena which was built in view of the 2006 World Cup.
Before hosting the 2006 World Cup, the Commerzbank-Arena was revamped totally with all stands demolished between 2002 and 2005.
Taking into consideration the spectacular development in recent years, the contract signed way back in 2005 is no longer serving the interests of Eintracht. The club pays 18 percent of ticket revenue to SFM per season in the first division, which also receives 30 percent of the stadium-related marketing income.
For the 2017-18 seasons, it resulted in a usage fee of 6.4 million euros, plus a rent of 2.5 million euros. A deal with international sports right marketing company Sportfive (now Lagardère Sports – sport and entertainment agency) which ended in 2004 proved to be too costly a proposition for the Bundesliga club. The marketer received 16.5 percent of the stadium-borne and 18 percent of the club-borne marketing revenue, in fiscal year 2018 that came to 9.6 million euros. The pact with Lagardère concluded on March 31, 2019, and the club has taken over the reins of marketing.
Come July 1, 2020, Eintracht will take up the mantle of the stadium, even if the arena still belongs to the city.
“We will take over the stadium as a permanent tenant for the next 15 years and thus also as an operator. We pay a total rent of eight million euros per year. This is a lot of money, maybe a little more than we would have liked or imagined. On the other hand, we get all the income for this: This applies to our games, catering, marketing and concert events. This is a big step for us because we have the economic options in hand,” explains Hellmann.
To give a more accurate picture – The marketing of the stadium name alone should bring the club more than half of the rent. Commerzbank currently pays around four million euros, but the money does not flow to Eintracht. As part of the new deal, 90 percent of the operating costs of the venue will be borne by the club and 10 percent will be picked up by the city. Hellmann anticipates total stadium costs of 14 to 15 million euros a year, but calls attention to the fact that the deal will stand the club in good stead, “We assume that we will significantly exceed this cost burden due to the revenue situation. This deal is good for Eintracht Frankfurt.”
The planned expansion of the stadium from 51,500 seats to just over 60,000 is music to the ears for fans. The city of Frankfurt has guaranteed the expansion and initially planned ten million euros for the same.
Hellmann does not believe that this amount will remain, and speaks of a “snack policy”. He explains, “You start with 10 and then you are at 30, so that it does not sound so terrible for the taxpayer.”
The argument is that – there should be more elbow room for supporters to enable them to enjoy a stadium experience on an almost shoestring budget. Hellman speaks of a “big step”. In return, Eintracht has promised to invest in the stadium’s digital infrastructure.
Hellmann says that as of next summer, there could be a new video cube “on which you can see who scored a goal”. The conversions in the stands are becoming more demanding. Capacity expansion of the facility is planned during the Winter World Cup in Qatar 2022, as the arena will be used for concerts in summer. Incidentally, in the redecorated stadium, the colors yellow and blue will no longer dominate, instead the club colors: Black, white and red will do so.
Hellman terms the creation of its own digital platform as “the most important business policy decision”, which can be used, for example, to buy tickets and pay for food and beverage in the stadium. Eintracht wants to steer clear of big players like Google or Amazon.
Warns Hellmann, “If we are not careful on creating an independent solution as regards digitization, and developing an answer based on our own strength, we will be like some companies, and then you will become an appendage to the large platforms.”
He envisions Eintracht as a pioneer in this regard, “As board members of Eintracht Frankfurt Fußball AG, we cannot allow ourselves to depend on the big multinationals in the world. We are working on this platform, it will be in a first version in the summer start.”
When it comes to gourmet food, fans will have a lot to be thrilled about. The contract with catering company Aramark, which had its share of controversies and is well known among the fans’ circle, has come to an end.
Accordingly, from the coming 2020-21 seasons, stadium catering will be in the hands of Supreme Sports Hospitality Frankfurt GmbH.
Extensive tender exercise
On May 29, 2019, the application and subsequent tendering phase exercise started and concluded in 2019-end. Twenty bidders and bidding consortia had applied, of which 15 participants ultimately made it into the catering tender. The extensive tendering process included a qualitative and quantitative query and evaluation of the offers as well as selected bidder presentations. After a thorough analysis and consideration of all pertinent factors, a Frankfurt bidding community with national and international presence landed the contract.
The special bidding process was used to query both economic and conceptual framework conditions for stationary and mobile offers in the public and hospitality sector for football games, concerts, conferences and other events in the stadium.
“In a very demanding tendering process, Supreme Sports Hospitality Frankfurt GmbH convinced with fresh concepts and new approaches. And this ranges from the stadium sausage to top gastronomy. We look forward to a good working relationship in the coming years,” summed up Hellmann.
KP Kofler, founder and CEO of global hospitality solutions provider Kofler Group AG, as well as Stefan Weber and Michael Weigel, founders and Managing Partners of travel catering specialists casualfood GmbH, will take over the stadium catering charge from the previous service provider for at least 10 years on behalf of the newly founded Supreme Sports Hospitality Frankfurt GmbH. As a regional company, KP Kofler enjoys good relationship with Frankfurt and Eintracht. Stefan Weber and Michael Weigel, as lifelong Eintracht members, have always been close to the traditional Hessian association.
Eintracht is adopting a novel concept when it comes to stadium catering, which will be implemented in phases by Frankfurters for Frankfurters and all guests of the stadium from summer 2020. Kofler and casualfood will help them in their endeavor to serve a spread to fans. This combination promises an unprecedented synergy in German stadium catering.
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