Dissecting Schalke’s New Gazprom Deal

Dissecting Schalke’s New Gazprom Deal

Gazprom has officially extended its sponsorship agreement with Schalke 04 by five years. The new contract will replace the existing contract that ran until June 2017, and will instead expire June 30 2022. Schalke and Gazprom have been partners since 2007 in what has been one of the longest sponsorship agreements in the German Bundesliga.

Germany’s Bild am Sonntag newspaper reported on Sunday that the deal will be worth at least €20 million a season, five million more than the existing deal. The deal will also include bonuses that could see Schalke earn up to €30 million a year, or up to €150 million over five years.

As Futbolgrad reported in December the club has held talks with Gazprom for the last six months. The final breakthrough was achieved at the end of April in Saint Petersburg, as Schalke’s chairman Clemens Tönnies and the head of Schalke’s marketing Alexander Jobst negotiated directly with Gazprom’s CEO Alexi Miller.

Tönnies told the official Schalke 04 homepage “I am happy about the continuation of this partnership. We have worked closely together for years, which will now be further extended with this new deal.” Schalke also stated that Tönnies’ close relationship to Miller were significant in reaching a deal.

It is understood that Tönnies, whose company Tönnies Fleischwaren has several ventures in Russia, has close relations not just to Miller, but also to Russian President Vladimir Putin.

The connection between Schalke and the Kremlin was heavily criticized during Russia’s intervention in Ukraine. The club was even scheduled to visit the Kremlin in the spring of 2014, but cancelled after coming under heavy public scrutiny. There were even suggestions that the Gazprom – Schalke sponsorship agreement would come to an end.

Yet Tönnies close relationship with the Kremlin, and his heavy investments in the Russian economy, have secured Schalke another major deal with the Russian gas giant (read more about Schalke and Gazprom relationship here, or for our Polish-speaking readers see the latest edition of the excellent Kopalnia Magazine).

Financially this deal will be crucial for Schalke, as the club once again failed to reach the UEFA Champions League after failing to beat FC Augsburg on Saturday May 7—Schalke are just three points behind fourth-placed Borussia Mönchengladbach, but Schalke’s goal differential of -1, as opposed to Borussia’s goal differential of plus 15 makes it nearly impossible for Schalke to reach the Champions League qualification spot.

Hence, Schalke’s marketing boss Alexander Jobst was relieved that Schalke signed a new deal with Gazprom. “With a new long-term Gazprom helps us secure the long-term financial stability of our club structure.” Jobst further added “the planning security with our most important partner is a milestone in our successful economic development.”

Gazprom also hopes to use Schalke as a marketing vehicle to break into new markets, as Jobst explains, “In the future we want to expand our partnership to China where we want to develop new projects.”

It will be interesting to see how Gazprom will shape the future at Schalke 04, as it has been previously suggested that the Russian company would want the club to restructure its economic model in order to make it possible for Gazprom to hold minority shares in the club, and in turn take more direct control over club politics.

Bad results over the last two seasons, however, have meant that Tönnies has come under scrutiny, and many fans even booed the club’s chairman before the match against Augsburg on Saturday. The club is an incorporated association (eingetragener Verein), and the club’s members therefore vote the chairman.

The next membership meeting is scheduled for June 26 2016, and judging by the reaction that he received by Schalke fans, and with the club failing to reach the Champions League once again, a clear opposition has now formed against Tönnies at Schalke 04. While it is likely that Tönnies will be re-elected in June, structural changes to the club could be next to impossible at the moment.

By Manuel Veth –