Club Owner Bayer Boosts Morale with Leverkusen Victory
Stock Plummets Due to New Drug Development Failure and Debt Burden
Asset Portfolio Being Restructured, "Won't Sell Club Shares"
"They (Leverkusen) are called ‘Werkself’ (Factory Eleven ? 11 players from the factory). We (Bayer) call them our colleagues. Congratulations on Leverkusen’s first German professional football championship. The season is not over yet. Good luck."
German pharmaceutical giant Bayer, which developed the antipyretic analgesic aspirin 126 years ago and grew into a major pharmaceutical company, posted a congratulatory message last month on the social networking service X (formerly Twitter) celebrating the German professional football team Leverkusen’s confirmed championship. The post was made when Leverkusen secured the title for the first time with a month left in the season. On the 18th, a month later, Leverkusen made history by achieving the Bundesliga’s first-ever undefeated championship.
On the 18th (local time), Xabi Alonso, the coach of Leverkusen, who achieved the first undefeated championship in the history of the German Bundesliga, and the players are celebrating while holding the championship trophy. [Image source=AP Yonhap News]
Bloomberg recently focused on the relationship between Leverkusen, which has been racing toward an undefeated championship, and Bayer, which has been facing management difficulties since last year. Bayer is the owner of Leverkusen. The football club Leverkusen was founded in 1904 by employees of Bayer’s factory. Leverkusen’s nickname, Werkself, meaning ‘Factory Eleven,’ also originates from this. The pharmaceutical company referring to the football team as ‘colleagues’ is understood to stem from this background.
According to reports, on the day Leverkusen achieved the undefeated championship, Bill Anderson, Bayer’s CEO, was among the fans at the BayArena, the stadium located just a 10-minute drive from Bayer’s headquarters. Bayer raised football flags in front of its headquarters ahead of important matches and promoted the leadership of the master coach Xabi Alonso, who led Leverkusen to victory, on social media.
Bayer’s active use of Leverkusen, which had been winning throughout the season, to boost morale is due to the company’s current management being in its worst situation.
In November last year, Bayer abruptly decided to halt clinical trials of a new heart disease treatment drug, which had been expected as a future growth driver. Asundexian, an oral blood coagulation factor inhibitor developed by Bayer, was anticipated to generate annual sales of 5 billion euros (about 7.4 trillion won) for the company as a next-generation drug. Around that time, CEO Anderson stated in an interview with a media outlet, "Bayer had been suffering from chronic underinvestment in research and development (R&D) for years until 2018 and failed to obtain new cutting-edge compounds used as new drug candidates."
With the failure of new drug development, Bayer’s stock price plummeted. It dropped nearly 20% in one day after the announcement and currently stands at 28.32 euros (as of the 21st), marking the lowest level in about 20 years since September 2005. Six years ago, Bayer took on enormous debt by acquiring the American herbicide company Monsanto, causing significant financial health issues. At the same time, lawsuits alleging cancer caused by Monsanto’s herbicides have spread in the U.S., causing ongoing compensation problems.
Bloomberg even evaluated that "having the football team win consecutive matches is a better way to boost (Bayer’s) morale than improving the balance sheet."
Despite the financial crisis, Bayer has no intention of selling its stake in Leverkusen. CEO Anderson, who has been reorganizing the business since last year, recently stated at a press conference that the company has never considered selling its stake in the football club while reviewing Bayer’s asset portfolio. Bloomberg reported that Anderson also gifts personalized Leverkusen jerseys when meeting external figures such as German Chancellor Olaf Scholz, suggesting that under Anderson’s leadership, investment in Leverkusen is unlikely to decrease.
The relationship between Leverkusen and Bayer has been close throughout their 120-year history. Before entering the Bundesliga in 1979, Leverkusen spent a long time in the lower leagues. Even in the 2000 season, after failing to win the championship and finishing as runners-up five times, the team was mocked with the nickname ‘Neverkusen’ implying they would never win. In response, at the 2006 Bayer shareholders’ meeting, one shareholder proposed selling Leverkusen.
However, the management at the time rejected the sale, stating that Leverkusen was "a valuable advertising asset for Bayer." Instead, in 2007, they allocated a budget of 56 million euros for stadium repairs and renovations. Werner Wenning, then CEO and chairman of Leverkusen, persuaded shareholders by saying, "It is an important means of promoting our image."
Internally, the company estimates the advertising effect to be worth several hundred million euros, several times the annual investment amount. Some critics call Leverkusen a ‘plastic club’ to criticize it as a creation of a wealthy pharmaceutical company, but Bayer believes that having the company logo on Leverkusen’s uniforms greatly helps football fans recognize and associate with the brand image.
Meanwhile, Bayer owns more than 20 sports clubs, including basketball, swimming, and tennis, making it one of Germany’s largest sports sponsors.
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