Philipp Grothe and the friendly agency

20 July 2009 | By Adam Fraser

In little more than five years, Kentaro has grown from three men in the breakfast room of a hotel to become a company employing more than 80 people – and chief executive Philipp Grothe is determined that it will be the soccer agency that finally cracks America.

"Having worked in a very difficult economic climate for the past nine months, I think everyone in the sports rights industry can be very proud," says Philipp Grothe. The Kentaro chief executive's company has been one of many in the business to, so far at least, stand fast against the storm that has engulfed so many other sectors.

Indeed, far from merely standing fast, Grothe points to growth: "If you look at the growth rates in sports, especially in football, they are still increasing," he notes. "And this is at a time when most of the other industries have massive decreases in overall business. Look at the big broadcast deals that have been closed in the last couple of months – the Uefa Champions League is a good example, with an overall increase between 20 and 30 per cent. In territories like Latin America, rights quadrupled. In mature markets like Scandinavia, there was a double-digit increase while, in the same territory, the licence fee for La Liga tripled. The [English] Premier League, in probably one of the worst economic scenarios ever, managed a slight increase coming from a very, very high level. I would say, roughly speaking, there is still an increase of around 10 per cent per year in broadcast rights. And I would say that, compared to a lot of other industries, that is very, very good."

Certainly, in Kentaro's case, it is good enough for the company to continue its rapid expansion with the opening of an American office to complement its four European bases. The USA's relationship with soccer has been complex for the last 50 years, but Grothe is confident that world sport's largest market is finally embracing the world's most popular sport.

Philipp Grothe, Kentaro CEO, is determined to break into the US soccer market"I'm a big believer in the US market, especially long-term," he insists. "We had a tour there with Argentina and Brazil before Euro 2008 and, in that week, we made more money from tickets than we generated from our entire business in Asia. The money is in the US."

Grothe is well aware that the USA carries different challenges to the rest of the world market. "Obviously, every region is different, but the experience we have had in the US is that you have very sophisticated supporters there," he says. "They are very well informed and very demanding. If you come with second class properties and don't bring your stars, then people will not come to your events. That's especially true in a city like New York, where you have probably three or four top events every night to compete with. But we did a game last summer between the US federation and Argentina, with [Barcelona's star forward] Lionel Messi, and I think we sold the Giants Stadium out with 80,000 – and there were another 15,000 queuing on a Sunday evening."

Such is Grothe's belief in soccer's ability to penetrate the American market that Kentaro's US-based office will not be looking at the traditional American sports, or even such sports as golf or tennis. "I strongly believe in sticking to the things you know," says Grothe decisively. "And we are a bunch of football experts: we breathe football, we smell football, we eat football. You can only market and exploit a sport when you understand it; and I wouldn't say I'm a big expert in, say, golf or tennis. I wouldn't say we have a natural competence in those things. That doesn't mean we don't look into opportunities. But, in the foreseeable future, Kentaro will be a football agency; especially as long as there is so much to develop."

Grothe is driving that development not just by entering new markets, such as the USA, but by innovating in existing ones. Kentaro has revolutionised international friendly matches and pre-season tournaments. The former, especially, have often attracted fierce criticism from coaches, players and even fans as an unnecessary distraction to the regular season. Kentaro's format, which pits top teams against each other in prime international locations – Brazil versus Italy in London, for example, or England versus Argentina in Geneva – has captured public attention. Both games sold out almost before the tickets had gone on sale.

Grothe is modest enough to accept that there was an element of luck in the conception of the first fixture, England's clash with Argentina. "Genius ideas sometimes come out of the blue, but here we were talking to the English Football Association and they said they needed an away game to fulfil an existing contract with one of their broadcasting partners. We said ‘why don't you play Argentina?'" he recounts.

The English FA knew that staging the match in South America would provoke uproar amongst Premier League clubs furious that their star talents would be shipped halfway around the world and back for one 90 minute game, but Grothe had an ace up his sleeve. "Argentina and Brazil have a long tradition of playing friendlies in Europe because so many of their players are based here. So we said, let's do  it in Geneva."

The FA bought the idea. And the luck didn't run out there. A few minutes from the end of the game, Argentina were leading against their old rivals. Grothe, well aware of how on-field issues take priority over off-field, with even the most commercially savvy sports properties – "It's very difficult to create a good deal with a club that lost the night before. It's better not to call them," he says – was more than a little worried: "I was on my way to the English FA's box when it was 2-1 to Argentina and I was prepared to get slaughtered." Then Michael Owen, the England striker, scored two goals in the dying moments of the match. "When I opened the door, it was 3-2 thanks to Owen, and they said what a great idea and what a great game. So, it was a fantastic start for the idea."

Still, while Grothe acknowledges the part played by luck, he rejects any claim that it is a defining factor in his company's success. "There's no miracle or genius in business; it's just blood, sweat and tears," he insists. "I wake up very early and the first thing I do, although it's not very healthy, is switch on my Blackberry and get the first ten or twenty emergency emails. And that carries on until very late at night; we have Latin American clients coming home after a long lunch, so it's ten or eleven o'clock at night in Europe, and they decide to call me and do some business because they don't care about our timing. It's both the upside and the downside of our business that someone, somewhere, is always playing football."

That intensity has seen Kentaro grow from three men in a hotel lobby to more than 80 employees across Europe – and now America – in just over five years. As recently as 2003, Grothe and his co-chief executive, Philippe Huber, were working at IMG. The company had headhunted them, in Grothe's case from the international soccer division he had started at UFA Sports, the predecessor of Sportfive, to build up its own soccer division.

"It was a very difficult time for IMG because it was just a year or two after Mark McCormack passed away. The company was not in the best financial state and we were coming from a very different culture – working for golf and tennis stars on a percentage basis is very different to dealing with soccer properties," remembers Grothe. "So we decided to do it the right way and create our own football agency and we created Kentaro in September 2003.

"It was just three of us: Kalle Sauerland – the son of the boxing promoter Wilfried Sauerland – who was working as an intern at IMG, Mr Huber and me. We didn't even have an office – we were using the breakfast room at the Berkeley Hotel until they kicked us out. That was the beginning; just three of us with laptops on our knees in the breakfast room. We developed very fast and we always knew we would survive because we had a lot of contacts and experience but, obviously, it went very nicely for us. It was good timing because the last five or six years have been a very interesting time, and that helped us – I don't know if it would be possible to set something up like that today. But, in the end, a good idea is always a good idea."

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