Sports supplier: How Puma got caught in the crossfire of the Middle East conflict

If Puma boss Arne Freundt had his way, sport and geopolitics would be two completely separate worlds.

Sports supplier: How Puma got caught in the crossfire of the Middle East conflict

If Puma boss Arne Freundt had his way, sport and geopolitics would be two completely separate worlds. “We see our task as supporting every professional athlete who wants to take part in international competitions,” says the CEO of the third largest sportswear manufacturer in the world. According to Freundt, the athlete's gender, nationality or religion played no role for Puma.

However, it has recently become clear that not everyone shares this view of the world. When it was announced that Puma was ending its sponsorship of the Israeli national football team, it caused a stir around the world. Once again it becomes clear what image risks international conflicts can pose for globally active brands.

Puma has emphasized that the decision to take the step was made a year ago - for purely strategic reasons, because the company was already in the process of limiting the number of its partners. But the perception in some circles was different: Pro-Palestine activists celebrated the withdrawal as a response to their calls for a boycott after Israel's attack on Gaza, with which the country responded to the Hamas terrorist attack on October 7th. Israel supporters, in turn, angrily condemned the decision. In the short message service X, the company was accused of abandoning the country at a moment of crisis. There was also a reference to the fact that the former Puma founder Rudolf Dassler was a member of the NSDAP.

The heated debate over the sponsorship contract has become Freundt's biggest image problem since he took office at Puma. The manager became Puma boss in November 2022, succeeding Bjørn Gulden, who moved to competitor Adidas. "Unfortunately some people are trying to use sport for their own political agenda," the 43-year-old told the Financial Times. From his point of view, it is simply part of business life that sponsorship contracts are terminated. “Our portfolio of partners is constantly changing,” he said. "We bring new people on board, end collaborations with others, and sometimes we get back together again at a later date."

The balance of the first twelve months under Freundt is mixed: Puma, which celebrated its 75th anniversary this year, is expected to increase its sales by five percent in 2023, according to analysts - and then for the second time at 8.9 billion euros Set a new record. At the same time, however, operating profits are likely to decline by two percent, also because higher raw material prices and steep discounts in the USA are putting pressure on the margin. The company's share value has fluctuated significantly over the past twelve months and is now back to around the same level as at the beginning of the year. But that means: still half lower than at its peak at the end of 2021.

“We cannot be satisfied with the current share price,” said Freundt, who is convinced that the company is also about trusting in its own strategy and the new boss. "I am a new face for the capital markets and it takes time to build trust." Freundt's predecessor had left big shoes to fill after almost ten years of leadership. After rescuing Puma from an existential crisis, he managed to nearly triple sales.

According to observers, Freundt is still in the shadow of his predecessor Gulden: "From an investor's perspective, the key thing is that he hasn't actually developed anything that goes beyond the original strategy," says Deutsche Bank analyst Adam Cochrane. Freundt himself sees it differently and points out that massive investments were made under his direction to strengthen the brand. Marketing was radically overhauled and brought back from the USA. Important executives in China and America were replaced - i.e. in countries where Puma is aiming for a significantly larger market share. “We have taken the right direction in 2023,” says Freundt. "But strengthening a sports brand is not something that can be done from one day to the next." Freundt is confident that he will be able to increase sales to ten billion euros by 2025.

The company's business partners are full of praise for the new Puma boss. "I've been in this industry for over 25 years and I've never seen a CEO who was so close to his customers," says Sven Voth, founder and boss of the Snipes shoe retail chain. Freundt tries very hard to work well with retailers. “He is involved in all important topics, listens carefully and reacts quickly,” says Voth. Freundt's first boss, Carsten Liesener, praises the manager's "good communication skills". Liesener was once a partner at Siemens Advanta, the company's own consultancy where Freundt started his career in 2005 after studying economics in Leipzig. “He is very empathetic and can win people over. At the same time, he has analytical depth,” says Liesener. “He stood out from the start.”

Freundt joined Puma in 2011 as head of strategy. He represents a new type of management that relies more on the use of data and team thinking.

In fact, the decision to end sponsorship of Israel's national football team is an example of this. The decision was made at the end of 2022, shortly after Freundt was appointed boss. His analysis: The Israeli team had only been moderately successful for years and had only qualified for an international tournament once. The team only finished 75th out of 200 teams in the FIFA rankings. In addition, the market for the jerseys is comparatively small with 9.7 million inhabitants in Israel.

“Arne has a very analytical view of what he puts into things and what results he can expect,” says Matthias Bäumer, head of the sports team at Puma and with the company for 16 years. Internally, Freundt is seen as a figure for the start of a new era. “Every now and then companies have to reinvent themselves,” says Bäumer. "And Arne is a leader for a new generation of managers who can implement this very well."

Freundt, who has two children, is seen as a role model for a better work-life balance, an issue that plays a major role in Puma's workforce: the average age is 31 years. “Arne works very hard,” says Bäumer. “But it’s also important to him that he has enough time to be there for his children’s lantern parade.”

This article, translated from the "Financial Times", first appeared in the business magazine Capital, which, like stern, is part of RTL Deutschland.