Air of uncertainty at Wolfsburg as Volkswagen goes ahead with planned mass layoffs

Admin l Thursday. October 31, 2024

SAXONY – Concerns are growing at VfL Wolfsburg amid the crisis at owners and German carmakers Volkswagen.

According to local newspapers, there’s a major feeling of uncertainty among the club employees, while comments on the Volkswagen’s intranet have questioned why the company still afford “an expensive toy” like Wolfsburg, while thousands of jobs are under threat.

The firm’s works council told VW employees at an event on Monday that the company intends to close at least three of its 10 plants in Germany and cut tens of thousands of jobs.

Mass lay-offs are planned as all remaining VW plants in Germany will be downsized under the plan from management.

Wolfsburg said in a statement that the club “is gearing its daily actions towards making a contribution to VW’s major savings program.”

“As a subsidiary of Volkswagen, it has always been our aim to use the resources made available to us efficiently and cost-effectively,” the statement read.

The relationship between Wolfsburg and VW is essentially based on two agreements.

A control and profit transfer agreement stipulates that the club must pass on all profits to its parent company if it sells a player. That was the case when Kevin De Bruyne was sold to Manchester City for €75 million ($81.5 million).

Conversely, VW also compensates Wolfsburg for all losses – as in the coronavirus pandemic or after particularly unsuccessful years.

The financial support from VW also comes in other forms, such as jersey advertising and the stadium’s naming rights. Ahead of this season, the contributions amounted to almost €80 million.

The future of the relationship between Wolfsburg and VW amid the company’s financial crisis is unclear, but the club has already changed its strategy, adopting measures such as primarily signing young players to develop them and sell them on at a high price.

Wolfsburg, like Bayer Leverkusen, who are owned by pharmaceutical giants Bayer, are granted a special exception from the 50+1 rule in German football.

The rule states that no shareholder can have more than 50% control of a professional German team.