A complete history of the relationship between PSV and Philips

When you think of PSV, a few things typically spring to mind. The red-and-white stripes, the production line of talented youngsters, and the legacy of great goalscorers. However, the most definitive characteristic of this football club is its deeply entrenched relationship with electrical conglomerate Philips.

It’s a mutual agreement that has brought success and recognition to both parties, helping each conquer Europe and grow on the world stage. It’s a definitive bond between two esteemed pillars of a hard-working community. It’s an adequate fairy-tale.

What is the link between Philips and Eindhoven?

In Eindhoven, the quintessential company town, people danced to the Philips beat for decades. Its society, economy and culture were predicated on the health and success of this organisation, which grew from humble roots to international dominance at an incredible rate.

A majority of jobs in Eindhoven had some connection to Philips, be it working in the factories or delivering products to local shops. The landscape, history and reputation of this town were moulded by the conglomerate whose legacy remains in museums and statues. It was a powerful cosmology.

The global Philips brand we enjoy today is a far cry from its rudimentary beginnings. When Gerard Philips, an engineering student at the prestigious Delft University, became particularly interested in electronics during the late 1890s, his father, Frederik, bankrolled a dream to create a light bulb manufacturing plant. A rather unspectacular factory was built in the rural backwaters of Eindhoven, then only a small village dealing in tobacco and textile stock, and the small family business took root.

A trial period of several years was served, during which the spectre of bankruptcy lurked before the company began winning larger contracts for carbon filament lamps. It expanded at a remarkable pace and, by 1905, a technical staff headed by Gerard’s younger brother, Anton, was appointed, adding greater professionalism to the outfit and raising production from 400,000 to 4,000,000 lamps per year.

Anton Philips was full of bright and brave ideas, if you will pardon the pun. He drove the company towards expansion with additional factories built across Eindhoven, each churning out some 20,000 light bulbs every day. The company morphed into a modern force, focusing on huge-scale mass production and leading the way in innovation.

Its increasing size changed the geography and demographic of Eindhoven, which mushroomed from a small village to commercial hub under the aegis of Philips. The population of Eindhoven, dubbed the City of Light in reference to its burgeoning light bulb fascination, soared from just 2,300 in 1815 to 47,000 in 1925. By 1935, 103,000 people resided in the area, and a majority went to work for Philips. The masses flocked to Eindhoven for literal and figurative enlightenment.

The tight-knit community of Philips workers was one of energy and enthusiasm. A high standard of morale was important to its executives, who were trailblazers for fair worker rights and conditions. The local landscape was shaped accordingly, with schools, libraries and grocery stores all built by Philips.

How PSV Eindhoven was formed

In 1910, the company determined to provide greater leisure activities for its workers in the hope of fostering strong civic pride and enriching the free time of hard-working families. Accordingly, the Philips Elftal was created. An embryonic forerunner to the modern day PSV, the Elftal - or “team” in English - was founded by eight influential power brokers with the intention of playing football games against teams around Holland. In the spring of 1911, the Elftal played and won its first match 4-0. A series of matches against EVV Eindhoven represented the first derby games, while the Philips works team also played clubs from Hasselt, Horn and Mönchengladbach.

After industry strikes in 1912, the initial team was disbanded. A replacement was spawned a year later, when a two-day sports carnival arranged by Philips was held in centennial celebration of Dutch independence. It was such a success, and proved so thoroughly entertaining, that the grand Philips Sports Vereniging was founded with the stated aim of providing recreational opportunities for the community. The most popular and successful arm of this union was its football team, founded on 31 August, 1913. This was, and still remains, the PSV Eindhoven we know today.

The leading figure of PSV during these early days was Frits Philips, the nephew of company founder Gerard. Frits was virtually raised in the factories and boardrooms of the family business. As a small child, he loved to spend time at the Philips Sportpark, an improvised facility replete with football pitch and red-and-white decor set in the shadow of the whirring light bulb factory.

The current Philips Stadion, a feat of modernity achieved through incremental reconstruction, sits on the same location as its forebear. Frits spent plenty of time watching PSV games there, witnessing the club expand from a mere means of employee recreation into an independent behemoth of continental football.

At the age of eight, Frits participated in a ceremonial kick-off prior to the first game in PSV history. Even as managers came and went, legends were made and sold, and the club became increasingly independent from the electronics firm, Frits Philips could be found in Section D, Row 22, Seat 43. In 2005, some ninety-two years after his first PSV game, he was in attendance to lift Eredivisie title number eighteen along with captain Mark van Bommel. His was an undying loyalty.

Frits stood as a tangible link between Philips and PSV for many years. In many respects, he remained as a stoic symbol of the relationship even as the football club became increasingly distanced from its eponymous parent company.

When PSV attempted to join a league for the first time, KNVB, Dutch football’s governing body, insisted that the club adopt a legal management structure similar to other associations. In essence, the authorities would only grant PSV a licence to participate in leagues and competitions if an executive board was elected by its members, providing a degree of organisation and accountability. The structure PSV settled upon, titled Eindhovense Voetbal Vereniging (EVV), can be seen as the beating Philips heart of PSV.

After entering a league for the first time in 1914, PSV rose to the highest level of pre-professional Dutch football by 1921. A relegation didn’t halt the club’s general progress and, following a swift return to the top tier, PSV has played continuously in the Netherlands’ highest level of football competition since 1926.

The relationship between Philips and PSV

It was this early success that inspired the club to dream big. When Frans Otten, a Philips functionary, rose to the position of vice president, the prospect of using PSV as a marketing tool percolated tantalizingly. Otten worked tirelessly to streamline and tighten the bond between PSV and Philips, delegating funds to the construction and development of facilities. He felt that, by raising standards, PSV and Philips could be held in even higher public esteem.

In 1928, Otten hoped to attract a better calibre of player by opening PSV to footballers who had no prior connection with the Philips company. This unwittingly became the club’s first step towards self-sustaining professionalism independent of its parent organisation.

Otten, a Philips director for over twenty years, ensured that PSV had the resources to succeed. This dedication came to fruition on the field, with the club victorious in national championship playoffs in 1929 and 1935.

In April 1933, PSV became financially separate from Philips, operating solely as a football club yet remaining symbolically under the Philips umbrella. The heritage of PSV had Philips’ fingerprints all over, and the two entities maintained a close relationship. However, the football club had no financial accountability towards Philips, with gate receipts and other income streams being fed back into the team rather than floating around the larger company. Philips, in turn, stood as a security net of sorts for the club that had eyes on professionalism.

Dutch footballers were paid for the first time in 1954 and the Eredivisie was established in 1956. PSV found itself at a definitive crossroads, fight hard for superiority even within its own town. The blue-and-white stripes of FC Eindhoven won the support of a more diversified Eindhoven, a decline in people flocking to the town solely to work for Philips opening up loyalties to different football teams. FC Eindhoven won the national championship in 1954 while PSV finished third. A change of direction was needed.

The aforementioned Mr Frits engineered said change. After attending the same university as his uncle, Frits worked as a grassroots factory technician before earning an executive position within the Philips hierarchy. While leading the globally evolving conglomerate through World War II, Frits remained an ardent PSV advocate and, as the professional game evolved, was keen to reaffirm the bond between Philips and PSV.

Accordingly, more Philips funds than ever before were dedicated to the improvement of PSV, which blazed a trail in the late-1950s and early 1960s by signing talented players from far and wide. A prominent example is Trevor Ford, a famous Welsh striker who played three seasons for the club. PSV began to play a quality brand of football and, after winning the Eredivisie in 1951 and 1963, were taken seriously as a domestic force. The Philips-backed progression of PSV, coupled with the saddening decline of FC Eindhoven, also helped expand the fanbase beyond recall.

In the 1970s, Philips sought to really capitalise on the emotional investment many were making in PSV. At the highest level, Philips knew that domestic success for PSV would not only fill the company with great pride, but also help fortify its standing as a major force. Furthermore, the executives saw a tremendous opportunity to have the Philips brand represented all over Europe if PSV could play regularly in the new-fangled European Cup.

In essence, Philips, ever hungry for expansion, used PSV as a marketing pawn. However, it was a perfectly amicable relationship, bringing mutual benefits and helping both the football team and the Philips brand grow internationally. In return for representing Philips with games all across the continent, PSV received huge financial backing from the conglomerate, used to compete at the highest level of European football.

During the 1970s, PSV won three Eredivisie titles, two KNVB Cups and the 1978 UEFA Cup with a squad assembled using considerable help from Philips. Willy van der Kuijlen was signed and went on to become the top goalscorer in Eredivisie history. Goalkeeper Jan van Beveren became a legend after PSV outbid Real Madrid, Ajax and Feyenoord for his services. The van der Kerkhof twins, Willy and René, were brought on board in a blaze of glory.

It was a win-win situation for Philips and PSV.

Inside the Philips marketing strategy

The inexorable advent of shirt sponsorship in Dutch football gave the two entities further grist for expansion. In 1982, the famous Philips emblem was first emblazoned across the chest of a PSV shirt. This became world football’s longest-running shirt sponsorship agreement.

During this period, the relationship between Philips and PSV morphed further into one of business rather than sentiment. The emotional bond was still felt, eighty years of tradition and heritage binding the two together, but the classic hallmarks of commercial give-and-take were axiomatic.

PSV played games all over the world, even winning the 1988 European Cup, with Philips splashed across their shirt, while also hosting teams from far and wide in the Philips Stadion. In turn, Philips had the contacts and financial muscle to force through spectacular deals beneficial to its football team, with star players such as Ruud Gullit, Romário and Eric Gerets all purchased.

Philips received international recognition, with entirely new audiences seeing its brand as a result of the attractive and successful football team. PSV received excellent players, financial invincibility, and an endless stream of trophies. All those generations after a community sports day spawned a casual football team, PSV and Philips still proved a match made in heaven.

The premiership of PSV official Harry van Raaij saw further attempts to formalise the relationship with Philips into one of commerce. During the mid-1980s, while PSV continued to win trophies and enhance its standing among the top clubs in Europe, van Raaij proposed a policy change that would codify the club’s connection with Philips as strictly business-like.

Essentially, the restructuring saw PSV receive a fixed amount of sponsorship money from Philips in return for shirt and stadium advertising, as well as greater matchday hospitality functions. The fee was paid annually as Philips became more of a conventional sponsor.

To this end, steps were made to limit Philips involvement at ownership level, with the Stichting PSV Voetbal - a corporate entity set up within the club’s legal structure as the Dutch game became professional - assuming control of all major assets.

In reality, Stichting PSV Voetbal, a foundation, became owner of PSV, collecting the sponsorship fee from Philips and applying it in the day-to-day maintenance of player transfers, salaries and general club affairs. Philips again provided a financial safety net for PSV, covering any losses and facilitating loans when needed. It was a business relationship that hinged on a sense of historical obligation.

As world football became more business-orientated during the early-1990s, with the introduction of global television deals and wall-to-wall sponsorship, PSV found itself at a natural advantage. In Philips, it had an intelligent and influential benefactor on which to rely for guidance. Philips, by this point a pre-eminent force worldwide, had tremendous experience in dealing with corporate direction, and assisted PSV in the procurement and later sale of assets for profit.

The club received record-breaking transfer fees for players like Ruud Gullit and Ronaldo, helping turn a handsome profit on initial investments and inspiring a business plan that sustained into the new millennium with such stars as Jaap Stam, Ruud van Nistelrooy, and Arjen Robben generating the club a huge financial surplus.

This even-keeled approach even earned the admiration of Sir Bobby Robson, who was lured from the England manager’s job by Philips and later given the fiscal flexibility to win two Eredivisie titles with PSV. In his autobiography, Sir Bobby praised Philips, citing the “financial muscle and good business sense,” it provided to PSV. In terms of business direction in football, Philips and PSV were characteristically ahead of the curve, blazing a trail of innovation.

Is PSV owned by Philips?

The strategic support and security provided by Philips was so successful that, during the late 1990s, PSV almost outgrew its dependency upon the company entirely. On 1 July, 1999, a further restructuring solidified PSV’s standing as a self-supporting company in its own right, with Philips receding further into the purely sponsorship capacity we see today.

It was on that date that PSV NV was established as a limited liability company, blending elements of partnership and corporate structures into one flexible force of enterprise and management. In essence, the NV (or public company), married the activities, responsibilities and assets of the old Association and the comparatively modern Foundation into one united programme.

The Foundation, in award of preference shares enabling it to make decisions regarding technical board composition, effectively became the legal owner of PSV. However, the Association and its members, in possession of the so-called Golden share, still held sway on moral club issues such as logo, colours, name, location and youth policy.

The formation of an independent Supervisory Board confirmed that this restructuring was motivated by a determination for PSV to be seen as a standalone football business entirely independent of Philips. This four-man panel, today headed by chairman Peter Swinkels, gave guidance and ratification to directors’ decision-making.

In addition to the Supervisory Board, PSV also established a Management Board, which is ultimately responsible for the day-to-day operation of the club. We see Tiny Sanders and Marcel Brands leading this group today. All aspects of this complex yet transparent board are accountable to one another, with interlocking responsibilities.

Philips men Jan Timmer and van Raaij served on the first supervisory board, but later appointments have seen this effect wane. Swinkels, for instance, has a background with Bavaria beer, yet was still welcomed onto the PSV board in 2010. Therefore, Philips currently has no direct link to the ownership or internal running of PSV. Rather, it remains the club’s chief sponsor and biggest fan.

Accordingly, PSV is now free to negotiate and strike considerable sponsorship deals with other organisations. Recent agreements with Freo and Bavaria illustrate a growing independence. Similarly, the main sponsorship package with Philips is now highly negotiable, with the electronics giant competing for its renewal with various other companies.

However, the old security net effect was evidenced in 2011, when Philips donated considerably to a relief fund helping to generate new capital for a financially challenged PSV. After unexpectedly falling off the UEFA Champions League map, PSV’s balance sheet was no longer sustainable, with many players commanding huge salaries that couldn’t be met by comparatively poor Europa League income streams.

Accordingly, Philips played a major role in what was ostensibly an £80m bailout of PSV. In accordance with this support, the club introduced tighter financial sanctions, with a salary cap and cost-cutting measures throughout many departments, until a return to the Champions League haven can be regularly guaranteed.

So in many senses, PSV and Philips are still looking out for each other, all these years later. At a recent event marking PSV’s centenary, Tiny Sanders praised the special relationship, stating that “PSV is a company that underwent a long development time. We have not maintained close ties with Philips for just nine months, but rather we are extremely proud of our unique relationship that lasted for 90 years before we became self-supporting. Our unbroken relationship with Philips is unique. The living proof is here today.”

Indeed, the two organisations have come a long way.

One hundred and twenty-two years after Gerard Philips set up a basic light bulb warehouse in humble Eindhoven, his electronic brainchild is still flourishing.

One hundred years after a company sports day spawned a football team, it is still going strong, too.

And thirty-one years after the word Philips was first scrawled on a PSV shirt, the bond is still intact.

It’s a certain kind of poetry.

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