A self-sustaining model

While being possibly Europe’s only financially fit and proper league — where the 18 domestic clubs collectively made a profit of euro 55 million — the euro 2.08 billion turnover over the past year has set the Bundesliga on an upward trend. By Arjun Ambarnath.

The presence of two German clubs, Borussia Dortmund and Bayern Munich, in the semi-finals of the European Cup — the first time that has ever happened — could help back Germany’s claims of closing the gap from England and Spain in the footballing order of merit. And it is a claim that must be taken seriously especially after Pep Guardiola chose Munich as his next managerial destination.

“It is because of the real good work done by Bayern. The arrival of Pep Guardiola is a big sign of the growing reputation of the Bundesliga. He is a big name and massive figure, and I think coaches like him aim for long-term success on the pitch,” says Andreas Rettig, COO of the Deutsche Fussball Liga (DFL).

While proving its worth in sporting terms, the Bundesliga also boasts of the lowest ticket prices among Europe’s five major leagues — an average paying ticket costing just about euro 22.7. Compare this to the Premier League and La Liga where a fan has to shell out almost double. But the success of the Bundesliga goes way beyond just cheap match-day tickets.

While being possibly Europe’s only financially fit and proper league — where the 18 domestic clubs collectively made a profit of euro 55 million — the euro 2.08 billion turnover over the past year has set the Bundesliga on an upward trend. “Another important thing is the balanced rate of clubs. If you look at the situation of the teams, you have advertising which constitutes around 26 percent, broadcast revenue at 26, match-day takings at 21, plus transfers and merchandising, and you add these figures up, it’s roundabout 70 percent. So the Bundesliga is a brand in good shape. It is a financially stable business model,” says Rettig.

A quick look at the continent’s other major leagues confirms the position the Bundesliga is in. Last season, the Premier League witnessed an approximate two percent decrease in its average attendance per game of 34,000 with La Liga attracting just about 28,000 fans while Italy and France remained half-empty at 22,000 and 18,000. These figures are dwarfed by the Bundesliga’s average of 44,293.

Rettig also attributes the success of the Bundesliga over the past decade to its “strict licensing system, where all clubs have to qualify in sports and economics”. Meanwhile, the 2006 FIFA World Cup came at just the right time. “It was the political will that drove us forward. The idea was to invest in modern stadiums and other infrastructure,” he says. “Without the World Cup, it would not have been possible to reach the level that we have at this moment.”

The main basis of the German model has been the fascinating 50+1 rule, whereby a minimum of 51 percent of the club must be owned by club members. The rule still allows for considerable investment opportunities for private investors, while preventing them from having overall control of the direction of the club.

“We think that the situation with the 50+1 rule is a real asset for us. It means that the clubs are secure from big financial investors, who claim to protect a club (the likes of Chelsea and Paris St. Germain), and if he feels bored, he takes over another club or switches his investment to another sport. All this is simply not possible in Germany. The rule is good for us...it’s good for the supporters and for the system. It helps secure our tradition and identification of clubs and its fans,” he adds.

So was this a case of putting fans first? “Actually, no,” tells Rettig. “Most clubs have proper management structures. There are some reasons why fans are not involved in the strategies of the clubs, but I feel the most important thing is the supporter-identification of the clubs.” But there are exceptions to the rule. DFL Press Officer Eckart Gutschmidt says, “Bayer Leverkusen and Wolfsburg are two. Suppose if the company is supporting football for, say, 20 years, then it may acquire a majority stake. These have been successful ventures because the company has proved to the fans that it takes its venture in the Bundesliga seriously. This rule has been a big part of our development.”

This discreet financial management has been achieved despite the league’s TV revenue being a modest euro 682 million compared to the Premier League’s euro 1.2 billion. No German team has won the European Cup since 2001.

Whether the disparity in TV revenue was a factor? Rettig says, “We need to win the big games. The most important thing is success on the pitch. I don’t think the TV deal has anything to do with it. From our side, it’s success in the European Cup that will help matters.”

He also points to German football’s success in producing its own players. “Another main pointer to our successful model has been the building up of youth academies. Eleven years ago, the Bundesliga made it necessary for all clubs in both divisions to invest in youth academies. We currently spend around euro 103 million on youth development (a steady increase from the euro 43 million in 2002/03). If you want more figures, the majority of players in the league come from the youth academies — 52.4 percent of licensed players. For example, when Dortmund played against Manchester City, their starting line-up had seven Germans, of which three were from their own academy.”

What has indeed made the Bundesliga fascinating is the fact that there have been four different champions in the past six years in the league, and five different winners in the German FA Cup. An all-German European Cup final at Wembley next month could be the “perfect gift” to the Bundesliga as it celebrates its 50th anniversary this year.