The scenes these past weeks in Berlin as World Cup Winners Germany paraded the gold trophy in front of thousands of adoring fans have been well documented. Germany’s wonderful performance at the World Cup finals in Brazil has once again led to many people to believe that the German’s have not just got it right at international level, but that this success is inherently due to how the national football league, the Bundesliga, is set up and administered.
A crucial aspect of the Bundesliga, which differs greatly to how things are in the Premier League for example (not to mention Serie A and La Liga) is how the Bundesliga has its own Financial Fair Play restrictions in place. Many experts believe that this is the cornerstone of Bundesliga’s strength and thus plays a key role in German teams success at domestic, European and World level, both in terms of domestic sides (like Bayern Munich and Borussia Dortmund) as well as the national team.
In this article, the first of a five-part series, I’ll examine the Bundesliga’s financial set up in a little more detail and ask whether or not it all adds up to guaranteed success for domestic and national teams.
Furthermore, if it does work, as it certainly seems to, why can’t a similar model be adopted by other league’s across Europe?
But to begin with, let’s take a look at some of the raw data from the Bundesliga’s 2014 Report into the state of the game in Germany in purely financial terms.
The Bundesliga has almost doubled the revenue it’s generated from 2003/2004 (€1,090bn) to the 2012/2013 season, where it generated €2,127bn. This amount is the second highest generating revenue league in Europe behind the Premier League.
Yet here’s the incredible thing: the Bundesliga makes far less money in broadcast revenue than any other of the top five European Leagues; they do make the second highest amount of money on a match day compared to other European leagues. Perhaps most critically of all, the Bundesliga’s wage bill is the fourth highest of all European leagues, and is less than half that of the Premier League.
Yet in 2012/2013, the average attendance at Bundesliga games was nearly 6,000 people greater than at Premier League games, with averages for the Premier League coming in at 35,921, but for the Bundesliga it was 41,914. Both these figures far exceed the average attendances in other leagues across Europe (28,249 in La Liga, 23,300 in Serie A and 19,207 in Ligue One).
There are many more facts and figures you can analyse about the Bundesliga but in essence, these boil down to the following key facts:
- The Bundesliga pays around half the amount of money in wages compared to the Premier League.
- The typical Bundesliga fan pays considerably less to attend and watch a game than any other fan in Europe.
- German Bundesliga clubs were run at a €91m profit for 2012-13, while the debt on Premier League clubs had increased in the 12 months leading up to the summer of 2013 by £139m.
These facts add up to one major conclusion, German football is run more cheaply, more profitably and undoubtedly more successfully than the game in England, Spain, Italy and France.
Why is that? Does the answer lie in the Bundesliga’s Financial Fair Play system. Let’s take a closer look and find out.
Bundesliga Financial Fair Play: The 50+1 Rule
To understand how Bundesliga clubs can both be successful and profitable means you need to understand how the financial fair play rules have been initiated within the Bundesliga. There all clubs (bar Wolfsburg and Bayer Leverkusen who are wholly owned by parent companies) operate under the 50+1 rule.
This rule means that at all times 51% of all shares in the club are owned by supporters. This single rule alone has perhaps shaped the Bundesliga more than any other financial ruling.
In effect, this rule means that it is impossible for a wealthy owner or company to buy out a club, in the way that has happened at Manchester United, Chelsea and Manchester City in the Premier League. In such situations, these football oligarch’s invest many millions, even billions of pounds, artificially inflating a clubs wealth with their own, buying players that the club could not realistically afford without the wealth of their new owner.
In the Bundesliga, this take over is impossible. As part-owners, fans have a far greater say in how the club is run. They have seats on the board and will appoint members to the club’s board who they feel will operate both with the clubs best interests but also the fans best interests at heart.
German Bundesliga sides have a “Fan Projeckt” who meet regularly with club officials, local government to ensure that both the club and the fan get the best deal possible.
The effect of the 50+1 Rule extends beyond a greater role for the fan in the say about how their club is run. It filters through every aspect of the Bundesliga. Clubs control their wage bills far more prudently and, perhaps more importantly, players in the Bundesliga temper their demands to fit in with the pay scale at their club.
Bundesliga clubs may therefore bring in only half the money each year that Premier League clubs do, but they spend their money more wisely, they don’t spend beyond their means, they treat the fan as part of the club, rather than simply a paying customer and perhaps most surprisingly of all, they turn out highly successful, profitable teams across Europe and also at the international level.
However, there are critics of the 50+1 rule and the rule does not stop individual clubs from overspending, going into debt or even folding. Furthermore, there are also subtle differences between how football is viewed within German society which is very different to how it is viewed in England. We’ll look at these in more detail in a later article. So the question is, does the 50+1 Rule add up?
How is it possible to pay players less, charge fans less, take less money in and yet still enjoy outstanding success on a football field at domestic and international level? Especially when the perceived wisdom in Spain, England, Italy and France seems to be that to win big, you have to spend big.
Doesn’t this seem paradoxical?
In truth, the fact of the matter is that the 50+1 rule introduces a healthy dose of realism into the Bundesliga. The league’s financial system isn’t built towards satisfying the whims of a wealthy owner, or lining the pockets of the players, but by offering fans a great deal to go and support their team.
In the Premier League, over 70% of the £2bn the league makes disappears in player wages, in the Bundesliga it is 51% of the €1.09bn.
In effect, the Premier League are paying five times (£1,5bn) as much in wages in real cash terms as clubs in the Bundesliga (around £300m).
In truth, the 50+1 system isn’t perfect; it is a very good general rule of thumb, but in actual fact, Germany’s prudence in football matters comes down more to realistic wage demands of their resident professionals, rather than any mystical or magical formula that Europe can follow.
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