Not Quite Thanksgiving Yet at 1860 Munich

Earlier this year, 1860 Munich supporters almost saw their club become but a memory, a big blue footnote on the history of football in the Bavarian capital. With pocket change rather light and Deutsche Fußball Liga auditors expecting €10 million by 30 June to allow the club retention of its playing license, prospects for a competitive 2011/12 campaign in 2.Bundesliga appeared dim, or possibly non-existent. This followed cash flow problems during the 2010/11 season itself, when around March Die Löwen ran the risk of being unable to complete their fixture list were they unable to meet financial obligations to paying staff and becoming more current on the tenant agreement at the Allianz Arena.

Those ever-gracious landlords Bayern Munich (or perhaps lord-it-over-lords?) offered to extend 1860 a loan to finish their campaign and keep their tenancy of the Allianz current, but that sense of stubbornness and despised reluctance to accept anything offered by Bayern which courses through the veins of those running 1860 Munich saw them reject such a gesture. A group of Lions supporters followed up their club directors’ answer by providing Bayern Munich with a less than diplomatic response by supposedly being the ones responsible for blue paint having been thrown at the club offices of Bayern. Ain’t rivalry grand?

Hasan Ismaik wants to establish 1860 Munich in the top flight of German football.

During April, though, rumours swirled of a wealthy white knight charging in from the Middle East to save the club before they hit that proverbial wall with Jordanian businessman Hasan Ismaik interested in rescuing Munich’s first Bundesliga club from ruin. After an initial run up of stories rife with speculation as to whether 1860 would be transformed into a league power much like Manchester City has been in England through its heavy investment from Arabian sheikhs, little in the way of news came out as to whether Ismaik would indeed become the first Arab investor in German football until the deed was done. Although Ismaik would be unable to claim a full ownership stake of 1860 Munich owing to the 50+1 rule, thus disallowed from treating the club as a rich kid’s fantasy football plaything, he chose to take the plunge into German football anyway, obtaining 49% of the voting shares, purchasing a further 11% of non-voting shares, and reshaping the board to suit his needs. His ability to dictate club matters, then, would look to mimic that of Dietmar Hopp at 1899 Hoffenheim, where effective majority ownership rests with the person who wields the power of the purse.

Considering the desperate situation club directors were in at the time, with their very survival at stake and supporters threatening to break away to sort out a new 1860 should another rescue hand-out from rivals Bayern be accepted, they might be forgiven for having overlooked a key flaw in the Hopp model.

For Hoffenheim, Hopp’s investment has given him authority to dictate who the trainer for the football club will be, which players are purchased, and which ones are sold (Gustavo-gate, anyone?). Should those in the majority–which comprises everyone else but Dietmar Hopp–disagree with his decisions, they face the possibility of him dumping his shares and essentially putting a full stop to the club’s continued financing. Hopp, then, has been granted general freedom to shape 1899 as he sees fit, spending heavily on its wage budget to fund the club into the Bundesliga and now letting the air out of sails just a bit in order to reduce the club’s reliance on the generosity gleaned from his SAP wealth. Swooping into Munich this summer to save 1860, Ismaik likely imagined a similar scenario whereby his investment would provide him the ability to more effectively determine the club’s future rather than just being a silent benefactor.

Ismaik admitted in an interview prior to his purchase of the shares he had been warned off investing in the German game due to the 50+1 rule but disregarded it, suggesting that as long as he had someone on the board who was sympathetic to his interests to work alongside President Dieter Schneider, he would be fine. With the board reduced from nine members to six and including a certain Hamada Iraqi–the Middle East middleman who brought the idea of buying into 1860 to Ismaik from the beginning–the Jordanian seemingly attained enough influence functionally to direct matters to his satisfaction. In reality this has not been the case, however, as observers in Munich see considerable infighting occurring between the Schneider and Ismaik spheres of influence, with Iraqi serving as the Arab businessman’s mouth-piece asserting Ismaik’s 60% stake in the club–counting those non-voting shares–amounts to his having majority control and the leverage to shape the club accordingly. Schneider appears to be coming in for complaint for him first having ceded sufficient power to Ismaik for him to feel his has authority akin to majority ownership while simultaneously being applauded in some 1860 circles for maintaining a position of defiance to the Jordanian’s scheme.

In short, neither side truly thought this transaction out. When Ismaik was told of the club’s history and asked, “Why bother?” he really should have considered the matter a great deal longer. As for club directors, had they thought Ismaik would arrive with bags of euros to save them and not expect something in return beyond a polite handshake, they really failed to see the forest for the trees. Ismaik is a businessman whose wealth derives from oil and real estate, and he likely anticipated to run 1860 as his business with a plan that not only raised the standards of play on the pitch but also turned a profit on his investment. While his pledge to spend around €33 million on the club over the next couple years and bring it up to top flight standard might be have been said to be minor to him, he was shrewd enough to know it was a massive amount to a club that had previously been selling off talent like Moritz Leitner and selling its 50% ownership of the Allianz just to survive and felt his stabilisation of the club this summer earned him the right to do as he pleased.

Moritz Leitner is one of many talents that has come out of the 1860 youth system in recent years. The Bender twins are another example for the club's excellent youth work.

Herein lies the key flaw of the Hopp model and why it is wholly untranslatable to a situation such as 1860. Ismaik is an outsider and Die Löwen are a fiercely stubborn group that would consider selling the shirts off their backs before having to consent to external influences on how they run things. Hoffenheim might have viewed Hopp–and apologies if this is wide of the mark–and his offer to fund the daylights out of their club with open arms, considering he had been a supporter since childhood. He, then, would be given carte blanche to decide as he wished since they knew he had the best interests of the club at heart since the club had been in his before the money arrived. Hopp was not just a foreign investor perceived to be seeking out a business opportunity for himself. He was one of their own, and the circumstances were almost too unique for them to be replicated with any modicum of early success anywhere else in German football.

Especially at 1860 Munich, where if Ismaik had really been paying attention, came to be in the state he found it after a previous investment group got cold feet and ran away from the club in 2009.

So, where does this leave Lions? One would imagine Schneider and those entrenched prior to Ismaik’s arrival will walk a finer line without drawing one in the sand, lest their Jordanian saviour decide six months of rejection is enough and hands in his stake. There are still debts to service, wages to pay, and rent still owed to Bayern Munich, as Ismaik has vowed to keep 1860 at the Allianz under its current arrangement for now rather than having presented plans of investment in a new home for the club. On the other side, Ismaik might want Iraqi to stop speaking much about him being a majority owner, lest the DFL wish to investigate a bit further in himself and the club to determine if any rules have been broken. On the pitch, the club have a slate of winnable matches ahead of the winter break after facing 2.Bundesliga table toppers Eintracht Frankfurt, but with matters becoming more unsettled in the executive suite, trainer Reiner Maurer’s task to keep the players focussed on the games at hand has become a tad more difficult.

In the end, however the situation resolves itself, Ismaik’s experience with 1860 Munich will serve as a test case for potential future foreign investors in German football. Potentially this means there will be more eyes that matter watching the Allianz when it’s lit up in blue rather than red in the coming year.

Feel free to leave a comment below.

The following two tabs change content below.

2 Comments

  1. A very good summary of the tricky situation at the club that I love.

    I for one preferred Ismaik’s cash to losing my team. Would I have gone and followed 1860 into the Bayernliga? I’m sure I would still have watched many a game.
    But I think the club’s greatest asset and it’s future is still it’s academy, and that surely could not have been sustained in that situation.

    Just imagine where 1860 could be today if they had been able to hold onto all the talent they had to sell cheaply to survive! The Bender twins, Leitner, Träsch, Mlapa, Schäfer, Holebas (now a Greek international), Johnson (now a US international), Lehmann, Gebhart, Baumgartlinger and Hosiner (now Austrian internationals), Baier… we’d make an okay Bundesliga team.
    If the academy keeps churning out the talent and if we can keep these kids in the future (at least long enough until they make us a proper profit and not just a pittance) I think positive development for the club will follow. I prefer this to buying players that are handed down from BL clubs with Ismaik’s cash. (Collin Benjamin did not really help us yet.)

    Anyway, I’m hoping both sides will continue to be able to work together. There will be gnashed teeth, but that’s what happens when there are compromises.

    Finally – Terry, “the cash we hear so much about but are yet to see”? Well we did get a generous shirt sponsor, I think you’ll have to give Ismaik that.

  2. You have to feel for Ismaik. He stumps up enough money to cover the immediate debt and pledges to fund new players in the future. Had he not arrived, would Dieter Schneider and co. be happy with complete control of nothing ?

    It’s clear that the two warring factions need a middle-man (Robert Schäfer) to steady the ship but it’s unlikely he can keep both sides happy. Therefore Schneider should be the one to flex. By offering consessions he ‘may’ nudge Ismaik into showing his colours and splashing out the cash we hear so much about but are yet to see.

Leave a Reply