The Bundesliga is one of the most prestigious leagues in Europe. However, it is built upon an anomaly – the 50+1 ownership model, which dictates that club members must hold a majority of voting rights at board level, has led the historic TSV 1860 Munich to fall from grace. The club’s majority shareholder, Jordanian billionaire Hasan Ismaik, is now faced with a tremendous challenge. He has the money to meet it, but things aren’t so simple.
Football fans have notoriously short memories, so one can perhaps forgive the followers of TSV 1860 Munich for forgetting the dire straits the club found itself in in 2011, when Hasan Ismaik stepped in to save it from bankruptcy. But the man who was once celebrated as a saviour is today confronted with fierce opposition.
The club had been poorly governed for many years, particularly since relegation to the second tier of German football in 2004, so Ismaik’s investment promised a real chance of a return to the club’s glory days.
This has failed to manifest for two main reasons. The promises made to Ismaik in 2011 were quickly forgotten by an intransigent board of directors more concerned with maintaining their powerful positions than with the team’s success on the field. Further exacerbating the problem is Germany’s outdated system of club ownership which allows this abuse of power to occur in the first place.
While Ismaik’s pledge to return the club to the top-tier of European football may appear fanciful in retrospect, his prior experience in turning around and leading businesses through complex change in the Middle East (thanks to which he became the first ever Jordanian billionaire on the Forbes Rich List) meant he had a solid background to improve the club’s fortunes.
This is a point often forgotten in the public discourse on club ownership: clubs do not only benefit financially from external involvement, but also from the transfer of know-how and expertise in running the increasingly more important commercial side of a club. Of course, fan clubs are a vital lifeline for any football club. But having them make strategic business calls, via their board representatives, is a mistake. Loyalty and passion for a team should not constitute the foundation from which strategic decisions are made.
Another complaint fans often level against foreign investors is that they lack commitment to their chosen clubs. This is certainly not true in Ismaik’s case, who, despite the way he has been treated, has attended almost every game since he saved the club in 2011. Last July he stepped up to save the club from insolvency, despite the board’s continuing rejection of his proposed reforms. These proposals would have decreased the probability of the club ever finding itself in such a situation again.
Ever since his original investment, the other board members – remnants of past failures – have attempted to block every initiative Ismaik has put forward, preferring the comfort of moribund mismanagement to the feeling of uncertainty prompted by any serious attempt at institutional change. In fact, even requests by Ismaik to invest in new players and facilities for the club have been repeatedly rebuffed by the board.
In a normal business, poor performance and obstructionism of this kind would mean removal from office. Yet due to Germany’s 50+1 model of club ownership, this behaviour has gone unpunished.
Widely reported internal club documents seen by Germany’s Kicker magazine even revealed that senior members of 1860’s board are actively pursuing a concerted policy of “death by a thousand cuts” against Ismaik, in the hope that by rejecting him at every turn, he will eventually grow weary, decide to sell up and walk away, thus proving their point.
There is a broader issue at stake here, one which affects German and European football alike: to what extent is the 50+1 rule fit for purpose? Though still held up as a model elsewhere on the continent, it faces increased domestic criticism in Germany, with a strong case that the rule itself impinges on European Union competition law. Perhaps it is time to reverse this old system, which has arguably protected incompetent club executives for too long.
The rule’s inadequacies have been thrown into sharp relief following Red Bull Leipzig’s meteoric rise over the past few seasons. The club, 99% owned by the Austrian energy drink conglomerate, consistently circumvented league rules on 50+1 – and that is precisely why it has been so successful.
German football also suffers competitively from the 50+1 rule. Within Germany, the rule ensures that larger clubs such as Bayern Munich and Borussia Dortmund can maintain their domestic hegemony, since the external investment necessary to shake up the status-quo is discouraged, as has claimed Matthias Sammer, Bayern Munich’s former sporting director.
Throughout Europe, and particularly in the most competitive league worldwide – the English Premier League – foreign leadership provided the stimulation that has made clubs thrive and others emulate the model. The most striking examples are perhaps Manchester City and Chelsea, both owned by passionate billionaires whose ambitious investments have resulted in tremendous success on the pitch. Similarly, PSG fans grew to like their Qatari owner once the team’s results quickly improved. Ultimately, isn’t that what the fans want?
Football has evolved from a game into an industry worth billions, and it is absolutely crucial for clubs to be run professionally. By handing over the reins of a club to people unable and unwilling to think rationally, the 50+1 rule undermines German football and discourages the investment necessary to advance the game on the global stage.
Just like the Bosman ruling of 1995 revolutionised the process for transferring players, and allowed club teams to have more than 3 non-EU players in the squad, it’s time to re-examine the 50+1 rule. Doing so would have a substantial impact on the ability of clubs like TSV 1860 to develop.
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- Revisiting the 1860 Munich, Hasen Ismaik Debacle in Light of the 50+1 Rule - February 5, 2018