AEG and the End of German Supporter Ownership?
When MLS and Bundesliga tied up a partnership last season, pretty much everyone saw this as a good thing. MLS would learn from the Bundesliga on all sorts of issues, and every forward thinking international football fan recognised MLS had picked perhaps the most supporter-friendly league in Europe to partner with.
But now it looks like the transatlantic influence will push the other way, as Los Angeles-based Anschutz Entertainment Group (AEG) — who own the LA Galaxy and a majority share of Houston Dynamo in MLS — push for a change that could transform the Bundesliga (via Soccer Investor):
Anschutz Entertainment Group will attend a conference this week which could pave the way for Bundesliga teams to be sold to major outside investors. Anschutz, the world’s second largest presenter of live music and entertainment events after Live Nation, leads the financial investment groups who will meet with club officials and the DFL, the Bundesliga organisation, according to the Canadian Press. Several club presidents, led by Hannover 96’s Martin Kind, have lobbied hard in recent months to open the doors for ownership by major foreign investors – whose money has helped propel the English Premier League into the world’s wealthiest soccer league. The Bundesliga is played in Europe’s largest economy and boasts the highest attendance, but in recent years has tumbled well behind the revenues of the Italian, Spanish and English leagues. Some team officials want to eliminate a league rule called “50-plus-1,” which dictates the club must have final say.
They insist major international players will demand financial and operating control for their investment. Most German teams aren’t owned and thousands of members vote on a president and board of directors. Those structures date back to about 1900, when many were formed as membership clubs. Anschutz owns or has an interest in numerous sports teams worldwide, including Major League Soccer’s Los Angeles Galaxy and the NBA’s Los Angeles Lakers.
Let’s set aside the beast that is AEG pushing this — who once owned half of MLS and dragged it to survival, but who have also shown very little sensitivity to supporters at various times — and just consider the principle at stake here. We’ve seen in the Premier League in recent years the growing dissatisfaction with rising ticket prices, the over-commercialisation of the league, and the debacle of the greedy Game 39 proposal.
FC Köln vs. Kickers Offenbach by ex.relax
The Bundesliga, by contrast, has reasonable ticket prices, safe standing areas, and isn’t owned by profit-hungry detached individuals out to make a fast buck. Due to the fact clubs in Germany are effectively controlled by ordinary members, traditional supporters have been protected to a greater degree than in England.
AEG and other companies looking to invest want this changed so they can control their investments. They clearly see Germany as a massive growth-opportunity, with its huge football-mad population still riding the post-World Cup tide and impressive stadia already in place across the land. It could become a bigger cash-cow than the Premier League if market forces were fully unleashed on it.
The potential deleterious consequences for suppoerters are obvious. Just at the time that in England, the backlash against unrestrained greed has organised in opposition to Game 39 and groups like Share Liverpool FC are arguing for fan ownership, Germany could be headed the other way towards less supporter control. On the other hand, those arguing in favour will claim it’d allow more German teams to compete financially with the Premier League teams for the best players.
It’s also interesting to see that it’s the mid-level clubs like Hannover 96 pushing for this change, not Bayern Munich, who already have enough revenue to compete with the European big boys. Presumably the mid-level clubs think this opportunity will allow them to gain the investment needed to take a step-up, and of course to rake in a lot more money.
This has an echo of the Premier League breakaway in England almost two decades ago, when mid-table teams voted in favour of a league that would lead to less revenue-sharing between the bigger and smaller clubs and a rising gap between rich and poor. The smaller clubs effectively dug their own grave, as the rich have got richer and poorer clubs have found it harder and harder to break into the top four.
One could see the same happening in Germany, as the richest investors buy into the richest, most glamorous clubs and the rest are left getting relatively poorer, while the supporter experience becomes more expensive and subdued.
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Tom Dunmore is the founder and editor of Pitch Invasion. Follow him @pitchinvasion on Twitter.
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Just a quick correction before I can comment on this in more detail (got to watch some football first).
“The Bundesliga is played in Europe’s largest economy and boasts the highest attendance, but in recent years has tumbled well behind the revenues of the Italian, Spanish and English leagues.”
Well behind is only true for the English Premier League. But every European league is tumbling well behind the EPL financially. There is no revenue gap between the Italian, Spanish and German leagues. According to Deloitte the Bundesliga generated the third highest turnover of all European leagues in 2005/2006, a bit ahead of Spain and a bit behind Italy. Only England is completely breaking away financially. According to preliminary numbers by Deloitte for 2006/2007 the Bundesliga is joined second with Spain, while Italy fell behind due to Juventus’ relegation. The Bundesliga achieves this with an 18 club format, ie. two clubs less generating revenue and 306 vs 380 league matches generating revenue.
The only problem for the Bundesliga is the fact, that Spain’s and Italy’s big clubs who are competing in the CL are much richer and that’s what counts. Nobody cares that a club getting relegated from the Bundesliga will have probably generated three times the revenue of a club getting relegated in Spain or Italy.
Thanks Jan. Do you know the figures for 2006/2007? I don’t know what numbers Soccer Investor’s quote that you mention comes from, but that might explain the discrepancy — I have no idea. Actually it’d be interesting to see the 2005/2006 numbers too, if you have a link to the info you mention.
OK, the preliminary numbers for the 2006/2007 season were quoted here:
http://www.eufootball.biz/Finance/060907-Serie-A-financial-strength.html
Deloitte’s Annual Review of Football Finance (Highlights):
http://www.deloitte.com/dtt/cda/doc/content/UK_ARFF_2007_Highlights.pdf
Now the problem with the English pdf is, that it’s very EPL centric. Deloitte’s German press release also quotes the revenue figures for the Bundesliga and other leagues:
http://www.deloitte.com/dtt/press_release/0,1014,sid%253D6272%2526cid%253D120134,00.html
http://www.deloitte.com/dtt/press_release/0,1014,sid%253D6272%2526cid%253D159177,00.html
So it looks like this:
2004/2005
1) EPL €1,97bn (€240m)
2) Serie A €1,34bn
3) Bundesliga €1,24bn (€65m)
4) La Liga €1,03bn
5) Ligue 1 €0,7bn
2005/2006
1) EPL €1,99bn (€200m)
2) Serie A €1,4bn
3) Bundesliga €1,2bn (€72m)
4) La Liga €1,16bn
5) Ligue 1 €0,9bn (€37m)
The numbers in brackets are operating profits of the league, with the other leagues generating losses or +/- 0.
Preliminary numbers for 2006/2007
1) EPL €2,2bn
2) Bundesliga and La Liga €1,39bn
3) Serie A €1,14bn
4) Ligue 1 €1bn
OK, time for more thoughts. A while back I wrote a post quickly outlining the current (legal) situation:
http://bundesliga.theoffside.com/numbers-surveys-studies/501-the-club-ownership-issue-in-the-bundesliga.html
To quote two figures from this post: 17 of 36 clubs in the Bundesliga (1. and 2.) have spun off their football teams. 7 of 36 clubs want to see the 50+1 rule gone.
The first number just means that you can only buy into 17 clubs as of now, because 19 are still exclusively Non-Profit Organisations which can’t be bought into in any way. To spin off the football team from the NPO the club members have to vote for it. This is a problem that Hamburg are currently facing. They want to spin off the football team, but are still meeting resistance from the club members. In the same way, the members have to vote if the club plans to sell shares of the football team to anyone. I read an interview by Werder Bremen’s president, who doesn’t oppose the campaign to get rid of the 50+1 rule, but is also certain that Bremen’s club members would never allow them to sell the majority of their shares in the men’s football team. Uli Hoeness also recently said that he doubts that Bayern Munich’s members would vote for such a deal. So even if the 50+1 rule gets abandoned, it’s improbable that every Bundesliga club will be taken over. As you pointed out, it’s a mid-table club looking to compete with the big boys, which is leading the campaign. And the promise of glory might be intriguing for those club members.
The 7 out of 36 number came from a poll by a newspaper about three months ago. Since then a lot of lobbying work has been done and it would be interesting to see, whether the league is any closer to getting a 2/3 majority against 50+1.
I’m a bit at odds with the issue. There’s a lot of potential lying around wasted in the second, third and fourth division. Clubs with 50000 capacity stadiums and a great potential for a large fan base. They could greatly benefit from some outside investments. But the recent examples of leveraged takeovers have turned my opinion around. I’ll probably rather live with clubs struggling to realise their potential than seeing stuff like that happen in the Bundesliga.
Interesting post, and a number of tremendously informative comments from Jan.
It’s worth noting that AEG are developing the new 02 Arena in Berlin, which to carry on a discussion Tom and I have had elsewhere, will become the third “NBA ready” facility in Europe (after London and Paris Bercy) when finished. They clearly see Germany as a serious market, and should, having had significant success there in music.
The plight of clubs like Hannover (and even more the “sleeping giants” like Fortuna Duesseldorf that Jan notes) is a real one, and one can understand how they could see outside investment as the best way for them to be able to compete with the likes of Bayern Muenchen, Schalke and Borussia Dortmund (though it has become significantly easier to compete with the latter, at least on the pitch).
That of course doesn’t mean that it is right. And it is also worth noting that the Bundesliga still has the best “competitive balance” (on and off the pitch) of any of the major leagues in Europe. That very fact is what gives the Hannover’s of the world hope, whereas their English, Spanish or Italian counterparts (say Bolton, Zaragoza and Udinese) have resigned themselves to playing eternal second fiddle to the Big Four/Three/Two.
It’s a conundrum for the Bundesliga this one. From a fan’s point of view, I think it would be better if the German league did not follow the route taken by the Premier League to protect the ‘ordinary fan’ by keeping ticket prices reasonable and fans at the heart of the game, (like it used to be in England). The downside to this is, of course, that the Bundesliga will continue to lag behind England in terms of the amount of money it can make and therefore it will struggle to produce teams capable of winning the Champions League. I think most German fans would prefer to keep it the way it is as the ‘match-going experience’ is better, not sanitised and the league is purely not existing to make money – like it seems to be heading over here.
What’s interesting to me is that the Bundesliga, Bayern notwithstanding, has always struck me as a more competitive league, top to bottom.
That is – Bayern isn’t the only team capable of winning the league…Werder, Leverkeusen, Borussia Dortmund, Stuttgart, Hamburg, and Schalke are as well. (Heck, even Kaiserslautern as recently as ‘98!)
I’d rather it stay the way it is…I find BL games fun to watch not really because of the level of play, but because the atmosphere is 2nd to none.
I’ve been a fan of Bundesliga longer than any other league. (hell, I was born there wasn’t there long but have been back numerous times)
However, I have to say, it’s been sad to see what was once the absolute top league in Europe sink to the level of the French league. It’s inexcusable.
The whole ‘think of the supporters’ angle is fine and good but it’s supply and demand. If the supporters think it’s too much money they’ll stop showing up. Of course, there are so many people who want in on the games that it rarely happens.
Also of note, many Prem teams actually cut back their ticket prices when they realized that fans where staying away from the stadiums late in the season when they were sitting comfortably midtable (I believe it was Boro and Bolton who made that move)
I know a lot of people like to wax nostalgic but the times when seats were $10 and you could stand are a throwback to times when teams were full amateur or semi-pro. You can’t have $200 million payrolls and $10 seats. You have to pick one or the other unless you build a 400K seat stadium.
That is to say nothing of the fact that the 50+1 law likely violates EU law. If someone made a serious run at buying a club and was shut out on that clause and challenged in court I have a pretty good feeling that the court would be forced to rule against German law (except the non-profit clubs of course)
So basically if BL wants to remain competitive and gain back the ground its lost then this should happen. If it’s happy with the idea of someday becoming a sub-Championship level league it should stay the same. They are running on a 19th century model in the 21st and it simply can’t compete with the model England is running on.
I wanted to point out one more thing, I hear many people wax poetic about how ‘it used to be in England’ and I’d like to point out that how ‘it used to be’ was thugs and hooligans beating people outside of, inside of, on top of Stadiums. Bum rushing stadiums and killing people in the crush. Invading the pitch and beating players/refs/fans and general loutish and boorish behavior. If you look at lower division football in England that isn’t run on the Prem model you still get plenty of that and it aint pretty.
If that’s the case for going back to ‘the way things were’ I think that case should be thrown out of court.
Papa Bear:
“I know a lot of people like to wax nostalgic but the times when seats were $10 and you could stand are a throwback to times when teams were full amateur or semi-pro. You can’t have $200 million payrolls and $10 seats. You have to pick one or the other unless you build a 400K seat stadium.”
I do not share your argument. The owners who buy those clubs don`t want a §200 million payroll for players either. If it was entirely up to them they would introduce a salary cap (to maximize profits ) and a draft system to make the Premier League more exciting. They don`t want to invest tens of millions of pounds a year in order to be able to win tens of million pounds in the Champions`League.
They didn`t become billionaires by thinking that way.
In the long run, their involvement will make the Premier League less competible.
So what is this involvement of investors good for?
Daniel:
I think you are miscontruing or misunderstanding my point. Sure the investors want to make money and certainly they didn’t become billionaires by throwing money into the fireplace.
HOWEVER, they are interested in building a brand (the old ‘you have to spend money to make money’ thing) and as such, tend to spend as much as they are able to in the quest to win trophies.
One thing you and others need to understand is, owning a sports team is largely a vanity purchase. There aren’t many people who are billionaires who made their money JUST from owning sports teams. People tend to look at what a teams ticket gates were and think it’s pure cream but its anything but. These guys mostly buys teams so they can have some glory, make a little ROI in the event they sell in 10 years and have some fun.
Seriosuly, no one invests in an established sports team in an established league to break the bank. It’s simply not woth it. Most teams are lucky to double in value in 20 years. You can double your money in about 5 years investing in a defense stocks mutual fund.
What are they good for ? Look at England. There are a LOT of teams that are bankrupt about to go bankrupt dragging the community down with them as they consistently hit up their single minded and doggedly loyal fan base up for more money.
Look at MLB (which has no salary cap BTW) no team is near bankruptcy and most make a decent profit considering the essentially capless model (there is a luxury tax for teams that outspend other teams by a certain percentage; I believe if they are over 25% above the next highest team). Oh and it’s an extraordinarily competitive leage as the top money spender rarely wins these days. The same can’t be said for the ‘big 4′ heavy Prem. It really wouldn’t be possible to make the Prem less competitive. Unless you think 4 teams who normally beat the hell out of the other 16 and split the titles amongst themselves more often than not is the definition of ‘competitive’
The ‘community’ owned teams drain the pockets of the fans who love them. It’s sounds noble and all but in the end its a drag on the community. The investor backed teams drain the money of a billionaire who if he doesn’t feel is making enough money/glory on the proposition hands it off to the next billionaire.
The reports by Deloitte and Touche on the comparative strength of the top leagues in England, France, Germany, Italy and Spain makes interesting reading. The Bundesliga holds it’s own financially with all by England, but no-one can hold a candle to them. That’s because of their domestic TV deal, which dwarfs any other. german clubs compensate by having the strongest commercial performance (ie, money that doesn’t come from TV or paying at the gate).
England’s performance – and ability to atrract players – is because of domestic consumer liquidity. They can afford to charge 50 quid because people have payed it. Sky can afford to bid 2Bn because people can afford to pay 40 quid a month in subscriptions.
The alarm bells though are that that domestic liquidity was based on cheap credit underpinned by rising house prices. Both of those no longer apply, hence the decline in ticket prices at the clubs mentioned in the article. They’ve been struggling for some time and have had to price lower to attract people in and the issue really is how much the bigger clubs will have to do this as the economy continues to slide.
“That is to say nothing of the fact that the 50+1 law likely violates EU law. If someone made a serious run at buying a club and was shut out on that clause and challenged in court I have a pretty good feeling that the court would be forced to rule against German law (except the non-profit clubs of course)
So basically if BL wants to remain competitive and gain back the ground its lost then this should happen. If it’s happy with the idea of someday becoming a sub-Championship level league it should stay the same. They are running on a 19th century model in the 21st and it simply can’t compete with the model England is running on.”
The 50+1 law might violate European law, but so does the “model England is running on”. A few days ago, Murdoch filed a lawsuit in Italy against the planned introduction of “central marketing”, which is also practized in Germany and England. Should the EC of Justice deem it in violation of European law, it will have a direct legal effect upon the Premier League ( and also the Bundesliga). Bundesliga clubs will get into serious financial troubles, but the Premier League will be dead. The superior model you are referring to is extremely vulnerable…
I don`t see any need for a sugar daddy in the Bundesliga. The financial situation is excellent. The Bundesliga grew 15% within a year and although it is not a global brand like the PL, its revenues from merchandising and sponsorship deals are much higher than in the PL. The Bundesliga might look non-commercial from the outside, but reality is different.
I don`t doubt that the PL is by far richer than the Bundesliga, but the Bundesliga is the 2nd richest league in Europe. I don`t see any reason to panic. In fact, the outlook of the Bundesliga looks fantastic.
jan
interesting stats, but are these revenues or profits or something else? and what’s the figure in brackets? many thanks
2005/2006
1) EPL €1,99bn (€200m)
2) Serie A €1,4bn
3) Bundesliga €1,2bn (€72m)
4) La Liga €1,16bn
5) Ligue 1 €0,9bn (€37m)
The numbers in brackets are operating profits of the league, with the other leagues generating losses or +/- 0.
Preliminary numbers for 2006/2007
1) EPL €2,2bn
2) Bundesliga and La Liga €1,39bn
3) Serie A €1,14bn
4) Ligue 1 €1bn
max,
Yup, those are the combined revenue figures of the clubs in the Big 5 leagues. The figure in brackets are the combined profits those clubs generated. Data on profits wasn’t available for the 2006/2007 season. Though, the DFL recently published their Bundesliga 2008 report, which includes detailed information for the 2006/2007 season and 18 out of 18 clubs in the Bundesliga turned a profit.
A few conclusions:
As of now only the EPL, Bundesliga and recently Ligue 1 are profitable leagues. There is no worrying revenue gap between the Bundesliga and any other league except for the EPL. With a hypothetical 20 club format the Bundesliga would have been sole second behind the EPL. The problem is just, that this doesn’t translate to the Champions League performance of Bundesliga clubs. Which probably lead to the suggestions, that the Bundesliga is falling behind Spain and Italy. Some reasons for this could be:
1. The Champions League floods Bundesliga clubs with at least €20m – €30m a year. Only Bayern Munich managed to work this to their advantage, as they competed in 9 consecutive Champions League seasons (only Real Madrid have a better record) and earned more money than any other European club in this competition during this time period. The fluctuation on the other places has been too high for any club to gain a similar monetary advantage. Ligue 1 clubs have the same problem. A similar rich elite as in other leagues would go a long way, to regain competitiveness. A big amount of the revenue of the Spanish and Italian league is generated by the 2-4 biggest clubs. It’s spread out more evenly in the Bundesliga.
2. Taxes. There are ways for clubs in Spain and England to save a lot of tax payments for their foreign superstars. In Italy clubs have exploited loopholes and it remains to be seen how rigidly the government deals with this. It’s more difficult for Bundesliga clubs to maintain expensive squads and it will stay this way, unless a European wide salary cap or something like this is introduced.
3. Bundesliga clubs are still servicing a debt of €600m which reduces spending power. A lot of it is for stadiums and infrastructure, so you can argue that it’s worth it. The rest are leftovers from the KirchMedia bankruptcy or plain financial mismanagement, as was the case with Borussia Dortmund. They recently announced that they’ll have an extra €20m per season available to them by 2010, when signing fee deals expire, which the club needed to avoid bankruptcy.
4. Since neither La Liga nor Serie A turned a profit recently, they are paying a price for their competitiveness. Real Madrid is a very profitable club, so I guess smaller clubs are responsible for La Liga’s negative result. In Serie A a club like Inter generates huge losses each season, but Moratti is willing to deal with this. I don’t know what happens elsewhere. How these clubs deal with rising debts. Or whether there are rich benefactors involved there as well, who keep it all from collapsing.
Turning the attention to the EPL: There are rich owners who are investing heavily in clubs there as well, but matchday and TV money are the two main factors for the revenue gap. Clubs in the EPL generate 2-3 times as much money in both areas than their Bundesliga counterparts. The question is how investors fit into this image. They want to make money, so they must bank on, at the very least, rising TV money, if not rising ticket costs as well. They might look to accelerate this development by investing in clubs, bring in better players and increase fan interest in the league. Which wouldn’t be such a bad thing, but you might wonder, whether it’s also possible to increase available income sources without third party involvement. Even if it’ll take a couple of years longer.
The problem is, as papa bear pointed out, that the 50+1 rule might not stand a chance in court. Hanover’s president already said, that he’ll go to court, should the clubs vote to keep the 50+1 rule. There’s another problem here as well, since the Bundesliga is operating with double standards in this regard. Hanover aren’t aiming to become a top 3 club actually. They want to be upper midtable and play in the UEFA Cup. One of the clubs playing there is Bayer Leverkusen and another club who is working hard to get there is VfL Wolfsburg. Both are an anomaly in German football as Bayer and Volkswagen are majority shareholders here. When the DFL changed the rules in the Bundesliga in the late 90s to account for the economic factors involved in football – where effectively you no longer had a 19th century model as papa bear suggested – they introduced the 50+1 rule. But they made an exception. Wolfsburg and Leverkusen were clubs founded and funded by companies and the DFL decided not to close the door on the two. Leverkusen and Wolfsburg wouldn’t be able to compete financially with a club like Hanover if it wasn’t for Bayer and VW. So you can argue, that they make it difficult for other clubs to grow and compete, when they take up the lucrative UEFA Cup or even CL spots. In a way, Hanover’s president is just asking for a level playing field. It’s a complex issue.;-)
Tremendously informative post from Jan there. Vielen Dank (und Frohe Ostern).
To answer the Serie A question, yes, the model here has always been for the owner to absorb and fund the club’s losses (when they can’t be forgiven by legislative action or absorbed by municipal authorities); Moratti has just been the most benevolent in recent years (but then, he has significantly more money than any of the others except Sivio). It fits nicely into the highly paternalistic structure of Italian football (and much of Italian society). The “Anglo-Saxon” idea that clubs can actually be run as profit-making enterprises hasn’t really caught on here (though the new group at Juve is trying, and Berlusconi has made noises about wanting Milan to break even), which may be one reason why there hasn’t been as much interest on the part of foreign investors. It will be interesting to see if the latest rumours of serious interest by the Gap/Banana Republic heir in Roma turn into something tangible, as I would imagine that he and his group have other ideas about a club should be run.
Daniel: “The superior model you are referring to is extremely vulnerable…”
ANY model is vulnerable. There is no 100% safe business venture. The question is: ‘do you want to get the biggest bang for the buck or not?’
The semi-pro model that Euro leagues had up until the 70’s was safer but as a fan of those leagues would you want to see that? NASL was on the verge of becoming the world’s top league back in the day because they actually paid people top dollar. That was in the early 80’s. As you can see, Europe is still kinda new to making the game a self sustaining prospect.
It will be interesting to see what happens with the marketing case, but I don’t see it being as much of a target as 50+1 which violates free trade laws (see Jan’s excellent point re: Bayer & VW) that the EU seems so intent on upholding (in theory anyway) Your point on possible implications is a very valid one though.
Daniel”I don`t see any need for a sugar daddy in the Bundesliga. The financial situation is excellent. The Bundesliga grew 15% within a year and although it is not a global brand like the PL, its revenues from merchandising and sponsorship deals are much higher than in the PL. The Bundesliga might look non-commercial from the outside, but reality is different.”
Of course Bundesliga makes a great deal of money. Not including Russia, it’s nearly twice the size of any other country in Europe and the football pyramid is much shorter than any other country of ‘large’ size in Europe which means people have fewer choices of clubs to support (that’s to say nothing of the fact that Germany is the richest nation in Europe). The Bundesliga should be killing the rest of Europe in revenue. Built in competitive imbalances stifle what should be much greater growth.
Sponsorship money will always be greater in Germany because of said massive population and wealth. Germans are also more consumer oriented than most countries in Europe which makes them even more attractive to Sponsors. The same holds true for merchandising. Germany has 90 million potential people buying shirts, England has 60 million. At $100 per shirt it’s nearly a $9 BILLION potential revenue difference.
Sure there is commercialism in Bundesliga, there is in every league in Europe that is big. But the utilization of it is simplistic to say the least. I mean, 2 years ago Bundesliga formed an agreement with MLS to learn business practices in terms of marketing and liscensing in exchange for information on how to produce a match for TV. If Bundesliga seeking the advice of a league that is less than 15 years old for how to maximize revenues isn’t telling enough of how far Bundesliga needs to go despite how far it has come, I don’t know what is.
I’ve been a Bundesliga fan my whole life and just wish it would reassert itself and make the strides it could.
I do think the Bundesliga is doing pretty good. Remember that the DFL as the professional administration of the 1. and 2. Bundesliga was founded 2000. Before that they were “just” two additional leagues run by the DFB.
The size of the home market isnt the deciding factor in the merchandising income. Real, ManU, Liverpool, Barca, Bayern etc aren’t makein so much more money than everbody else because the plaster everyone in they home countries with their products. They have a global market and teams like Schalke, Hamburg or Bremen simply can’t compete there, no extravagant marketing will help there, only long sustained success at the international and national level does. Even then they will have a hard time closing the gap.
Similar things are true for the gate receipts. Most clubs, especially the bigger ones, make the most money from business seats and luxury boxes not from the 10€ stand tickets they are only some kind of additional pocket money. I pretty much doubt that the high prices there differ that much from the English one. It even is a reasonable policy to sell a bunch of tickets at cheap prices to guarantee the appropriate athmosphere the high price spectators expect of a football match.
The biggest problem in terms of revenue for the German teams is the TV market. There is no viable competition between paytv channels to drive up the prize into crazy regions like in the PL. On top of that come home made issues f.e. repeated absolutely amateurish negotiations nd contracts by the league officials, the fans don’t wanting a split up game day, because of various reasons, competition for amateur clubs, overmarketing, away games can only planned on short notice, myth “Sportschau”, high marketing income because of the high range in public TV etc. Frankly as long as the officials are botching the TV deals as much as they constantly have for the last 7-8 years, there is no reason for the fans to step down.
The next biggest challenge will be the decision of the German cartel bureau concerning the central TV marketing. They are extremely unsatisfied with the revenue distribution (best teams get ca 25m /y, worst in 1. Bundesliga around 12m/y, teams in the 2. Bundesliga somewhere between 4-5m to 8-10m). If the central TV market goes all the mid level teams like Hannover can forget about getting good investors, because their TV deals will be too small.
Even if the Bundesliga opens itself up to investors, it wouldn’t change much in terms of internal competitiveness, as the rich clubs would get more potent investors than the smaller clubs. It would only tighten the grip of the richest clubs on the top denying the small teams the much needed income and marketing boost of the CL.
papa bear
some interesting stuff, but a point that should be mentioned is that the german population is 82.5m (and declining) and the uk is 60m with england’s at 50m. therefore, assuming shirts cost the same – £45, then the gap would be about £1.5bn . but point taken about sales.
homa
could you tell me a little more about what’s going on at the moment with the german cartel investigation inot kirch? what’s the latest? how is the tv money currently split? can you recommend a good website for this info? many thanks
There is a thread at transfermarkt.de where some people recompute the list just for fun for splitting up the money. If you understand German I could recommend it. Looks reasonable and they do explain it pretty good.
http://www.transfermarkt.de/de/forum/6/diskussionsforum/thread/220968/anzeige.html&p=1
Maybe even English-speakers could understand the explanation or derive it from the presented numbers, calulcations and examples, it is the second post in the thread. If there is interest I could explain the essence of the distribution system here in English.
Sorry, but I dont know too many English soccer sites, especially ones who would report in detail about the antitrust problems of the Bundesliga.
As far as I know the antitrust authority sent an enquiry about the current TV deal, decentralised TV deals and their financial impact to all Bundesliga clubs, who had to send back the answer at the 19th of March. Obviously it is to short to survey all the answers and publish any information or conclusions.
Their main beef is the distribution of the money and the new publishing company, owned by Kirch and the DFL. The company would (only) give the pay tv broadcasters a prefabricated product which they would have to distribute via their channels. The idea is to lower the entrance barriers for new pay tv broadcasters, who would no longer need to build up a whole sport section from scratch.
The journalistic independence would obviously be compromised as the host (the DFL) would also do all the press work surrounding the games.
A simplified summary of the current TV deal:
The domestic TV deal is worth €420m a season. 80% (€336m) go to the 18 teams in the Bundesliga and 20% (€84m) to the 18 teams in the second Bundesliga. A ranking of the 18 teams in each league is compiled using the performances of the last four seasons with a ratio of 4:3:2:1. The first ranked team in the Bundesliga receives twice as much TV money than the 18th ranked team. The first ranked team in the second Bundesliga receives twice as much TV money than the 18th ranked team.
The DFL also sold international rights to bwin for €20m a season. This money is only spread out among the 18 teams from the first Bundesliga. In addition the distribution key is very top heavy and uses the final table position of the last season as a ranking. The top five receive the majority of the money (€4m, €3m, €2m, €1m, €1m).
The current deal is valid for this and next season.
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fireplace is a part of life and one which keeps you away from getting freeze in your cold days. so i don’t think its a money earning field. a good maker will definitely make good out of his talent.
Very good written. I’ m loving reading these articles , it is such a rich topic, and a great chance for fans to share their knowledge & passion!
R.Vinello