Bundesliga über alles? German industry bankrolls club success

For the first time since the Champions League started admitting more than one team from each country, two German sides have made the semi-finals

Bayern Munich's President Uli Hoeness smiles before their German Bundesliga first division soccer match against Eintracht  Frankfurt

Bayern Munich's President Uli Hoeness smiles before their German Bundesliga first division soccer match against Eintracht Frankfurt

Mon, Apr 15, 2013, 13:14

For three decades German club football has chronically underachieved on the European stage. The country’s clubs have won two Champions League titles since 1983: the same total as FC Porto.

Now, for the first time since the Champions League started admitting more than one team from each country, two German sides have made the semi-finals.

The much-discussed “German model” now boasts the most modern stadiums, the biggest crowds, and, increasingly, the best football.

German football men have not been slow to point this out and the most outspoken is Bayern Munich president Uli Hoeness, who spent much of the last decade complaining that Bayern were being penalised for running their business prudently while English, Spanish and Italian clubs binged on cheap credit and sugar-daddy handouts.

Now that Bayern are poised to dominate Europe, Hoeness wants to see Uefa entrench his club’s superiority by punishing loss-making foreign rivals to the fullest extent possible under Financial Fair Play.

Hoeness once said “it’s no fun to win the championship or Champions League with a £50-£60 million loss”. Maybe that is true when your first language is German, where the same word Schuld is used for “debt” and “guilt”. But winning the Champions League thanks to someone else’s megamillion-euro losses looked plenty fun for Chelsea fans celebrating their victory in Munich last May.

“The Malaga punishment was a good beginning,” Hoeness told World Soccer last week, referring to the one-season European ban Uefa imposed on the club due to delays in payments to creditors.


‘Big losses’

“[Malaga’s owner] did not pay his bills. He lived beyond his means. But I hope this is only a start. If they kill the small clubs and let the big ones live then that is not okay. I hope that one day one of the biggest is killed. The sooner the better.

“Change will be very difficult if Manchester City or Paris Saint-Germain are allowed to go on making big losses, but if Mr Platini is tough then German clubs have a very good chance because the infrastructure and crowds are better than anywhere else,” said Hoeness.

Implicit in his frequent homilies is the notion that if only foreign clubs would stop acting so stupidly and do things his way, they too could be as successful as Bayern.

He forgets to mention that the German football model has an extra dimension beyond the infrastructure and the crowds, beyond even the enlightened youth development structures that have fostered an outstanding generation of talent. There is another crucial aspect of the German football model that is difficult for foreign clubs to copy: the German economy.

Bayern make more money from sponsorship than any other club in Europe. Last year, sponsors paid them €201.6 million. That sum is larger than the entire annual turnover of Juventus, whom they beat in last week’s quarter-final. Dortmund are a smaller club, but their sponsorship income of €97.3 million is still much larger than that of Arsenal, Chelsea or Milan.

The striking thing about this income stream is how much of it comes from the clubs’ local catchment areas. Bayern have commercial deals with 27 sponsors, 16 of these are German firms with 11 based in the club’s wealthy home state of Bavaria. Dortmund have partnership deals with 56 companies, of which 48 are German, with most of these based in the club’s home state of Nord-Rhein Westfalen.

By comparison, clubs in England and Spain are growing in stony economic soil.

Liverpool, for instance, have 18 sponsors, of whom none are based in Liverpool and only three are from the UK. Manchester United have 33 commercial partnerships across a dizzying variety of niches. Not a single sponsor is from Manchester and only two of the 33 are UK companies.


Economic advantages
Real Madrid have 11 sponsors, of whom four are Spanish; while Barcelona have 14, of whom five are Spanish.

German clubs’ peculiar economic advantages are also reflected when you study the kinds of firms that sponsor the big sides. Bayern’s sponsors include well-known giants of German industry like Siemens and Audi, but also “hidden champions” like the Schaeffler Group, who are among the world’s premier manufacturers of ball bearings.

Dortmund are at the heart of the Ruhr region and local backers include Evonik, a chemical conglomerate; MAN SE, makers of trucks and turbomachinery; and Wilo, who specialise in industrial pumps.

England no longer has a comparable manufacturing base, while Spain never did. Manchester United, Liverpool, Real Madrid and Barcelona have, between them, zero domestic heavy industrial sponsors. In these countries, the only large companies with money to spend on sports sponsorship are those that provide financial services and alcohol.

English and Spanish clubs rely on TV for their income, in terms of the money they receive directly from TV rights and for the marketing exposure that enables them to cut deals with sponsors in Asia, North America and the Middle East.

By comparison, Hoeness only has to open the door to see a queue of prosperous domestic firms looking to pour money into his coffers. When the Bayern president lectures the rest of Europe on how to do their business, he should remember that not everybody has it as easy as his club.

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