Question: Bundesliga Finances and Big-Money Transfers

[gosya]

So, I'm sitting here - on the other side of the pond, pondering this question:

Germany is Europe's weathiest country (or second wealthies behind England). Certainly above Italy and Spain. German stadiums are always packed to the gills and Bundesliga hasa the highest average attendance on the continent. Having visited all of the above-mentioned countries, I can attest that Germans are second only to Brits in their overall immersion in football.

So, why do German clubs fail (or lack finances) to big-time players? It certainly is not b/c players don't want to come play in Germany for footballing reasons, since we've learned that players will follow the money 95% of the time.

Here are several clues that I have been able to come up with:

1. Average ticket prices are signifcantly lower than in England, which is true. But I think it's still higher than in Spain or Italy.Would attendance drop if German clubs raised ticket prices?
2. German TV contract is not nearly as large as tV contracts for leading domestic leagues in other countries. However, why would it be smaller, given that population is the highest in Europe and per-capita-income is pretty high. So, shouldn't competitive bidding for such contract rights yield very good results?
3. German clubs lack super-rich owners. While there are certainly no Abramoviches in German football, other European clubs w/o wealthy, free-spending owners (like Manchester United, Liverpool, Barcelona) seem to be able/willing to pony up the money for super-superstars.
4. German clubs are actually run like businesses, focused on produciing profit. While it is true that most football clubs in Europe are terrible businesses, which consistently bleed cash flow, it doesn't seem that German clubs are any more successful in turning profits. Are German clubs successful business enterprises?
5. German clubs lack international appeal of other Euro giants. While it is true that German clubs comes close Reals and ManUs in global appeal, especially in wealthy Asia and United States, Bayern Munich and Borussia Dortmund are consistently in top-10 or -20 in annual revenues. Still, clubs w/o global presense like Tottenham seem to spend more annually in transfers than clubs like Werder or Shalke.
6. German clubs do not believe in importance of superstars, value teamwork over individuality, and have been successful w/ this approach for many years. Yes, German clubs have done very well in international competition over the decades, but have sharply fallen off in the last 3 years. Is this just a hickup or a sign of things to come?

So, please help me out - which of the points I've brought up make sense, which don't? What have I left out?

[96Squig]

(...)
So, why do German clubs fail (or lack finances) to big-time players? It certainly is not b/c players don't want to come play in Germany for footballing reasons, since we've learned that players will follow the money 95% of the time.
Well, while most ppl in the German leagues seem to be nobodys, you have to keep in mind that one doesn't need star players to be successful. Greece 04 anyone?
1. Average ticket prices are signifcantly lower than in England, which is true. But I think it's still higher than in Spain or Italy.Would attendance drop if German clubs raised ticket prices?
Yes, they would. Not an option I would say. Plus the atmosphere would be hurt big time. Keep in mind that stadiums like Hanover, Wolfsburg or Berlin hardly ever sell out.
2. German TV contract is not nearly as large as tV contracts for leading domestic leagues in other countries. However, why would it be smaller, given that population is the highest in Europe and per-capita-income is pretty high. So, shouldn't competitive bidding for such contract rights yield very good results?
It may would, but it would hurt the league's quality overall. It would center the money on Schalke, Dortmund and Bayern and give any other club hardly any chance. The depth of the first 2 German leagues is way above the Seria A, Ligue 1 or La Liga.
3. German clubs lack super-rich owners. While there are certainly no Abramoviches in German football, other European clubs w/o wealthy, free-spending owners (like Manchester United, Liverpool, Barcelona) seem to be able/willing to pony up the money for super-superstars.
As you said yourself, not a reason.
4. German clubs are actually run like businesses, focused on produciing profit. While it is true that most football clubs in Europe are terrible businesses, which consistently bleed cash flow, it doesn't seem that German clubs are any more successful in turning profits. Are German clubs successful business enterprises?
Depends. German top clubs just don't make that much money (on spectators and TV), and German clubs are not allowed to make that much depths as clubs in Spain and Italy. Real Madrid (!) would not be allowed to play in the bl the way they run things financially wise
5. German clubs lack international appeal of other Euro giants. While it is true that German clubs comes close Reals and ManUs in global appeal, especially in wealthy Asia and United States, Bayern Munich and Borussia Dortmund are consistently in top-10 or -20 in annual revenues. Still, clubs w/o global presense like Tottenham seem to spend more annually in transfers than clubs like Werder or Shalke.
Well...
6. German clubs do not believe in importance of superstars, value teamwork over individuality, and have been successful w/ this approach for many years. Yes, German clubs have done very well in international competition over the decades, but have sharply fallen off in the last 3 years. Is this just a hickup or a sign of things to come?
hickup ;-)
So, please help me out - which of the points I've brought up make sense, which don't? What have I left out?
3, 5 and 6 are less significant I'd say.
I think you left out the depth thing, which is pretty big imho, but possibly hard to see form the US.
Plus, you value the success of a league with so-called superstars, which I think are overhyped, and therefore don't see the competitivness of a league (something the Bl is quite good in imho).
My 2€cents

[gosya]

Thx for your response. Btw, I do not value success of the league on superstars. I did not try to value success of either the league or individual teams. Neither is depth an issue for me - I already consider Bundesliga to either the deepest or second deepest (behind EPL) league in the world. And, I enjoy watching the league.

I simply tried to understand why top clubs in Germany do not compete for top individual talent available on the market. Whether it was by choice or by necessity. Regardless of what you think of quality/excitement/depth of the league - the only thing big clubs care about is their own success (whether determined by money or titles).

[Dead Fingers]

http://www.bigsoccer.com/forum/showthread.php?t=188635

[HeyaBVB]

Thx for your response. Btw, I do not value success of the league on superstars. I did not try to value success of either the league or individual teams. Neither is depth an issue for me - I already consider Bundesliga to either the deepest or second deepest (behind EPL) league in the world. And, I enjoy watching the league.

I simply tried to understand why top clubs in Germany do not compete for top individual talent available on the market. Whether it was by choice or by necessity. Regardless of what you think of quality/excitement/depth of the league - the only thing big clubs care about is their own success (whether determined by money or titles).
YOu try to value our league on American values (money) ...

Problem is you can't do that ... germans don't spend money as easy as you do ... They don't get higher prices because we germans simply in overall hate pay per view ... the league would be ruined if they only place a bet on pay per view ..

Italians and Spanish just get money out of nowhere (pbsp imaginative selling of a training center for 1 Billion Euros by Real Madrid a few years ago) toward the city Madrid (lol?)

[Alex_K]

3. German clubs lack super-rich owners. While there are certainly no Abramoviches in German football, other European clubs w/o wealthy, free-spending owners (like Manchester United, Liverpool, Barcelona) seem to be able/willing to pony up the money for super-superstars.


German clubs can't have owners. They are non-profit organisations. They can't be bought. Clubs can turn their professional football section into a company but they have to remain in controll of the company. There are two exceptions, Leverkusen and Wolfsburg, where the pro-section is owned by a company. This was allowed because this was already the case when the ruke was established, but the comoanies are not allowed to sell the clubs (if they'd want to get rid of them they had to return them to the mother club).

That's probably the 1000000th time I wrote this on BigSoccer :D.

[Dead Fingers]

That's probably the 1000000th time I wrote this on BigSoccer :D.


I concur...you get a cookie.

better bookmark that answer. :D

[LoewenBoy]

I simply tried to understand why top clubs in Germany do not compete for top individual talent available on the market. Whether it was by choice or by necessity. Regardless of what you think of quality/excitement/depth of the league - the only thing big clubs care about is their own success (whether determined by money or titles).
I'll give a perspective from an older member. The frugality of the Germans comes from 80+ years of living through either war or extreme poverty (think depression). This frugality is pervasive in German society and is directly responsible for their demand for inexpensive beer, cheap pretzels, and football tickets that are affordable. Couple this with the fact that when Germans have a hobby (i.e., following football) they never do their hobby or ANYTHING half way. When people choose to follow a team, they are true fanatics. These two aspects of being German drive the success of the BL in Germany.

The football clubs embody this notion of frugality as well. Why pay hundreds of millions for players when that is no guarentee of financial or football success? Chelesea has spend hundreds of millions but it did not buy them the CL. It did buy them two EPL titles, but how did they earn for that? What was the return on investment? Look at the other English clubs, or the Italian or Spanish clubs that have spent millions and won nothing. You pointed out yourself that they run clubs like businesses. EXACTLY, Germans demand success but not at ANY price. Also, Germans pride themselves on building things over time, from scratch, rather than buying a complete, ready-to-go package. Hence why teams are slow to develop.

Lastly, I do not think that even if successful teams like Bremen, Bayern, Dortmund tried to compete in the European transfer market that their fans would stand for it. Prices would go up and fans would not tolerate that. Look what happened to Dortmund after 1997....they went on a spending spree that nearly bankrupt the club. Remember Real's problems several years back? Sure they won titles but they almost ruined one of the best clubs in Europe.

One thing left unsaid, and it may not be popular, but the BL style of play is not exactly the most attractive to watch...compared to Spain or England. Perhaps this is another reason...perhaps big name players do not want to play boring football.:o

[Alex_K]

I concur...you get a cookie.

better bookmark that answer. :D

I hope it's a chocolate cookie :D.

The frugality of the Germans comes from 80+ years of living through either war or extreme poverty (think depression).

Wow...

[LoewenBoy]

LoewenBoy][/B]The frugality of the Germans comes from 80+ years of living through either war or extreme poverty (think depression).
Wow...
Yeah, grew up with my grand parents and parents telling me stories daily about post war Germany...both WWI and WWII. All belonged to TSV1860. If you look back at the club leaders in Germany over the last 40 years you will see how engrained the whole notion of frugality and piety is. Even Hoeness, who would sell his soul to the Devil for a CL title, is not willing to part with more money than he thinks a player is ultimately worth. Like him or hate him, you have to respect a man that can hold back his lust for a title for the sake of financial security. Hence why 1860 was not bailing out FCB in the Allianz stadium deal.:D

[SoftTackle]

German's are old fashioned. That you see numerous attendees at matches wearing jean vests with club badges is the best evidence of this claim. ;)

[Alex_K]

Yeah, grew up with my grand parents and parents telling me stories daily about post war Germany...both WWI and WWII. All belonged to TSV1860. If you look back at the club leaders in Germany over the last 40 years you will see how engrained the whole notion of frugality and piety is.

But this is a extreme over-simplification. It's based on a generalizaition and doesn't exactly explain the numerous German clubs who have been in financial trouble. Quite a few German clubs aren't really examples of frugality if you ask me...

Frugality and piety have been traditional virtues of the middle class well before the 20th century. In post-WWI Germany people had suddenly to experience that frugality was actually bad (during a time of inflation, keeping your money is pretty much the worst thing you can do). people who had saved money were the big losers back then. And the first thing many people did when the economy started to prosper during the 1950s was spending money. Of course there has been a psychological effect of the war experience, but arguing that "frugality is pervasive" in today's German society because of this might go a bit too far.

And "80+ years of living through either war or extreme poverty" might be slightly exaggerated...

[Alex_K]

German's are old fashioned. That you see numerous attendees at matches wearing jean vests with club badges is the best evidence of this claim. ;)

Well, in some cases "backward" seems to be a better word :D.

[96Squig]

Well, in some cases "backward" seems to be a better word :D.
Another reason to emigrate to the Netherlands ;-)

[LoewenBoy]

And "80+ years of living through either war or extreme poverty" might be slightly exaggerated...From my count you have really only a few properours decades since 1871...most of which coming in the last 30 years. Certainly it can be said Germany has seen more harsh times in the last 100 years than they have seen properous times.

[Alex_K]

From my count you have really only a few properours decades since 1871...most of which coming in the last 30 years. Certainly it can be said Germany has seen more harsh times in the last 100 years than they have seen properous times.

Between 1871 and 1914, the industrial production in Germany increased by 600%, meaning that by 1914 Germany had surpassed Great Britain as the leading industrial nation in Europe (and became the worlds number 2, behind the US). The economy did also prosper between 1924 and 1929 (the "golden twenties") and the Third Reich wasn't exactly a time of poverty as well. And finally the German economy basically prospers since the early 1950s right now (despite not exactly being on a constant high since the 1970s Germany has always been one of the richest countries in the world since then).

[herewego]

First of all: in my opinion, it´s not a bad way how Bundesliga is working compared to other leagues.

Spain and Italy always had this billionaires, mafia kind of people or even corrupt governments putting big money into some of their teams.
Even PL is now under the influence of that russian oil mogul, but that is not the tradition in England.

So, to compare Bundesliga with Spain or Italy makes no sene for me, these leagues have the same 2 or 3 top Clubs over the decades and oveall lack quality in depth and competition bigtime. They have big spenders and big TV money for the top clubs, but on the other hand bad teams and stadias and attendance rates on the bottom of the league, which would qualify these teams not for 2nd league in germany.

Fan culture, attendance, spirit wise one could compare Bundesliga only with PL, even while PL is going in a someway different direction through the Abramovices and Glazers of this world in the last years.

There was always a difference between PL and Bundesliga, as in England footballclubs have been always professional companies, while Bundesliga teams are traditionaly only professionaly units of non-profit sport clubs. Therefore there is a framework of taxatation and league licencing rules that simply disqualifies teams, if they don´t work economicaly reasonable.

Either Chelsea or Real would not get Bundesliga licence, at least if the money which is put in from outside would be handled the same way as it is done there.
On the other hand, it would be possible for a Abramovic kind of spender to put the same amount of mopney into a Bundesliga team, but only as a sponsorship. Anyone can put as much money as he wants in a Bundesliga Club, but he would not be allowed to own and rule that club.

In the last decade there has been some opening and interchanging between the traditional non-profit structure and stock exchange companie structure, BvB Dortmund has gone to the public stock exchange, Bayern Munich football unit is a non public companie on stocks. But that is only allowed for the professional football unit of a club, which anyways has to stay a unit of a non-profit club, and the last word and the Bundesliga licence belongs furthermore to the non-profit club.
That´s a someway hard to understand, and hard to explain construction, but the main thing is, that in the end, the president of a german football club is somebody who is elected by the members of the club. Of course, big sponsors have their influence, but in the end, no Glazer or Abramovic could buy any Bundesliga club against the will of the club members and even if the club members would vote for that, the club then would lose his place in the Bundesliga, because the Bundesliga rules basicaly define Bundesliga as a competition of non profit organisations and the participating teams have to hold on that rules.

To come back to the comparision of Bundesliga and PL, during the decades, Bundeliga licensing system has kept the Bundesliga teams in a frame that forces reasonable economical behaviour, as in the PL, construction of profit business organisation has done the same to the clubs, as normaly, if not an Abramovic kind of man joins in, PL Clubs have to make profits or collapse in the the end.

In the end, there are only two main differences between Bundesliga and PL: the ownership and the different TV market circumstances.
While Italy and Spain are really different, as discriven in the start of my post.

The difference in ownership is resulting in decisions, that do keep an eye on the membership and the fnbase, more than in England.
If you need the vote of the members to stay president of the club, you take more care of ticket prices, you play at times when fans have time to travel, not at times that fit to the asia market, you keep at least some standing terraces, etc.
And in the end: you have not the most superstars, you don´t win CL at any time, but you have the highest attendance in the world and a sligthly competative league, where the 18th can beat the first on a good day.

Of course, during the last 30 years Bayern established as an outstanding top club, but all the other clubs are sometimes fighting for championship, and sometimes against relegation. And Bayerns outstanding has not much to do with the Bundesliga rules, but with superb managing of Ulli Hoenss and outer circumstances like Cl Money.

The difference in TV market:
In Germany we have about 30 free, commercial TV networks in any cable household, even hundreds of them in satellite, added by a strong public TV system which has two nationwide channels and about 10 more local channels for any part of the country, which nowadays, through cable and sat, are although receivable in the whole country.
This variety of free receivable TV programmas makes it harder to establish a Pay TV system in Germany, than in other countries. You won´t pay a fee for hollywood movies, if the competition of the many free TV channels forces them to air them for free half a year later.
For that reason, football as the main sport of the nation, is the only factor that can force the establishing of pay TV in Germany. But therefore, pay TV needs exclusivity on Bundesliga.
But in that question, both the big free TV market and the non-profit club structure and a third factor, which I describe later, play their role.

As I said, the base for pay TV is not as big as in other countries because of the big free TV competition. And even in England, the big money that is spent for exlusivity on PL by pay TV company makes no profit, it only works there, because they have another factor of exclusivity for hollywood movies on pay TV. The mix of exclusive airing of football and movies gives them about 8 million customers, while in bigger Germany, only about 3 million people describe for pay TV.
Of course, with 8 million customers, you can pay about 1 billion euro for exclusive TV rights of PL, while with about 3 million customers you only can pay 450 million for the Bundesliga.

The second factor is the non profit structure, the president that needs the members votes.
It would be unthinkable in Germany to play games on saturday noon, just to be able to air them live at primetime in Japan. It would be impossible to not keep at least a reasonable number of cheap places in the stadia, it is unthinkable to transfer the Sportschau, the free TV Bundesliga show with 10 to 15 minutes of any Bundesliga game from 18:30 to 22:00, just to give py TV more exclusivity.
The members would just kick the president´s asses at the next yearly convention, and the fans would boycott to buy tickets to the stadia.

Remember, Bundesliga income is build on an other mix than in the other big leagues. They need big attendances more than the other leagues. And they get much more money from stadia advertising and shirt sponsors than the other league. You know, that is the other hand of football exclusive in pay TV. With more airing in freeTV, you get much more money from sponsors, just for the amount of people ou reach.

And that is the third factor I talked about.
Bundesliga gets less money from pay TV, but on the other hand, gets much more money from sideline advertising, shirt sponsors and stadia name sponsors than any other of the big legues.
This money evens not with the PL payTV money, but it closes the gap significantely, and it evens with Italy and Spain.
The difference to Italy and Spain is only how they share the TV money. In Italy it goes to the big clubs, while in germany it is shared between all clubs of 1st and 2nd Bundesliga. Of course, depening on the results of the last four years, but almost half of the TV money is shared equaly to all the clubs. That means: Juve could buy more expensive international Stars than Bayern, but the second tier teams in Germany are better than in Spain or Italy. In the end, the big money difference is neither TV or advertising, because that equalizes in the addition, the big difference is the Abramovic, Agnelli or Berlusconi money.

All this factors together make the difference. And now we can answer the question of the thread starting post: There are cultural differences and the question, why europe´s biggest country by people and economical power cannot or even don´t want to buy the most expensive footballers might be on a big part answered this way: just because this country is bigger.

In Germanys and the european neighbourhood there are about 120 million german speaking people. That are at least double as much people and "reasons" to establish commercial free TV as in the other big football countries. Commercial free TV, advertising on free TV and pay TV exclusivity are obviously big enemies. For the size of the german speaking part of europe, the pendulum in Germany wents more to the freeTV market, than to pay TV.

And in the end, that might be better for the future of football in Germany. You see this half empty old stadia in Italy and the corruption that comes with big TV money not for the league, but for single clubs. You see, Juve got about 120 millions from pay TV and they need that money every year. In Germany that money is shared in a way that gives some economical security for all the clubs. While, if Juve finishes not in the top 4, they lose most of that money. No wonder, that the tried to secure that money in a criminal way.

In England, tickets are so expensive, that many fathers couldn´t go to the games with their sons anymore, and public free receivable PL coverage is aired after 22:00, when the kids have to be in bed.
We will see in the future, how that will change the interest in football. I mean, if the kids, at least the kids from not so wealthy parents, cannot watch PL, why should they later get interest to play football, why should they buy shirts and why should they go to the stadia,when they have grown up to adults?

In Germany, beside all the commercial influences which are there as well, football stays as the peoples game and as long as the attendance in the stadia is the highest in Europe, there is a big indicator, that Bundesliga is run well in the way that it is run.
I think, most german football fans, and every second german is a football fan, can live with that. They don´t care much about Championsleague, it´s enough for them, if once in a decade or so a german team wins CL, but to have a competative Bundesliga at reasonable prizes is much more worth to them. To go with your son for some action and a Bratwurst, that is what we like.

[Bayerntone]

Is this a sign of success?:-

Juventus FY net loss widens to 21.6 mln eur on losses from player disposals

http://uk.biz.yahoo.com/060811/323/gj9px.html


The article was in 2004 and the situation has not been much improved since:

http://www.cafebabel.com/en/article.asp?T=T&Id=1963