The financial cracks in the foundations of German football

A problem exists in German football. The latest crisis finds its origins in the foundations poured over the last dilemma nearly two decades ago. Following victory at the 1996 European Championships, Die Mannschaft imploded. Defeat in the World Cup Quarter Finals in 1998 was followed by first round elimination at the 2000 European Championships.

Germany is not a nation to take such setback lightly. In the next decade, German football was revitalised at grassroots level.

At the same time, a nation so emboldened in its efforts to integrate became more insular than ever before with its own top-level football. Bundesliga clubs future-proofed their organisations by betting big on their own fans. These clubs were decreed member associations, severely limiting the future possibility of outside takeover.

Those two measures – promoting grassroots football and public ownership – have been resounding successes, but tremors are being felt in the carefully poured foundations of German football as it looks to keep pace with the rest of Europe.

Germany’s approach to improve grassroots football was two pronged. Mimicking systems from abroad – specifically France and Holland – the German Football Federation (DFL) mandated all Bundesliga clubs to operate their own youth academy; in turn maximising the talent pool available for Die Mannschaft.

Bundesliga clubs were offered increased funding (up to €400,000 in 2000) for more prestigious academies and this was a significant boost, especially to smaller teams. In 2003, Bundesliga (and 2. Bundesliga) clubs spent €47.8m on their academies and this number had swelled to €163m in 2017.

Footballing centres of excellence were also established and DFL coaches, once in their tens were soon in their hundreds. No aspect of the German landscape remained untouched and the DFL strived to ensure their youth were schooled in footballing excellence.

In his outstanding book Das Reboot Raphael Honigstein highlights the far-reaching nature of these centres, mentioning Toni Kroos, a graduate from Greifswald, a far-flung region of Germany, who may well have gone unnoticed had it not been for the early 2000s developments. There are now 366 DFL operated centres of excellence serving 25,000 youths from the age of 12.

The results took time to come to fruition. It would be naïve to say that Germany’s success at the 2006 World Cup was an early result, but head coach Jurgen Klinsmann was pivotal in establishing the structures that assisted his successor Joachim Lowe in guiding Die Mannschaft to World Cup glory in 2014.

Immediately following the 1996 European Championships, Bundesliga teams also began measures to protect the future of their league. Previously, all Bundesliga clubs were owned by members’ associations, as not-for-profit organisations. In 1998 the rules were changed to allow private investment in clubs, with the proviso of the ’50+1-Regel’ – the 50+1 Rule.

This rule stated that that for any club to compete in the Bundesliga, the club – and by extension, its fans – must own more than 50% of its voting rights. The rule was designed to keep clubs in the hands of its own members, and ‘protect’ clubs from external investors.

Proponents of the 50+1 Rule argue that due to their ‘ownership’ of their own clubs, fans are more invested leading to greater support. Ticket prices remain modest and Bundesliga attendances are amongst the highest in European football. The ‘Yellow Wall’ of Dortmund boasts 26,000 supporters each week, some paying as little as €10 for entry.

It has been argued that the 50+1 Rule has – along with the DFL centres of excellence – led to more homegrown players in the Bundesliga. In 2016, only 33.6% of players in the England’s Premier League were English whereas in Germany, 49.9% of all Bundesliga players were German.

Both the grassroots innovations of German football, and the 50+1 Rule have developed German football and its players. It appears however that these developments may have reached a natural ceiling.

Since 2000 Germany has produced outstanding footballers that have excelled on every stage. Fourteen of that twenty-three man 2014 World Cup winning squad were 25 years-old or younger. Bundesliga clubs however have failed to attract elite non-German footballers.

More frequent has been the tendency of Bundesliga players to find success elsewhere. İlkay Gündoğan, Kevin De Bruyne and Leroy Sane play for Manchester City while Pierre-Emerick Aubameyang and Henrikh Mkhitaryan now play for Arsenal.

Even more telling; Germany has produced a golden age of coaches who have also emigrated. The coaching tree of Ralf Rangnick has sprouted Jurgen Klopp, Thomas Tuchel and most recently Julian Nagelsmann. Both Klopp and Tuchel have left the Bundesliga for Liverpool and PSG respectively.

Money – or lack thereof – is the factor many feel is now undermining Bundesliga football.

The Bundesliga earns a healthy €4.64 billion over four years in domestic TV rights. The problem lies in its international TV rights money. In the past decade, the English Premier League has earned as much as eight times more than the Bundesliga in international TV revenue. Observers are concerned that Bayern Munich’s dominance has adversely affected the Bundesliga’s marketability abroad.

Bayern Munich themselves are not resistant to change. In September 2017 and June 2018, Karl-Heinz Rummenigge called for more autonomy for German clubs. Rummenigge sees the Bundesliga as the last of the top five leagues in Europe to allow private investment and perhaps fears Bayern losing their way among the European elite.

While competitors such as Borussia Dortmund would undoubtedly gain ground on the Bavarians, Bayern would back themselves in a juiced Bundesliga, knowing that investment in the league could only increase its marketability and international TV appeal.

The 50+1 rule has significant detractors. In 2009 Hanover President Martin Kind argued – unsuccessfully – that the rule was in violation of EU Competition Law. Inequality is creeping into the Bundesliga and organisations are taking advantage of financial loopholes. Private ownership is banned, with a few exceptions.

RB Leipzig, a club largely incorporated in the past decade, is run by the Red Bull corporation, with membership peculiarities – 17 voting members, as opposed to Borussia Dortmund’s 140,000 voting members.

Being owned by a corporation such as Red Bull is a work-around which has also benefited VfL Wolfsburg, owned by Volkswagen, and Bayer Leverkusen, operated by pharmaceutical company Bayer.

In 2015, Dietmar Hopp took majority shareholding of FC Hoffenheim utilising a clause allowing majority private ownership should an individual or company support an organisation over an extended period of time.

The development of football in Germany since the turn of the century has been nothing short of astounding. Starting from the bottom up, the Bundesliga clubs have created a system of youth development which has complimented structures put in place by the DFL allowing players, coaches and clubs to flourish.

From another viewpoint however, while the structures of Bundesliga have been uniquely outstanding, leagues such as the English Premier League have become more marketable and fabulously wealthy, an alternative type of success. In its own way, this wealth has served to future proof many current – and even former – English Premier League teams.

There is appetite for changes to the setup, with German football now at a crossroads. Do Bundesliga clubs wish to continue as fan-centric operations, or do they wish to become cash-infused European challengers?

In order to compete at an elite European level and see the likes of Schalke 04, Dortmund and Leverkusen again challenging in the Champions League, adaptation seems necessary. It may require fans giving up a level of their absolute autonomy and in return, their clubs will become greater agents in a wider, global market.

To make this happen, the DFL and Bundesliga clubs will need to draft a framework which will allow this financial development while also ensuring the long-term health and happiness of the ‘Yellow Wall’ and those similar in Germany.

Author Details

Aidan Boland
Aidan Boland

Irish Primary School Teacher living in Tipperary with a big interest in sports. Main interests include Premier League and Bundesliga along with Golf and NFL (specifically New England Patriots).

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