The Bundesliga is back, Ja!

Want your local league to be as successful, fun and exciting as the German's Bundesliga? follow the business model

photo: mathew wilkinson, cc license

The tickets are cheap, the atmosphere is great, the football is usually great fun, and at the final whistle the players line up to applaud their fans and even talk to them. It’s all about hugging and bonding at the end of each game.

But what makes the Bundesliga such a great story? Again, we must follow the money trail.

The Bundesliga is a solid stock, always on the rise. Last season, the DFL teams (the 36 professional clubs in Germanys top two divisions) had broken through the 2 billion euro income barrier; their debt was less than 710 million euro. Manchester United, with a £716 million debt, surpassed the cumulative sum owed by all DFL teams.

How the Bundeliga business model works? It emphasizes the importance of the core fans, rather than the owners or shareholders.

Until the late 1990s all Bundesliga clubs were 100% owned by members and fans who paid to become part of the club. But in the late 90′s, some clubs recognized the need to compete with their European rivals. So they spun off their professional football sections into outside limited companies separated from the parent club in order to attract investment.

However, Under Bundesliga rules, members must still own 50% of the shares plus one extra vote of these spin offs. This is the so called 50%+1 model, a model that many view as the best in Europe, partly because it makes it impossible for private investors to take over a club.

German clubs are a cooperative, a business model that probably touches the essence of football better than other models. It reinforces football link to the community where it is being played.

The cooperative model is not perfect, but it is a much better model than the benefactor model where a rich individual buys a club and runs it the way he feels right.

Giving so much power in the hands of so few people, mostly new-comers with mushroomed ego and zero knowledge about the club and football business in general, often leads to clubs that struggle hard to survive.

According to an A.T. Kearney study published in July 2010, “The current economic system in soccer encourages overinvestment and extreme risk-taking in order to win games, far beyond economic sense”.

Club owners are after trophy glory, political capital, or the fulfillment of childhood dreams, and their methods endanger clubs and leagues, the consultants added.

Sometimes, like in Chelsea’s case, this model can do great for a club, but a more telling tale is the story of Portsmouth, which in February 2010 became the first Premier League soccer club to seek protection from creditors after the benefactor lost his money. Portsmouth’s story had repeated itself throughout the first decade of the 21st century in all the leagues that did not have good enough protection from private investors.

The benefactor model has clearly had its day, but it is clear that the supporter-based co-operative model is more sustainable, mainly because it spreads the power.

With the new financial fair play regulations, the only way to excel in football would be to build stronger community ties and get the fans more involved (the sponsors would love it). The Bundesliga financial model is basically forcing the clubs to invest in the one asset they will always have, their fans.

4 Trackbacks

  1. [...] Nothing really changed since Sacchi wrote these words, some three years ago. Serie A – the best league in Europe for many years, a league where every game was a tactical brain storm – was built and then destroyed by the benefactor model. [...]

  2. [...] The Bundesliga model might be the best model for the football business – however, I doubt investors would like to pass 50% of their new bought clubs to fans. Therefore, it should be part of football laws that every time a club is being bought – 10% to 25% of the shares should be sold to the official supporters’ trust. [...]

  3. [...] most owners enjoy their position of football dictators. Doing what they want with the club. But hopefully not for long. Once parliament will publish its [...]

  4. [...] stable yet innovative, profitable yet social. It is impossible for one individual to buy them. The cooperative model is a great model for sports as it has been well proven in the Bundesliga. In “real world [...]

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