The Bundesliga made a profit of €52.5 million in 2010-2011, translating to an increase of €130 million from the previous year’s figures. The impressive numbers came just after UEFA revealed that in 2010 European teams racked up a staggering €1.6 billion in debt.
The Bundesliga also generated record revenue in 2010/11, bringing in almost €2 billion. Adding to the financial success, the attendance record for the league was broken for the second year in a row as 42,101 spectators were at each game on average, making the German top-flight the best attended league in Europe, ahead of the English Premier League.
By the way, Manchester United, with a £715 + million debt, surpassed the cumulative sum owed by all DFL teams.
So what makes The Bundesliga such an economic powerhouse?
The Bundesliga is a solid stock, always on the rise. It emphasizes the importance of the core fans, rather than the owners or shareholders.
This concept is realised in many ways like open training sessions, cheap ticket prices, safe standing areas, beer in the stands and a lot of sponsored activities for fans. As for the players, they seem much more open and friendly towards the media and fans – partly because they are not scared that some owner/dictator is going to leave them out of a job if they say something wrong.
How does the Bundeliga business model work?
Until the late 1990s, all Bundesliga clubs were 100% owned by members and fans who paid to become part of the club. 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 their club’s 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 simply take over a club.
Basically, the Bundesliga’s model found the perfect balance between money and the supporters. The league solved the Matrix.
German clubs are a cooperative, a business model that probably touches the essence of football better than other models. It reinforces football’s 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 any way he feels right. Putting so much power in the hands of a few people, most of them newcomers with a mushroomed ego and zero knowledge about their club and football business in general, often leads to clubs that struggle to survive.
According to an A.T. Kearney study published in July 2010, “the current economic system in soccer encourages over-investment and extreme risk-taking in order to win games, far beyond economic sense”.
The consultants added that club owners are after trophy glory, political capital, or the fulfillment of childhood dreams. It’s basically all about their ego and their methods endanger clubs and leagues.
Sometimes, like in Chelsea’s case, this model can work 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 every league that did not offer good enough protection from private investors.
The benefactor model has clearly had its day, but it is clear that the supporter-based cooperative 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 love it). The Bundesliga financial model is basically forcing the clubs to invest in the one asset they will always have – their supporters.
It’s actually a model that understands football better.
And this link here will help you find your Bundesliga club.