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Does the Bundesliga lack the financial strength to succeed in Europe?

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The 2008/09 Bundesliga season is set to get underway in a couple of weeks, but instead of looking forward to whether someone will be able to wrangle the title away from Bayern Munich, the league, its clubs, and its fans may be looking more towards the future right now.

Currently, the league, the German government, and pay-TV company Premiere are locked in a three-way battle over the Bundesliga’s exclusive TV rights for the future, a battle that also has a great impact on the fans.

The country’s Federal Cartel Office ruled last Thursday that highlights from the Bundesliga’s Saturday matches have to be available on free TV soon after the end of the day’s action and said that the big-money deal between the Bundesliga and Premiere has to be renegotiated.

As it stands, the league is none too happy about having to cater to the fans at the expense of potentially valuable revenue. The more highlights that are available on free TV = the less money that Premiere has to fork out for a deal = less revenue on the whole for the Bundesliga’s clubs, who currently split the TV monies relatively equally.

On the other side are the fans, who, according to the ruling, will have to wait a little longer to see the matchday highlights; in addition, the ones who subscribe to pay TV channels will have to fork out extra money if the deal is done.

In the midst of it all, Bayern Munich chief exec Karl-Heinz Rummenigge is stepping up in ‘defense’ of the league and its clubs, saying that the Bundesliga’s lack of financial strength negatively impacts the league’s chances of producing a Champions League winner in the near future.

Does Rummenigge have a point?

Talent hasn’t, isn’t, and never will be an issue in Germany, and neither is being able to keep most of the country’s top talent inside the country’s borders as shown by the club breakdown of their Euro 2008 squad, but when it comes to being able to match the buying power of say, a Real Madrid, Chelsea, or Manchester United, even the Bundesliga’s biggest club may well lag a little behind.

Last summer, Bayern made their club-record signing when they landed Marseille’s Franck Ribery for €25m. In the meantime, we’re hearing about Chelsea wanting to buy Kaka for €150m, Real Madrid trying to swing a €80m deal for Cristiano Ronaldo, and Tottenham looking for Manchester United to fork out well over £30m for Dimitar Berbatov.

And for homegrown talents? While Darren Bent fetched a nearly £17m fee when he moved from Charlton to Tottenham last summer, Wayne Rooney went for nearly £30m, and others like Michael Carrick, David Bentley, and Gareth Barry are commanding fees pushing the £15-20m mark. Miroslav Klose, one of the more proven goalscorers on the European circuit, though he was 29 at the time, went for only €15m. Lukas Podolski went for only €10m when he moved from Cologne to Bayern in 2006, whereas he’d probably have fetched nearly twice as much if he played in England.

More than anything though, what might sting Rummenigge the most is that German clubs, most notably his own, don’t have nearly the same prowess that they did in Europe not too long ago.

In the 70s and 80s, before West and East Germany became one, German clubs, especially the ones from the West, were a regular fixture in European finals. Bayern Munich won three straight European Cup titles from 1974-76, Hamburg SV claimed the crown in 1983, and there were runner-up finishes in 1977 (Borussia Monchengladbach), 1982 (Bayern Munich), and 1987 (Bayern).

Between 1973 and 1989, German clubs appeared in eight UEFA Cup finals, with M’Gladbach appearing in four and winning two in 1975 and 1979, Eintracht Frankfurt beating M’Gladbach in an all-German final in 1980, Bayer Leverkusen lifting the trophy in 1988, and Hamburg (1982), Cologne (1986), and VfB Stuttgart (1989) all coming out on the losing side.

The country was also very successful in the now-defunct Cup Winners’ Cup, winning five titles (four by West, one by East) between 1964/5 and 1991/2, and the same amount of runner-up finishes in that time period.

Since the unification of the country in 1990, there’s been sporadic success, as Borussia Dortmund (1997) and Bayern Munich (2001) have been crowned European champions, and Bayern (1996) and Schalke (1997) won the UEFA Cup, with Bayern (1999) and Bayer Leverkusen (2002) appearing in Champions League finals.

However, their presence has definitely waned since the halcyon days when Rummenigge was bagging loads of goals for Bayern Munich and West Germany.

But, is his grim assessment of the future of German football on the European landscape as true as he feels it is? True, having the fallback of large amounts of television revenue makes that incentive to even finish just inside the safe zone all the better, but what about from a competitive point of view?

Schalke made the Champions League quarterfinals last season, and both Bayern and Bayer Leverkusen made it deep into the UEFA Cup before being felled by Zenit St. Petersburg, who’ve built a team around Russian talent and not by spending big.

Not only do Bayern have the team to make another deep run in the Champions League, but don’t rule out Schalke and Werder Bremen’s chances either. Both have stocked their clubs well with a blend of homegrown and continental/international talent, without having to spend big to do so.

And amazingly, according to Forbes Magazine’s recent list of the world’s richest football clubs, there are more German clubs (five – Bayern, Schalke, Dortmund, Hamburg SV, and Werder Bremen) in the top 20 than there are Italian (4 – take a wild guess) or Spanish (3 – you know who), and one less than England (6 – though there are four more English clubs from 21-25). That’s not even taking into consideration the sweet financial backing that ambitious Wolfsburg have from Volkswagen and are using to catapult themselves into the upper echelon of the Bundesliga.

More telling than anything is what former Bayern star and current club manager Jurgen Klinsmann said to contradict his chairman’s statement in talking to the Sunday edition of the Suddeutsche Zeitung.

“I do not accept the argument about the lack of finances amongst our clubs compared to Europe’s top clubs.

“The top 15 clubs are all equipped with good international players and in the long-term, it is more important to have a good, hard-working team ethic than a hundred transfers.”

Precisely. If Porto and Liverpool can win Champions League titles without having to spend a mega-fortune, if Arsenal and Monaco can make finals without having to do the same, then so can Bayern, so can Schalke, so can Werder, and so can Wolfsburg even.

In the end, a compromise is going to have to be made in regards to the TV deal, and someone stands to sacrifice something either way (because isn’t that how compromises tend to work?).

Whatever happens, German club football may still linger well behind the likes of the Premier League when it comes to revenues, but the bell certainly isn’t tolling for its future, by any means.

Comments (11)

  1. I am from Germany and I think this is a great article about the Bundesliga. I agree with Klinsmann but I also think that money is very important in modern football. When Barcelona takes 150m and Bayern 30m Euros by TV it is no wonder when Hleb moves to Barcelona. So, I don´t think that superstars like Eto´o or Drogba will move to Bayern, Bremen or Schalke. But it´s right that German talents like Schweinsteiger or Podolski are our capital for the future to attack the Champions League. We will see how far the German clubs will come and if they could pass the quarter finals into semi-final or maybe even reach the final.

  2. If this TV deal is going to make German clubs waste money on over-rated and over-price players like they do in england and spain then i say FORGET it.

    I do agree with Rummenigge to a certain extent, in that the lack of financial buying power will make it more difficult to win cl and the article has indeed shown that this has been the case in recent times.

    However, i do believe that German clubs can win cl becuz it not all about money, if that was so chelsea would be 3 titles in a row. Its about have a decent side and employing the right tactics and get a bit of luck. So it is still possible, just harder.

  3. i hope this is true. Klinsmann always has the best words, but can he do it this year in the Champions League: become a perennial contender in his tenure?

    And I also hope that Schalke and Werder do good this time around. Schalke I think got retooled better than Werder have, and as quarter-finalists last season, they can yet make another run. See, they haven’t SOLD any of their core players…and they’ve banked in on Holland’s EURO 2008 revelation: Engelaar. I think that Bayern and Schalke will shake up things soon enough… I also think that this will be the domestic battle for the shield and cup next season

  4. Excellent article. If the economic downturn continues it will be the clubs owned by private investors from leveraged take-overs who will be at greater risk than clubs that are in large part own by their members which is the case in Germany (except Wolfsburg and Bayer) and elsewhere. While contemporaries of Hicks, Gillet and the Glazers attempt to extract profit from their clubs, The Bundesliga will have the security of the 50+1 rule that restricts private ownership of a club to a minority. This is not ideal for every club (some clubs are agitation the League for a change in the ownership rule) but it does provide greater security in what could be very choppy times for football.

  5. Hey, now i maybe a bayern supporter..but i really doubt the champs league from seeing their preseason results and the game highlights…2-1 loss to borrusia dortmund and 0-0 with cologne are not our results..but schalke did well last time..they are just a little weak upfront due to kuranyi who really sucks badly, so I am saying,klinsmann is to a certain point right but wrong ahead of that and good luck to bayern as long as they dont show another zenit to us…

  6. Even with an improved TV contract the Bundesliga clubs couldn’t compete with those gigantic sums of money mentioned in this article. That’s a game for billionaire club owners to play.

    Those Rummenigge quotes also include a lot of lobbying. Another Bundesliga manager warned clubs may need to raise ticket prices. Another talked about the youth academies, which could be in danger (as in: think about the poor children). That’s really just to spin the public opinion against the cartel office.

    The problem here is, that Germany has Europe’s biggest media market, but the Bundesliga has the smallest TV contract (of the 5 biggest leagues). So the holy grail is to find a key to unlock the potential of the market. The court ruling limits the options the Bundesliga has to design their rights package in a way, which would allow to increase the size of the rights deals in the long term. All the bitching is less about the new deal kicking in next year (on average clubs could have spent an extra €5m on wages or transfers, which doesn’t change a lot). But with a certain TV schedule written in stone the league fears long term stagnation.

    Anyway, according to the Forbes list, Schalke is worth more than Inter Milan, but Schalke’s spending power is infinitely smaller than the one of a club which can generate huge deficits year in year out, without having to fear bankruptcy. According to Deloitte the Bundesliga had the second highest overall turnover of the European leagues in 2006/2007 and turned a profit of €250m (pre-tax though! – no money which could be reinvested 1:1). Over €100m more than the EPL. Serie A and La Liga haven’t been turning a profit for years – they are more often in the red – while the Bundesliga consistently operates in the black. It’s the club ownership issue again. There are also tax issues, as e.g. Spanish clubs can benefit from a 25% flat tax for foreigners. All those things won’t change in favor of the Bundesliga with an improved TV deal.

    Real Madrid have wasted hundreds of millions on new players and couldn’t get past the last sixteen in the Champions League for years. So, you need to know what to do with your monetary advantage otherwise it won’t help a bit. In the same way, you can build good squads with intelligent transfers and some homegrown talent. But, more money would definitely help keep such a squad together…

    Porto is the exception and not the rule. The rule are the rich clubs.

  7. @Jan

    Yes, Porto is the exception but I think that, let´s say 3 German clubs are more powerful than Porto at the time and some of them (or one) have more chances to win the Champions League soon. Bayern is a rich club but not rich enough to buy players like Ribéry and Toni every year although I hope they´ll do. I think Bayern is very similar to Real Madrid concerning the translation into action to be the best in Europe.

  8. I can tell you as someone who talks to a number latin football fans here in the Miami area, the Bundesliga has done perhaps irrevocable damage to its reputation in the whole fiasco about releasing U-23 players for the Olympics. Ironically enough every player request submitted to a Premier League club was honored while only about half were honored by Bundesliga clubs.

    Latin Americans take Olympic Football more seriously than the rest of us, and simply do not understand the stand of Bundesliga clubs, which is reasonable but they do not see it.

  9. Kartik, I am also feeling the same way regarding the whole controversy of releasing U-23 players for the Olympics among Bundesliga clubs. I had a feeling that the Bundesliga is not endearing itself to many in this aspect. I don’t remember the Premier League clubs (as far as I am aware of) affected made a huge fuss of their players who are bound for Beijing.

    The Olympics only come once in every four years, the Champions League happens every year. Yes, I know both Werder Bremen and Schalke have Champions League committments (given their respective players Diego and Rafinha defied their clubs and joined the Brazil Olympic squad) which clash around the time of the Olympic football tournament in Beijing but the fact that the gold medal is something Brazil has never won in Olympic football (considering Brazil is the five-time World Cup champions) makes Olympic football even more of a big deal in Brazil. Like what you say about Latin Americans taking Olympic football more seriously.

    I come from Singapore myself and reading what one of our newspapers was saying this in its headline regarding the whole controversy – ‘Brazil coach Dunga says clubs must have sense & sensibility’ and the sub-headline is like a subtle reminder to the clubs – ‘Clubs must work with nations and not just have own interests at heart’ (the Brazil Olympic football team was here last week to get used to the climate and they did played a friendly against a local selection here). It may be big news here in Singapore that the boys from Brazil were here even if it’s the Olympic selection (given this ain’t happen everyday in my country), back then I had mixed feelings reading daily reports of what happened to the squad when they were here.

    Because I do also follow the Bundesliga (apart from the Premier League) and this is kind of depressing. The football clubs may be the ones who pay the players their salaries, but they have to understand why their employess want to take part in the Olympics. I know it has always been Diego’s dream to represent Brazil at the Olympics but looking at how his club Werder Bremen is reacting to this (they are taking the case to the Court of Arbitration for Sport even after the FIFA ruling yesterday said that players who are 23 and below have to be released for the Olympics and Diego is 23), I don’t know what to say.

  10. The rule are the rich clubs, but examples like Porto and others are proof that money isn’t always the determining factor in success at the highest level. Certainly helps, but it’s not the be all, end all.

    While Schalke and Fenerbahce, both of whom made the Champions League quarters, certainly aren’t struggling financially, they aren’t up there with the buying power of the sides they went up against (Barcelona and Chelsea), but they certainly held their own.

    It’s true that you do need at least a little financial security and buying power to reach that kind of success, but with that said, Bundesliga clubs like Bayern, Schalke, Werder, along with Hamburg and Wolfsburg, have the money to compete on a high level year in, year out and to nab a European trophy here and there.

    There are the ‘surprise’ winners every several years, so it should happen before too long.

  11. The rule are the rich clubs, but examples like Porto and others are proof that money isn’t always the determining factor in success at the highest level. Certainly helps, but it’s not the be all, end all.

    While Schalke and Fenerbahce, both of whom made the Champions League quarters, certainly aren’t struggling financially, they aren’t up there with the buying power of the sides they went up against (Barcelona and Chelsea), but they certainly held their own.

    It’s true that you do need at least a little financial security and buying power to reach that kind of success, but with that said, Bundesliga clubs like Bayern, Schalke, Werder, along with Hamburg and Wolfsburg, have the money to compete on a high level year in, year out and to nab a European trophy here and there.

    There are the ‘surprise’ winners every several years, so it should happen before too long.