Belfast Telegraph

Wednesday 27 August 2014

Europe's balance of power tipping towards a German Bundesliga that's expert in balancing books

DORTMUND, GERMANY - APRIL 24:  Robert Lewandowski of Borussia Dortmund celebrates after scoring his team's third goal during the UEFA Champions League semi final first leg match between Borussia Dortmund and Real Madrid at Signal Iduna Park on April 24, 2013 in Dortmund, Germany.  (Photo by Lars Baron/Bongarts/Getty Images)
DORTMUND, GERMANY - APRIL 24: Robert Lewandowski of Borussia Dortmund celebrates after scoring his team's third goal during the UEFA Champions League semi final first leg match between Borussia Dortmund and Real Madrid at Signal Iduna Park on April 24, 2013 in Dortmund, Germany. (Photo by Lars Baron/Bongarts/Getty Images)

German football fans, in case you haven't noticed, are having a ball.

Bayern Munich and Borussia Dortmund, after whipping the cream of the Spanish league last week, look set to line up in an all-German Champions League final at Wembley next month. But really that's just the cherry on top. For the Bundesliga has been a blessing to domestic supporters for years. The unique German ownership model, that requires a majority of a club's shares to be held by ordinary members, has helped to put a lid on ticket prices, delivering the best value for supporters in Europe.

Fan democracy, however, doesn't mean austere socialism. Total league revenues have doubled in the past decade to €2bn (£1.7bn), second only to the Premier League. The Bundesliga is also home to some of the Continent's most exciting (and expensive) talent. Dortmund's feted 20-year-old midfielder, Mario Götze, will move to Bayern Munich at the end of the season for €37m.

There is a fair chance that Dortmund's Polish striker, Robert Lewandowski, will also choose to stay in Germany, despite big-money interest from Manchester United and others. The former Barcelona coach, Pep Guardiola, chose Bayern over Roman Abramovich's Chelsea earlier this year.

So how did German football get so attractive? "One reason for this sporting development is an essentially sound financial foundation," says Reinhard Rauball, president of the German League Association. It is a struggle to disagree.

There are strict controls on German clubs' finances. Debt levels are closely monitored by the league to reduce the risk of insolvency. Expensive player transfers are vetoed if they look like they might prove unaffordable. All clubs must submit their financial projections before each season to league accountants before they receive a licence to compete. Points are docked from those who bust their budgets.

The curse of European football's boom has been that revenues come in one door and flow out in inflated players' wages and obscene agents' commissions, leaving little for investment. The average wage-to-income ratio is 64 per cent across European leagues. But not in Germany. Last season just 37.5 per cent of clubs' turnover went on player salaries. That pay restraint is the reason German clubs make decent profits, which enable them to pump money into impressive youth training facilities. This investment has produced a rich crop of home-grown talent.

Some have complained that new Uefa controls limiting spending by English clubs to revenues will entrench the advantage of the biggest clubs. But Germany shows that financial prudence does not mean weak competition.

Bayern Munich may have been runaway Bundesliga victors this season, but the league has had five different champions over the past decade. Compare that with four in the Premier League and three in Spain's La Liga.

Some of the cheerleaders for the financially libertarian Premier League have tried to pick holes in the German model. Stefan Szymanski, a sports economist, notes that in real terms Bundesliga ticket prices have been rising faster than in the Premier League in recent years. But the average level of German top-level ticket prices is still well below those in England, with an average adult season ticket costing £207 compared with £468 in the Premier League.

The success of the Bundesliga scares the vested financial interests of English football. Those clichés about the Premier League being the most exciting competition in the world are ringing rather hollow these days. And the German model clearly demonstrates that fan empowerment can co-exist with commercial clout and on-field success.

"The game's about chasing glory, not a beautiful balance sheet" argues one of the vocal proponents of the high-debt, free-spending, sugar-daddy culture of the Premier League. But what the Bundesliga is proving is that clubs can have both glory and a beautiful balance sheet. Indeed, it's looking increasingly possible that the latter could be a good route to the former.

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