- German football’s 50+1 rule restricts private ownership, but there are calls for change
- Bundesliga revenues are growing, but not as quickly as some clubs would like
- Next round of international and domestic media rights sales could settle the argument
There are almost seven million members of football clubs across Germany, and almost all of them can call themselves ‘owners’.
Most German clubs are at least majority-owned by their fans, who pay the lowest ticket prices in Europe’s top five leagues. This produces big attendances, loyalty, sustainability, and consistent year-on-year growth.
The top two tiers of German club football have enjoyed 14 consecutive seasons of collective revenue growth, from €1.28bn ($1.45bn) in 2003-04 to €4.42bn in 2017-18. At last season’s end, the top tier Bundesliga was the second-richest league in world football, behind the English Premier League. As the slogan goes, the German Bundesliga is “football as it’s meant to be”.
But for some among German football’s upper echelons, it isn’t quite enough. For them, the ever-growing financial might of the Premier League and the continued buying power of Real Madrid, Barcelona and Paris Saint-Germain has made German football’s commercial philosophy seem a little parochial.
The fear of several clubs – as well as the chief executive of German football’s governing body, the Deutsche Fußball Liga – is that German football risks being left behind.
As things stand, no German football club in the top four tiers can be more than half-owned by a private company or investor, unless the DFL grants an exemption. A club’s members or fans must own at least 50 per cent, and if the share is split 50-50 between members and private interests, the members receive the casting vote.
The ‘50+1 rule’ is designed to prevent incompetent or malicious ownership driving clubs into financial ruin, as has often been seen over the past two decades in Italy and England. But it is also there to prevent monied owners giving what most German football fans would deem an ‘unfair’ financial advantage, in the manner of Qatar Sports Investments at PSG or Abu Dhabi United Group at Manchester City.
Publicly, most clubs and executives are careful to support the rule.
“At the end, it’s football. It’s not a business. Not a business,” says Jörg Wacker, board member at Bayern Munich. “We have more than 290,000 members in the club. We’re talking about 4,500 fanclubs, 700 outside of Germany. If you look at how we have done this for the last 27 years, every year was profitable. We have no oligarch; we have no sheikh who gives us money. We do it ourselves.”
Wacker says this with pride. But the words of Bayern’s chief executive, Karl-Heinz Rummenigge, perhaps belie Bayern’s true position on the matter.
“Our behaviour in this matter [50+1] is the cause of condescending smiles here in the United States,” Rummenigge said, speaking at a press event in Miami last year. “Everyone is worried that we will lose competitiveness if we open up to the market. The opposite is true; Germany would benefit from it. Either we go down this path as well or we will wind up paying a price for [not] doing so.”
Rummenigge is not the only one in German football to speak openly about modifying or abolishing the ‘50+1’ rule to open German football to outside investment. Eintracht Frankfurt board member Axel Hellmann and sporting director Fredi Bobic have both gone on the record with their ideas to relax the rule and allow private companies to take majority stakes in German clubs.
Martin Kind, chief executive of Hannover 96, is perhaps the most outspoken about the rule’s ills. Kind is currently attempting to take majority control of Hannover on the grounds of investing in the club for 20 years – one of the DFL’s primary requirements for granting any individual or company an exemption to the rule.
The only club to have taken advantage of the 20-year exemption thus far is TSG 1899 Hoffenheim, a team based in a small village in south-west Germany. Hoffenheim’s population is about 4,000 people, but thanks to Dietmar Hopp’s investment and now ownership, the club was able to qualify for the Champions League this season.
Even the chief executive of the DFL, Christian Seifert, believes the rule should be reformed. Speaking in January 2018, Seifert told a new year reception in Frankfurt that German football was in danger of succumbing to mediocrity without accepting change: “If we want to be competitive, we have to commit ourselves to a certain degree of commerce.”
Speaking in March 2018, Seifert said: “We need at least to figure out if between radical positions – keep the market as it is or blow it away and open up the market completely – there is a way in between.”
Reform on hold
In the minds of many German football stakeholders, the 2019 DFL annual general meeting on March 21 was to be dedicated to finding that middle ground. Four Bundesliga clubs have either been made exempt (Bayer Leverkusen, VfL Wolfsburg, Hoffenheim) or cleverly circumvented the rule (RB Leipzig), and many top-tier clubs felt it was time to rethink whether the 50+1 rule served a worthy purpose.
The debate ended virtually before it began. Andreas Rettig, president of second-tier club FC St. Pauli, opened the meeting by successfully passing a motion prohibiting any official discussion about reforming, relaxing or abolishing the rule until next year’s meeting.
The motion decreed that any discussion about the rule was to be directed at solidifying its legality, as Germany’s competition authority is still yet to offer an opinion on whether the rule breaches EU antitrust law. Rettig’s motion passed with 18 clubs in favour, many of which play in Germany’s second tier.
While Rettig’s motion delayed any reform, the issue isn’t going away. In the opinions of several prominent German football executives, the Bundesliga’s focus on sustainability and tradition has put it in danger of longer-term stagnation, on and off the pitch.
The league is in the early stages of a talent drain, with Premier League and LaLiga clubs now able to offer huge transfer fees and wages to lure its best players and coaches away.
Top coaches such as Jürgen Klopp, Thomas Tuchel and Ralph Hasenhüttl have all left Bundesliga clubs for new jobs in either England or France.
And several of the league’s top players over the past four seasons – Pierre Emerick-Aubameyang, Ousmane Dembélé, Naby Keïta, Leroy Sané, Javier Hernández and Christian Pulisic – have either already left the Bundesliga or will do so before the 2019-20 season.
These factors are likely to have a negative impact on the amount the Bundesliga is able to earn from its international media rights – the one revenue stream in which it significantly lags behind its rivals.
But while the Bundesliga’s focus on domestic sustainability and growth may come at the expense of its ability to grow international revenue, there are strong arguments as to why this should remain the case, and a majority among those working in German football and the wider public believe it can prosper with its traditional values left intact.
In 2020, the DFL will go to market with the Bundesliga’s domestic rights, which are currently valued at €1.16bn per season. Its current domestic rights cycle, which runs from 2017-18 to 2020-21, earned the league an increase of 85 per cent on its previous deals, which ran from 2013-14 to 2016-17.
From 2021-22, the league could stand to earn significantly more than the current amount, given the competition between pay-television broadcaster Sky Deutschland and streaming platform DAZN.
The Premier League’s current domestic deals bring in the equivalent of about €1.76bn per season, and the Bundesliga – which already has the second-largest domestic rights deal of any football league in the world – has a great chance to gain more ground.
For Carsten Cramer, managing director of Borussia Dortmund, the Bundesliga’s domestic prosperity is directly tied to the 50+1 rule, and the idea held among German people that professional football is community property.
“The connection to the people is important because the people are the club, the people own the club. Without that, we would have quiet people in the stadium, and we wouldn’t be able to talk about the noise of our stadium,” Cramer says. “I’m very, very sure that, without that, we would be less successful and less attractive not only for the supporters, but also for the commercial partners. It’s a circle. You just have to ask: what is the starting point of that circle?”
For Cramer, and many others, the starting point of the Bundesliga’s circle is the fans that fill its stadiums. The Bundesliga consistently has the highest average attendance of any football league in the world. Nine of its clubs are in the top 25 for average league attendance in Europe’s top five leagues this season.
“When we developed ‘Football as it’s meant to be’ as our positioning, the fan culture is a big part of that,” says Robert Klein, chief executive of Bundesliga International. “It also plays into the full stadiums we have, the atmosphere in those stadiums, and the product we take internationally.”
Cramer adds: “The attendance is the highest in worldwide football. We have a crazy atmosphere in the stadiums because we have the standing areas. We make football accessible and achievable. For the whole society. It’s not only limited to people who are able to spend lots of money.”
The average cheapest ticket in the Bundesliga this season cost €15.20. At Dortmund, the cheapest ticket is about €11. Despite the low prices, last season’s matchday revenue across the league brought in just over €538m – roughly on par with Spain’s LaLiga but behind the Premier League – and this is expected to remain steady for 2018-19.
Cramer believes none of that would be possible if German football began to leave its roots. “At the end, we don’t do it for ourselves, we don’t do it in order to make the next step. We do it for the people. And as long as the people are interested, we should be very, very happy. We have to think about how to keep the interest of the people and of the supporters, because the moment they give up their interest in football, we won’t be able to create such a successful product.”
The league’s cancellation of Monday night kick-offs is evidence of fan power in German football. The kick-off slot was introduced by the DFL in 2017-18 to attract greater interest in the league’s domestic media rights. Fans routinely boycotted the fixtures and actively protested at others, eventually forcing the league to go back to six kick-off slots.
“When you’re doing international business, if you had total flexibility it would work with broadcasters,” Klein says. “But six different kick-off times is plenty. If that means early viewing parties in the US and mid-to-late evening viewings in Asia, that’s what you work with, and you work on concepts around it.”
In the opinions of Cramer and Klein, German clubs can achieve their commercial goals with 50+1 in place. Dortmund, a club that faced financial ruin in the mid-2000s, earned over €500m in revenue during the last financial year. Its recovery is partly due to investment from chemical manufacturing company Evonik, insurance company Signal Iduna and sports manufacturer Puma. Collectively, the three companies own 25.21 per cent of Borussia Dortmund GmbH & Co.
“There are still many, many clubs owned by the members who are successful and commercially attractive for others,” Cramer says. “I think the identity of the clubs and their connection to the people is very, very important at the moment. If the investors take over, I’m very sure that we will lose some of that identity.”
Klein added: “50+1 is part of the Bundesliga. It provides us with lots of opportunity in terms of how the product is seen. I think there’s a lot of discussion around it, but it’s healthy discussion. The rule doesn’t hold us back.”
Klein is currently in the process of attempting to prove that point.
Since July 1, 2017, Bundesliga International has been responsible for developing the league’s global marketing strategy, striking global commercial partnerships and increasing the league’s on-the-ground presence outside Europe. New offices in New York City and Shanghai have aided its efforts to bring the Bundesliga closer to potential fans in key targets markets, while also providing a hub for German clubs looking to do the same.
The work of Bundesliga International over the past two years has given Bundesliga clubs a solid platform on which to build their global appeal, but Bundesliga International’s primary reason for being – to convert these marketing efforts into significant growth in central revenues – is about to be put to the test.
The Bundesliga is about to sell its media rights from 2020-21 onward across Asia, the Americas, the Middle East and Africa. The new round of international deals will act as a litmus test for German football executives worried about the league’s ability to keep pace with the global popularity of the Premier League and LaLiga.
In 2018-19, the Bundesliga earned about €250m in international media-rights revenue. The Premier League looks set to increase its international media-rights income from 2019-20 to 2021-22, up from about €1.6bn per season in the previous three-season cycle. LaLiga is thought to be earning more than €650m per season for its international rights until the end of 2019-20.
Without a Lionel Messi or Cristiano Ronaldo to lead its marketing push, Bundesliga International is drawing on the league’s fan-friendly nature to convince broadcasters of its value. Klein says that the inclusive nature of the Bundesliga – as well as its fan-owned clubs – are a primary reason why football fans outside Germany choose to watch the league.
“We have been talking about the club community aspect and we want to make that resonate internationally as much as it does domestically,” Klein says. “In the US, our fan culture is one of the main reasons people watch the Bundesliga. Across Southeast Asia it’s also a determining factor. We have the means and ways to push this angle via localised content and storytelling to really deliver that story and the impact it has on the league.”
Before the creation of Bundesliga International, the league earned a huge increase in China from a five-season deal with streaming platform PPTV, worth an average of $50m per season from 2018-19 to 2022-23. But the league now faces tough tests in Asia and Latin America, where good results are far from guaranteed.
The Premier League has recently suffered a stream of reduced rights fees across Asia, with new deals in Japan, Malaysia, the Philippines, Singapore and Vietnam all dropping in value. In Latin America and Brazil, the rights to all other major football properties have already been sold, and it is possible that recent consolidation in media markets across the region will have a negative impact on the Bundesliga’s earning potential.
That said, the league is coming from a relatively low base. Its 80-territory, five-season deal with media group Fox – from 2015-16 to 2019-20 – covers Southeast Asia, Latin America, Brazil and the United States, but brings in just over $60m per season.
Media-rights experts say the league is keen to sell rights market-by-market in Southeast Asia in order to reap the reward of its localised marketing push in the region over the past 18 months, but Klein says it is taking a more pragmatic approach.
“We want to take a market-by-market approach when it comes to how people understand the Bundesliga. In relation to commercialisation, a pan-regional media-rights deal or going market-by-market are both still in play,” Klein says. “Either could offer us what we want, but it depends if the partner will invest in localisation and local content. That’s the direction we need to go in.”
The league is also anticipating a good result in the US, which has recently produced spectacular increases for European leagues such as Serie A. Sources say Bundesliga International is hoping to at least double the league’s media-rights income from the territories covered by its Fox deal.
It is not outside the realm of possibility that the Bundesliga could increase its international media-rights revenue to over €400m per season. Coupled with a domestic sales process that is also expected to produce a strong increase, the Bundesliga has an opportunity to increase its global media-rights revenue to almost €2bn per season by 2021-22.
If Klein and his domestic colleagues can exceed expectations, it would deal a blow to the argument that the 50+1 rule is holding German football back. But if not, pressure will mount to replace the Bundesliga’s stability with some creative destruction.