Bundesliga's 50+1 Rule: The fans' saviour or competition's inhibitor?
With just seven games left to play in the Bundesliga and Bayern Munich leading the pack by 17 points, this season's winners are virtually decided. While the lack of competition in Germany's top flight is one of the most discussed topics when it comes to football, another peculiar feature of the Bundesliga that has been doing the rounds as of late is the 50+1 rule.
The 50+1 rule explained
Incorporated in 1998, the 50+1 rule necessitates that if any team wants to obtain a license to play in the Bundesliga, the parent club must hold the majority of its voting rights. Thus, club members or member associations must own enough shares that give them 50 percent voting rights plus one additional share which gives them the bulk of the voting rights.
The essence of the rule is to ensure that the club members, imperatively the fans, have control over the club policies and proceedings so as to cut down on activities of personal interest from the private investors.
There is an exception to the rule as well, wherein any private individual or entity who has substantially funded a club for 20 years or more can apply for an exemption to the rule and can hold a controlling stake. The three teams which fall under this category right now are Wolfsburg who are owned by Volkswagen, Bayer Leverkusen who are owned by pharmaceutical company Bayer, and Hoffenheim who are owned by SAP co-founder Dietmar Hopp.
The biggest benefactors of the 50+1 rule are the fans. Club members hold the major chunk of the voting rights. Thus, they can engage in schemes that benefit the fans and avoid those endeavours which benefit the external investors but go against the club's culture.
Fans experience a greater connection with the club and their opinion matters. Ticket prices are also kept in check. Player wages are reasonably monitored. Sound control is exercised over transfer market prices. Interestingly, European heavyweight Bayern Munich's most expensive transfer signing is capped at €41.5 million. There is stability when it comes to the administrative side of things.
The 50+1 rule has done much good to the football culture in Germany. The huge outpour of fans in games is a common sighting. The fact that only a small percentage of season tickets are offered means that more fans get to see the games. Thus, the 50+1 rule does not only fall in line but also promotes the pro-fan setup in Germany.
The biggest example from recent history which reaffirms the importance of this statute is the case of the now fourth division side 1860 Munich. Once a Bundesliga giant, 1860 Munich have been in dire straits of financial crumbles since the turn of the 21st century.
Back in 2011, Jordan-born investor Hasan Abdullah Ismaik responded to Munich's wealth wobbles when he spent €18 million to help the club survive, inheriting nearly 60 percent of the shares and 49 percent of the voting rights. What ensued since then has been nothing short of a farce.
Continuous squabbles between the major shareholder and the club administration have led to 1860 Munich become a distraught figure in the world of football. Ismaik's perceived discontent at not being able to control the proceedings despite investing heavily and the management's faulty functioning while trying to keep the Jordanian investor and the fans on the same page have led to the undoing of the 1965-66 German champions.
The lowest point of this tumultuous landslide was when 1860 Munich declared financial incapacity to obtain a license for playing in the 3. Liga when owner Ismaik refused to pay the required fees. As a result, the club was pushed down to the fourth tier, thereby enduring two relegations in a span of five days.
All of this happened without Hasan Ismaik owning a majority stake in the club. Nobody can predict what would have been had he owned a controlling stake.
The biggest drawback of the 50+1 rule is that it limits the financial capacity of the clubs. Without being able to captain the ship, external investors would not like to channel heavy funds into a team. Thus, the major sources of club finances are limited to the revenue generated through operational activities like match tickets, shirt sales, et al.
With membership fees in check, thanks to the populist fan culture in play, Bundesliga clubs seriously limit their earnings. Given the overt dominance of Bayern Munich in the Bundesliga, the ineptitude of the teams to compete is worth fretting over.
The Die Roten have won the Bundesliga every year since their treble season of 2012-13 and are on the verge of a sixth consecutive league triumph. There are no imminent challengers in Germany to throw the Bavarians off the perch.
A lack of quality in the domestic circuit has eventually been projected on the European stage as well where Bayern is Germany's only saving grace. The five-time UEFA Champions League winners are the only German side who qualified for the last 16 stage of the competition this year. RB Leipzig are the only other Bundesliga team remaining in Europe albeit in the second-division Europa League.
The shortage of considerable funds has also made Germany's top flight employ questionable habits. As of late, it has been rather easy for foreign clubs to prize away Bundesliga's biggest talents.
Dortmund have been guilty of selling their best players for heavy bids. The sales of Pierre-Emerick Aubameyang and Ousmane Dembele to Arsenal and Barcelona respectively resonate the same.
Many other clubs have also been known for employing the same tactics. Bayer Leverkusen sold the likes of Dimitar Berbatov, Heung-Min Son, and Chicharito to Premier League clubs while Schalke recently shipped Leroy Sane to Manchester City.
What's also frightening, is how quickly a fund-fuelled side can progress through the ranks of German football as was the case with Hoffenheim and especially RB Leipzig.
The scenario of RB Leipzig is even more peculiar, given how easily the side bent the 50+1 rule. The club founded in 2009 after Red Bull invested heavily in a fifth division side then known as SSV Markranstadt has quickly climbed up the ladder and finished second in the Bundesliga in their debut season last year.
Leipzig are arguably the most hated club in Germany by fans and the crux of this loathing stems from the fact that they owe their successes to the funnelling of monetary reserves by Red Bull.
"But what about the 50+1 rule?" you might ask. It's simple, they bypassed it. While Red Bull GmbH owns 99 percent shares of the club, the remaining one percent is held by the members association and as per the 50+1 rule, the member association holds the majority of the voting rights.
However, Leipzig have introduced two classes of members: the voting members and the supporting members having no voting rights. While it is possible to become an official voting member, most of whom are currently Red Bull employees, Leipzig can reject any application without citing reasons.
The club has been extremely shrewd. In fact, the name 'RB Leipzig' whose generally perceived full-form is 'Red Bull Leipzig', is a fallacy. The 'RB' essentially stands for 'RasenBallsport' making the club's full name to be RasenBallsport Leipzig.
What needs to be done
In the modern era of commercialization of the sport of football, the 50+1 rule is living on borrowed time. Minimal competition in the league is a recipe for disaster, as can be seen by French Ligue 1 where Paris Saint-Germain lead the race followed by occasional challengers but none of the sides have enough quality to make a lasting dent on the biggest stage of Europe.
Thus, restrictions need to be lifted to allow external investment to pour in for the dormant Bundesliga biggies to make an upsurge. However, the criticality of the 50+1 rule cannot be undermined as fans still remain a huge part of the game.
The DfB (Deutscher Fussball-Bund) need to allow some shift in power from the fans towards the private stakeholders. But the expanse of the same needs to be marginalized in such a manner that it does not lead to the narrowing of the club supporters by making the ones with the reserves as the undisputable seat of power.
In a nutshell, the motive is to allow freedom of investment but to couple the same with accountability and answerability.