The German Bundesliga has turned into the breeding grounds of the world champions, and the process has been mesmerizing
Well then, if this is something that ensures the growth of the game in the country, why can't other countries such as England simply follow suit? That is because they can't afford to.
As a matter of fact, the English and the Spanish clubs have a significantly higher wage structure than their German counterparts. Liam Smith, an aspiring lawyer from Leeds, observes in his article analysing the German football model that - "Their pragmatic approach to football governance and finance means Bundesliga spend only 51% of their revenue on wages whereas Premier League clubs spend 70% of their revenue on wages."
Hence, with growing expenditure, it is impossible for them to cut down on their income revenue and "risk" on the hope that this might encourage more long-term community involvement. Ticket revenues still continue to constitute the second largest source of income for English clubs after TV revenue. To put things into perspective, English giants Manchester United earn about 38 million Euros more than what Bayern Munich earns from ticket sales in a year.
Now that brings out yet another question. How can the German clubs maintain a lower wage structure when player wages in other leagues are sky-rocketing?
Well, that is down to their unique club ownership rule of "50%+1". According to this rule, an investor or a benefactor cannot own more than 49% stake in a club. This ensures that the controlling stake always remains with the club and its fans, and thus stops any multi-billionaire, driven by ego or vested interest, to "artificially" pump in a large amount of money and ultimately make the club spend more than they should have. Therefore, Bundesliga will always have a controlled check on the initial investment on new players and their subsequent wages.
Now, the investor or the single benefactor model has its perks too, as evidenced in the case of Chelsea and Manchester City in England or perhaps Paris Saint-Germain in France, who have had brilliant transformations since billionaire takeovers. However, it could also prove quite fatal.
I caught up with German based noted football journalist Arunava Chaudhuri and he was quick to point out that very fact.
"You mention Chelsea, PSG and Man City; but these positive examples are rather exceptions than what happened to Portsmouth or Leeds United. And for that matter, you can look at Aston Villa or Newcastle United from last season, where large investments have taken these traditional clubs down into the Championship."
Indeed, such takeovers and massive investments have often failed to live up to its promise. There have been quite a few instances where subsequent mismanagement has eventually led to disastrous results. In Spain, Racing Santander faced a similar predicament.
A mere 5 years since the club was taken over by Indian business tycoon Ahsan Ali Syed in 2011, Racing Santander now finds themselves in the third tier of Spanish football and has suffered a financial and institutional crisis. Prior to that, the club had successfully completed a decade in the Spanish top division.
Arunava further adds that the "50%+1" rule has not only stabilised the top hierarchy of German football but its merits have had far-reaching effects than what just meets the eye.
"I think that the 50%+1 vote rule has helped German football over the years as it not only created a strong top tier Bundesliga, but a robust overall club football structure in Germany. Surely in Germany as across Europe, the top clubs who play UEFA Champions League regularly have moved away from the rest of the clubs due their extra income, but then you still have clubs like Darmstadt 98, SC Paderborn or Eintracht Braunschweig who can make it from the third/fourth division into the Bundesliga without large scale investments and are given a level playing field without big investors in the background.
“A Darmstadt staying in the Bundesliga is an even bigger upset than Leicester City winning the EPL title. Leicester has transformed over the last few years into a club with potential due to a new stadium, investments into the team and a seasoned manager. Darmstadt, on the other hand, were lucky to stay in the third division (3.Liga) few seasons ago with another club failing the club licensing.
“They went on to gain successive promotion into the Bundesliga and sensationally stayed in the league. Their budget two years ago in the 3.Liga was lower than some of the Indian Super League franchises, just to put things into perspective!
“Such fairy tales are becoming more and more difficult, even in Germany, but they are possible through the robust financial system which allows even smaller teams to sustain themselves. Problems with an investor - of him having financial problems or losing interest - might mean disaster for such football clubs."
Raphael Honigstein, a renowned German journalist, and author termed the debate on the "50%+1" rule as a controversial topic when I reached out to him. However, he was quick to highlight its merit.
"The 50+1 rule obviously restricts investment. The Saudi Sheikhs or the Russians surely wouldn't prefer to be minority stakeholders. This prevents instant greatness. However, this also ensures stability. It prevents clubs from going bust – like in the case of Portsmouth or Leicester. Anything that is organic – understandably – takes a longer time to grow but there are several benefits along the way."
However, if the financial structure is controlled in the way it is in Germany, do the German clubs lose out on attracting big name star signings and an overall global appeal? Well yes!
But while the Bundesliga still fails to match the brand potential of the English Premier League or for that matter the Spanish La Liga – just on footballing terms - it hasn't affected them much at all. Clubs from Germany have been consistently among the top performers in Europe and have often been overachieving than their English counterparts. The national team, as well all know, are the reigning world champions.
So, in a nutshell, Germany is cutting down largely on their ticket revenues to build community engagement; spending way less on superstar signings and player wages and yet somehow is able to compete with the very best. While it may seem as yet another paradox, the outcome is hardly surprising. Arunava explains exactly why -
"Germany has the best youth development system through their youth development centres (NLZ, Nachwuchsleistungszentrum). You therefore have a steady flow of young talent into the league, besides some of Europe's best young players deciding to join the Bundesliga like Renato Sanches (Bayern Munich) or Ousmane Dembele (Borussia Dortmund) rather than going to the EPL or La Liga.
“The quality in the Bundesliga is the highest amongst the top leagues of Europe, only that one would say the names aren't always the biggest."
Well, that is true. While Germany had a minimal number of football academies across the country during their Euro 2000 debacle, that number has considerably increased since then. All their 36 clubs in the top two divisions are running a flourishing academy of their own and the steady influx of quality homegrown talent in the first team as a result of this has helped the clubs in maintaining their financial health and at the same time has catalyzed their footballing success.
Further, the onus for youth development was not simply left to the individual clubs – the German Football association (DFB) themselves introduced their talent development programme in 2003, aiming to identify and then train young players with tactical and specialized knowledge. This proved to be a common platform for local as well as players affiliated with different professional clubs to work and enhance their existing footballing skills. The long-term results were inevitably a “success story” for the German clubs and the national team alike.