This is how the billion-dollar Bundesliga business works

Bundesliga-FootballClubOwners

The Bundesliga is a great inspiration for millions of people and is worth billions of dollars. The wealthiest clubs like to compare themselves with successful companies, like Siemens and Apple. Are they right?

Of course, football moves millions of people but you might not know that there it moves als dollars. According to the German Football League Association the ‘Ersten Bundesliga’ has a turnover of more than two billion. It’s not strange that this represent Germany’s most important sports product.

Clubs like FC Bayern, Borussia Dortmund and even smaller clubs like Mainz 05 have reached a level of a large medium-sized company. But what is the difference between a football club factory and a car factory? And how well does it work?

Sports Success as a product

The main success for a football club is sports success. To achieve this, a club need good players. They form – at least when they are really good – the heart of the football company. Technically are the high-paid players nothing more than capital assets.

The managing director of Borussia Dortmund Hans-Joachim Watzke says “In a figurative sense, the players are what machines are for an industrial company. Only in football we have the problem that competitors are constantly trying to buy our best machines.”

The Dortmunders have had that experience only recently. A stately 37 million euros has been paid by rival Bayern Munich Westphalia for midfield ace Mario Götze. A enormous amount, even for a club as Bayern Munich.  Anyway, Christoph Breuer suspects another strategy behind the transfer. “It was not just about strengthening their own squad. Bayern Munich also wanted to weaken an opponent, “says the professor of sports economics and sports management of the University of Cologne. Therefore, a strategic price had been paid. Economically, on the other hand, transfers like this scale are a big risk.

The high amount can hardly be calculated. Especially since the value of a single player from the collective team can not be calculated out in detail. In addition, the sports success is not guaranteed. On a regular basis, supposed top transfers turn out to be a disappointment.

Millions of investments despite red balances

But the risk is often supplanted by the clubs. “Although most of the legal form are now set up as a company. Unlike a classic company, however, they are not geared towards economic success, “explains expert Breuer.

It is not about the profit maximization as with a company. For the football companies only the sports success counts. And for it again and again deep red numbers are accepted. In Hamburg, for example, where HSV invested heavily – despite the tense financial situation a year ago – this strategy failed completely.

At that time, playmaker Rafael van der Vaart was hauled out of England for a double-digit million amount , and now he is on the balance sheet of HSV as an asset – and must be amortized over the term of the contract. For example, if an association spends 48 million euros on a player, 12 million euros would have to be amortized on a four-year contract at the expense of the result.

Of course it is a different situation with junior players from their own youth or with players who come free transfer. They are attributed to the so-called hidden reserve, they are included in equity.

Investing in legs

Football is a risky business. The players are not machines. Much can go wrong here, for example, there is a risk of injury or acclimatization difficulties. From a certain sum, the question then arises how manageable the risks are still.

Although there is an elaborate analysis behind each transfer. About special calculation models which added value a certain player can bring for the club. But in the end, however, emotional decisions are often made. The league is not as rational as it seems to be. If you lose five times in a row, it is quickly over with many objectivity.

BVB’s boss Watzke knows only too well how dangerously missing objectivity is. In the middle of the thirties, his predecessors in Dortmund had ignored any precautions and for record sums – overestimated – bought players from Brazil, for example, to be able to play at the top of Europe. This would have nearly plunged the club into insolvency.

Bundesliga wants to become known abroad

If you have a good product, you have to make it known. In the Bundesliga currently is vigorously the advertising drum touched. Less inland, because in this country there is already no more important sports product than football. Hundreds of thousands of people pour into the most modern stadiums in the world, week after week, and millions of Germans look to their television screens.

So the clubs focus on marketing abroad, such as training camps across Europe, short breaks with friendlies in Asia or even the commitment of players from specific countries. Borussia Dortmund, for example, knows every football fan in Japan since the purchase of Shinji Kagawa.

The recently transferred from Hamburg to Leverkusen Heung-Min Son has made the Bundesliga in South Korea known. At HSV, Korean sponsors have entered even because of this player alone. However, with the recent transfer to Leverkusen, companies are likely to continue their journey.

Merchandising revenues are even on record. A good 170 million euros were taken by the 18 Bundesliga clubs of the 2012/2013 season with the sale of jerseys, scarves and bedding, experts estimate. However, expensive football players can not afford expensive new players.

Source: Welt.de / Bundesliga.com

Leave a Reply

Your email address will not be published. Required fields are marked *