The Bundesliga cash cow
August 24, 2012
The 2012/13 Bundesliga season, the 50th since the league's inception, will make records in the history of German football.
"The Bundesliga is on its way to becoming the dominant force in Europe," Emmaneul Hembert from the consulting firm A.T. Kearney in Düsseldorf said, attributing this primarily to the inking of a new TV deal.
The Bundesliga struck a new deal on TV rights for German league matches last April. The league will now rake in 2.5 billion euros ($3.14 billion) over the next four years, which equates to 625 million euros per season. Pay-TV channel Sky Germany will pay the lion's share, receiving most of the broadcast rights in return.
The new level of income is almost 50 percent greater than in previous seasons. Economist Stefan Ludwig also considers the new rights deal to be a major success. However, as director of the Sport-Business-Group at the international consultancy firm Deloitte, Ludwig points out that the Premier League in England still receives a considerably larger sum. That's why Ludwig believes that the 'Premiership' will remain in first place "for the coming years."
Some for all, and all for some
The economic might of a league is made up of "revenues from television, sponsoring and spectators," Ludwig said in an interview with DW. When you combine all these elements together, then the Bundesliga is a clear second among the "Big Five," the top soccer divisions in England, Germany, Spain, Italy and France.
Ludwig believes that the Bundesliga's new-found advantage over the Primera Division in Spain is relatively safe, "because Spain has the only league that still has a decentralized television rights arrangement." Every club is individually responsible for selling the rights to their own games - meaning that the league's giants, Barcelona and Real Madrid, can ink lucrative individual deals while the rest of the division is forced to fight over scraps.
"Things are different in the Bundesliga. There is a relatively good spread among the 18 Bundesliga teams, based on the principle of solidarity," Ludwig said. The Bundesliga collects the television revenues and then distributes them among the clubs, with the amounts calculated based on how the teams fare in the league. But even the sides mired in mid-table or fighting relegation get a share. Sides like Bayern Munich, Borussia Dortmund and Schalke are still far better off than clubs like Mainz or Augsburg, but nobody goes home empty-handed. And ensuring some degree of financial parity in a league usually makes for closer competition - for more exciting football.
Counting the pennies
One thing that sets the Bundesliga apart from the rest of the "Big Five," in Ludwig's view, is the sober approach to club finances. German clubs have to undergo a strict licensing process - and if they can't present a sustainable budgetary concept, they're unlikely to qualify for a license.
The approach to this issue is rather more relaxed elsewhere, and remains that way despite governing body FIFA's best efforts with its new Financial Fairplay initiative. Ludwig thinks people forget too easily that German sides really are obliged to spend only a portion of their revenues on their high-profile stars.
"We know there are some European clubs who spend more on their players than they generate in revenue. And every side has extra costs beyond its squad," Ludwig said.
Relative restraint on transfer market
Germany also tends to lag behind its rival leagues when it comes to big-money signings. Then again, the Bundesliga is very likely to set a new record in this transfer window, which is open until the end of September. So far, the 18 Bundesliga sides have splashed out 186 million euros on new players, according to the calculations of the German DPA news agency. The current record, from 2007, stands at 194 million euros. One more - seemingly likely - extravagant Bayern Munich deal would tip the scales.
But on an international level, even this record outlay is on the stingy side. The 20 Premiership teams in England have already doled out 300 million euros, Italy's Serie A has spent 280 million euros and the unusually decadent French sides have also parted with 198 million euros to date.
Fan funding
Ludwig also stresses the importance of the Bundesliga to the broader German economy. For an indication of its significance, he says one needs only look at the money the leagues generate directly. The Bundesliga brings in around 1.7 billion euros per year, "and if you add on the second division, then it's over 2 billion euros."
On each of the 34 Bundesliga match days, almost 400,000 football pilgrims head to the various games. And they don't just pay for their tickets. They eat and drink, buy flags, banners, jerseys and scarves. Travelling fans heading to away games usually have a particularly large outlay.
"They spend money on the travel, on drinks, on accommodation. That's an enormous factor," Ludwig said.
Fans are a crucial component of the Bundesliga's success, no other league in Europe is able to attract so many spectators - although Germany's comparatively relaxed laws permitting terraces where fans stand up play a role in this.
In England, an average of 35,000 fans attend a Premier League game, the average figure lies between 20,000 and 28,000 in Spain, Italy and France. The Bundesliga, meanwhile, attracts 42,000 fans on average to each top-flight match - putting it in a league of one.