50+1: The Club Ownership Issue in the Bundesliga
By: Jan | December 13th, 2007All Bundesliga clubs are organised as eingetragener Verein (eV), which Wikipedia tells me would be similar to a Non-Profit Organisation (NPO) in Britain or a Non-Profit Corporation (NPC) in the US – to give you some orientation.
They often aren’t pure football clubs either, but can cover a variety of sports. So, if you ever fancied the idea of playing for Bayern Munich, lack the football skills but are a respectable chess player, you may try and make it in Bayern Munich’s chess team.
In 1999 the DFL (German Football League) acknowledged the growing economic relevance of football and the legal/tax issues coming with it. The clubs were allowed to spin off parts of the club, like the men’s football team, and turn them into separate corporations. With one important restriction: the original NPO has to keep 51 percent of the shares (50+1 Rule), essentially blocking potential investors from taking over and running the football team.* No other European league is that restrictive. So far 17 of the 36 clubs in the first and second Bundesliga have spun off their football teams. Some of the biggest names like Schalke, Hamburg and Stuttgart remain exclusively NPOs though.
Hanover 96’s president Martin Kind recently started an initiative to get rid of the 50+1 rule, because he thinks, that it harms his club’s economic development and prospects. All in all, according to a survey by the German newspaper Handelsblatt, 7 of the 36 clubs in the first and second Bundesliga want to see this rule gone. Which is still quite a bit short of the two-thirds majority necessary to actually get rid of it. So a lot of lobbying work is still ahead for Kind and friends.
* There are two exceptions: the company founded clubs Bayer Leverkusen and VfL Wolfsburg, for whom a special clause was added. Investors who had supported a club for over 20 years until 1999 were allowed to keep the majority of the shares and continue to run the clubs.
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Comments
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Aha. I’ve often wondered about that- I’d heard there were systems in place to keep someone from just buying a Bundesliga team, but I wasn’t sure what they were.
Posted from
United States
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Why doesn’t the Bundesliga want investors taking over a club? Granted there is the EPL in one extreme, but given the correct set of regulations, it can work out rather well.
Posted from
United States -
I guess the EPL didn’t help reduce prejudices and stereotypes towards investors/eccentric club owners.
Maybe some egos play part in this as well, who fear losing control/power/influence.
A lot of tradition and history plays a part. Clubs have always been, as mentioned, non-profit institutions, who don’t just do football as a business but carry a lot of social responsibility for their city/region. A piece of football culture that is dear to many people, who fear investors would kill this.
You don’t necessarily need investors to run an economically successful club either.
BUT: investors can definitely help accelerate things. There are some potentially great clubs with modern 50000 capacity stadiums in the third and fourth division (Düsseldorf and Leipzig). Those would be ideal candidates for a long term project. A club like Berlin could also speed up it’s economic consolidation with the help of an investor. It can obviously be a very positive thing for the Bundesliga – creating a greater depth of strong teams.
Posted from
Germany -
I’d rather Germany did not unleash the beast that is commercialism. I like the football in Germany and the less corporate it is the better. There are many owners in England who have simply come in to milk the cash cow. It sickens me. Where were these investors in the 1970’s before TV money and the middle classes got interested in the sport?
Posted from
Germany -
It’s true, commercialism does devalue the sporting value. But the fact is, if you want to compete in today’s world, you need a lot of money. Obviously Bundesliga clubs have a lot of talent, and in my opinion, some of the best coaches in Europe, but Bayern have so much more money that it really makes the scale uneven, and even big clubs like Werder and Schalke can’t compete over a long period of time while the smaller clubs struggle in the UEFA Cup.
I think when done the right way, investing is a good thing because football is (unfortunately) a business. And as you said Jan, it’s especially a good option for a small club that that has a long term plan. It did wonders for Lyon, which was a backwater second division club only 20 years ago, but now it’s the 12th richest club in Europe. And yet Lyon have still managed to hang onto their social responsibilities and maintain their local identity. Though most French clubs are still actually “family run,” clubs like Toulouse and Le Mans are taking the Lyon approach, which is gradually inviting investors into the fold.
The key is creating laws to prevent EPL like situations. Again, I’m only speaking from a French perspective, but one way the LFP regulates investors is by rigorously screening every buyer. Marseille’s owner tried to sell the club last year but the LFP blocked it, saying that the buyer didn’t meet their standards. The LFP also doesn’t allow a club to end the year running in the red, so no French clubs have massive debts (or they get relegated). Clubs like MU, Inter, and Chelsea wouldn’t be able to play in the French topflight (now there’s a thought!).
I might be in the minority, but I think greater cash flow into the Bundesliga could make the league more competitive and challenge the hegemony of the big three. It would also allow the smaller clubs to hang onto their talent and not have it sucked up by Bayern.
Posted from
United States -
Yes and no. I think that a lot of football clubs suffer from mediocre/unprofessional management. There are some reasons why Bayern Munich is so rich, and one is because Uli Hoeness is a very good manager. Investors can help professionalise the management of clubs, but a lot of clubs are doing so/have done so on their own, and benefit from it. So, investors can help here, but they aren’t a necessity.
Investors can also accelerate the economic growth of a club with initial cash injections. But it’s not a necessity either.
But I think that over the next few years, the Bundesliga will probably make things easier for investors, but most probably with something more severe than EPL’s laughable “fit and proper person test”.
Posted from
Germany
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