Friday, February 17, 2012

Bayern Munich - Opportunities (Let's Make Lots Of Money)

Despite a couple of below par performances in the new year, this season still holds a lot of promise for Bayern Munich. They currently sit in second place in the Bundesliga just two points behind reigning champions Borussia Dortmund, have reached the semi finals of the DFB-Pokal (German Cup) and comfortably won their Champions League group.

Under the guidance of experienced coach Jupp Heynckes, Bayern have returned to something approaching their normal high standards after a particularly disappointing time last season. The loss of influential midfielder Bastian Schweinsteiger through injury has been compensated by the goal scoring exploits of Mario Gómez and a new-found defensive stability.

Heynckes, who has already led Bayern to two league titles in a previous stint as coach between 1987 and 1991, replaced Louis van Gaal last summer. The hapless Dutchman fell foul of the old truism that you are only as good as your last game (or season in his case), as the wonderful achievements of 2009/10 were not replicated. In that happy period, Bayern secured a domestic double and reached their first Champions League final since 2001 where they succumbed to José Mourinho’s Inter Milan.

"Super Mario"

The following year was a very different story, as Bayern only sneaked into the Champions League with the minimum objective of third place, while they were beaten by Schalke 04 in the German Cup semi-finals and crashed out of the Champions League at the first knockout stage. The club’s embarrassment was amply demonstrated by the cancellation of their traditional visit to Munich’s Oktoberfest for the first time in living memory.

Although these results might not seem too bad, they represent a poor effort by Germany’s most successful club. The Bavarians’ glorious history includes 22 league titles (seven since the turn of the millennium), 15 German cups and six European trophies. In fact, Bayern are one of only three clubs to have won all three major European competitions, most notably the Champions League on four occasions, including three times in a row between 1974 and 1976.

Even though Bayern won nothing in the 2010/11 season, their results off the pitch were still mighty impressive, as they reported their 19th consecutive year of profits. That’s a remarkable achievement in the ultra-competitive world of football and is unprecedented among leading clubs. Although their revenue fell back very slightly to €321 million, that still represented the second highest ever generated by the club (only behind last year’s record).

Bayern’s profit after tax dipped slightly from €2.9 million to €1.3 million, though profit before tax actually rose from €5.6 million to €8.8 million. That’s pretty good, especially as profit on player sales fell by €20 million from €27 million to €7 million. In contrast, operating profit improved by €21 million, mainly due to lower player costs: wages decreased €8 million to €158 million, while player amortisation was slashed by €18 million from €51 million to €33 million. Board director Karl Hopfner certainly seemed satisfied, “Despite a difficult starting position – I remind you that we had no notable sporting success last season and faced an ongoing financial and euro crisis – we again recorded a profit.”

It should be noted that these are the group accounts, which include two business divisions: football (FC Bayern München AG) and the stadium (Allianz Arena München Stadion GmbH). Since its inclusion in 2008, the Allianz Arena has had an impact on the accounts with 2011 being the first year that this company contributed a positive result of €0.9 million, as opposed to losses in previous years: 2008 €7 million, 2009 €10 million and 2010 €3 million.

Although it has added commercial revenue of around €40 million (plus higher gate receipts), the expenses have also increased, including annual depreciation of €17 million and sizeable interest payments (though declining from €19 million to €8 million). As the detailed accounts for 2011 have not been published, I have estimated the reduction in interest based on the profit improvement announced in the results press release.

Given the consistent small profits, even as revenue has risen, it looks very much like Bayern make their suit from the cloth available. In other words, they have a deliberate policy of operating at a profit, but budget to use all available funds on strengthening the squad. Whatever the strategy, it’s a notable feat. Indeed, chairman Karl-Heinz Rummenigge was moved to say, “I’m justified in describing the financial side of our club as exemplary.”

It’s certainly far removed from the business model applied by some others, as can be seen by the many huge losses announced last season, e.g. in England Manchester City €219 million and Chelsea €75 million; in Italy Juventus €95 million, Inter €87 million and Milan €70 million. That said, there are a few clubs that did report profits – and higher than Bayern. Real Madrid made €47 million, thanks largely to their enormous revenue; Arsenal €14 million, boosted by property sales; and Manchester United €11 million, where the Reds’ awesome cash generating capacity was enough to cover the interest charges on the hefty debt.

Bayern’s revenue of €321 million was enough to retain fourth place in the Deloitte Money League for the fourth consecutive year, although the gap between the Bavarians and third placed Manchester United (€367 million) has nearly doubled from €27 million to €46 million. Similarly, the Spanish giants have also significantly extended their lead over Bayern, mainly thanks to their individual television deals: Real Madrid (€479 million) from €116 million to €158 million; Barcelona (€451 million) from €75 million to €130 million.

Looked at more positively, Bayern are one of only four clubs to have breached the €300 million revenue barrier and they are also a long way ahead of other clubs in the top ten. Their turnover is a huge €70 million more than Arsenal and Chelsea and around €100 million higher than Milan and Inter, so they are in a very handy position.

One technical aside: Bayern speak of revenue of €328.5m for the group in their financial announcement, but that includes €7.1m of profit on player sales, which is excluded in the revenue definition used by the Money League, leading to the €321.4 million revenue that they list.

In fact, since 2005 Bayern’s revenue growth of €131 million (69%) has only been bettered by Barcelona €243 million (117%) and Real Madrid €204 million (74%). The extent of that achievement is seen by the fact that some clubs have hardly grown their revenue at all in that period, e.g. Chelsea €29 million (13%) and Milan €20 million (9%). Post calciopoli, Juventus’ revenue has actually declined €58 million (27%).

Clearly, currency has an impact of the revenue of English clubs, as Sterling was stronger against the Euro a few years ago, but the underlying trend is not much different.

What is undeniable is how much Bayern’s financial domination against other German clubs has strengthened in the last few years. Although Schalke 04 were the biggest climbers in this year’s Money League, breaking into Europe’s top ten for the first time, their revenue growth of €88 million since 2007 to €202 million was still less than Bayern’s growth of €98 million in the same period.

No other German club came close to this performance with Borussia Dortmund’s resurrection only reflected by €49 million growth (though it will be higher this season with the addition of Champions League money). Revenue at Bayern’s other principal domestic competitors (Hamburg, Werder Bremen and Stuttgart) was virtually unchanged.

Dortmund’s achievement in winning the Bundesliga last season is all the more striking, when you consider the huge disparity in financial firepower compared to Bayern with their revenue being nearly €200 million lower. Put another way, based on the revenue advantage, Bayern should really win the German league every season, though, as somebody once said, it’s a funny old game.

Bayern’s slight revenue reduction of €2 million in 2011 was mainly due to a €12 million decrease in TV money, which was almost entirely due to lower European revenue following an earlier exit in the Champions League. This was offset by €5 million improvements in both match day income and merchandising.

Unlike many other leading leagues that are very dependant on television money, the Bundesliga prides itself on a more balanced revenue mix. The league’s chief executive, Christian Seifert, describes this as “a stable and sustainable business model that relies on three revenue sources.” This means that German clubs tend to receive a higher proportion of their revenue from gate receipts and commercial income. Bayern are no exception to this rule with €72 million generated by both match day and television and €178 million from commercial income.

No, that’s not a misprint: Bayern really do have commercial income of €178 million, comprising sponsorship and advertising €82 million, merchandising €44 million, other commercial activities €14 million and revenue from the Allianz Arena €38 million. That accounts for well over half (55%) of the club’s total revenue. Of the top 20 clubs in the Money League, this proportion is only surpassed by Dortmund (57%). Vorsprung durch Technik indeed.

Commercial revenue grew considerably in 2008 after Bayern bought out the 50% of the Allianz Arena owned by 1860 Munich, who play their matches at the same ground, to take full ownership of the stadium. The €11 million payment saved their city neighbours from the threat of bankruptcy, but, according to Rummenigge, “was not done because of brotherhood or sympathy. It’s in our own self-interest.” Given the additional revenue from naming rights, stadium tours, rent, hospitality and catering, he probably has a point.

Unsurprisingly, Bayern’s commercial revenue of €178 million is the highest in Europe, though Real Madrid narrowed the gap to €6 million last season. It is still a fair way ahead of other commercial powerhouses, such as Barcelona €156 million and Manchester United €114 million. In fact, the commercial income on its own would place Bayern 12th in the Money League, ahead of such luminaries as Manchester City, Juventus, Marseille and Roma.

Bayern’s shirt sponsorship deal with Deutsche Telekom, extended to the end of the 2012/13 season, is one of the most lucrative in world football, only behind Barcelona’s €30 million deal with the Qatar Foundation. There have been varied reports of its value with Deloitte suggesting that there is a guaranteed minimum of €22-24 million, though performance bonuses could take that to €30 million. This structure was confirmed by club president Uli Hoeness, who said that the money “will go up if we’re extremely successful internationally. There could be icing on the cake.” The German media usually report that the agreement is worth €25 million.

Recently Hoeness has confirmed that the club is in sponsorship talks with Gazprom, Schalke’s current sponsor, though he has said that any deal with the Russian energy giants would be “in conjunction with Schalke instead of replacing them.”

Bayern also benefit from attractive sponsorship from two of their largest shareholders, namely Audi and Adidas. The car manufacturer acquired 9.09% of FC Bayern München AG’s shares in 2009 for €90 million as part of a commitment to invest €200 million in the club until 2019. The remaining €110 million represents sponsorship of around €10 million a year.

Adidas acquired a similar shareholding in 2002 for €77 million and have been the club’s kit supplier for an eternity. They have extended their agreement for a further eight years until 2020, paying a reported €25 million annually. That is only exceeded by the €30 million paid to Manchester United and Barcelona (both Nike), Real Madrid (Adidas) and Liverpool (Warrior Sports).

According to the club website, on top of the main sponsor and kit supplier, Bayern have 10 premium partners, who each pay €4-8 million a year (per Handelsblatt): Audi, Coca Cola, HypoVereinsbank, Imtech (Hamburg’s stadium naming rights sponsor), Lufthansa, Paulaner, Samsung and Yingli Solar (the first time a German club has had a Chinese partner). In addition, they have 13 classic partners (paying €2-4 million) and 4 food partners (€500,000). Furthermore, the stadium naming rights have been sold to Allianz for around €90 million in a 15-year deal, so are worth €6 million a year.

"Schweinsteiger - Hand in glove"

The merchandising revenue of €44 million is also hugely impressive, as the club profits from some high profile players, including German internationals such as Schweinsteiger, Gómez and Thomas Müller, plus foreign stars like Franck Ribéry and Arjen Robben.

Of course, not everything that Bayern touches turns into commercial gold, as was seen by the recent fiasco, when the club announced that a “spectacular transfer” would be announced at a news conference, only to disappoint their fans when they merely revealed a new Facebook application.

Hoeness greeted the club’s commercial success with typical modesty, “In sponsoring we are number one in Europe”, while Rummenigge was only slightly more restrained, “We are one of the biggest and most valuable brands in world football.” There is no doubt that Bayern benefit from their position as the undisputed leading club in Europe’s largest economy, as Germany’s strong corporate market enables Bayern to negotiate numerous money-spinning contracts.

Paradoxically, they are also helped commercially by the weak digital television market, which means that German clubs are televised more frequently on terrestrial channels than their counterparts in England, Spain and Italy, thus providing more exposure for their sponsors. As the old saying goes, it’s an ill wind that blows no good.

Nevertheless, the TV rights for German football are considerably lower than the other major leagues. The current deal is worth only €412 million a season, which is around a third of the value of the Premier League contract (€1.3 billion), and also less than Serie A €1 billion, Ligue 1 €0.7 billion and La Liga €0.6 billion. The domestic rights are bad enough, but the Bundesliga has really failed to market itself globally, so it gets only €40 million a season for overseas rights compared to €550 million for the Premier League.

Hoeness has bitterly complained about the need for a better TV deal. When the three-year contract is renewed in 2013, it is likely to be higher, but it is questionable whether the increase will satisfy the Bayern board, as recent reports suggest that the rights might be sold for €450 million, an increase of less than 10%.

Unfortunately, we do not know exactly how much Bayern received from the Bundesliga in 2010/11, but they got €28 million the previous year. In the 2009/10 accounts, the club estimated that their share would be €30 million. To place that into context, the club finishing bottom of the Premier League, West Ham, received around €45 million, while the winners, Manchester United pocketed almost €70 million.

TV revenue in the Bundesliga is largely divided among clubs via a points system based on their league position over the past four years, though some money is also allocated per the number of games televised live.

Performance is weighted in favour of the more recent years, so last season a factor of 4 was applied to 2010/11, 3 to 2009/10, 2 to 2008/09 and 1 to 2007/08. However, a form of equality is then applied, as the club with most points from this algorithm only receives twice as much money as the club that has the lowest number of points. In this way, as top club in 2010/11 Bayern received €24 million for performance, which was double the €12 million for last placed St. Pauli.

Bayern’s allocation from the Champions League decreased €12 million from €45 million to €33 million, as they went out at the last 16 stage, compared to reaching the final the previous season. The importance of Europe’s flagship competition was emphasised last week when a report by La Gazzetta dello Sport revealed that Bayern had earned a staggering €347 million since 1992, only behind Manchester United.

This was also seen in 2007/08 when Bayern only qualified for the Europa League and received the relatively paltry sum of €5 million, even though they were semi-finalists. The Europa League’s status as poor relation to the Champions League was confirmed last season when Bayer Leverkusen only received €7 million, the 4th highest in that competition.

Therefore, Bayern will be gratified that Germany’s number of places in the Champions League has increased from 3 to 4 (at the expense of Italy), due to the changing UEFA coefficients. However, this might prove to be a double-edged sword, as it could mean that Germany’s TV (market) pool has to be shared between more clubs. The impact can be seen in 2008/09, when Bayern secured the largest slice of the TV pool (€21.5 million) in Europe, as Germany’s portion only had to be shared between two clubs that year.

"Ribéry - Franckly, Mr. Shankly"

The other aspect of the TV pool that is little understood is the methodology used to allocate this element, which is as follows: (a) Half depends on the progress in the current season’s Champions League, which is based on the number of games played. (b) Half depends on the position that the club finished in the previous season’s domestic league. Thus, Hopfner has already warned that Bayern’s share this season will only be 15% following last season’s third place, compared to the 50% received as champions.

Of course, qualifying in fourth place is also not without danger, as this only qualifies a team for the play-off round, which might throw up an awkward opponent, e.g. this season featured a match between Arsenal and Udinese.

Bayern’s match day income rose €5 million from €67 million to €72 million, even though the number of home games dropped from 25 to 23. This was due to higher ticket prices, more friendly matches and more attractive opposition in the domestic cup.

Even though Germany has a well deserved reputation for low ticket prices, Bayern still have the sixth highest match day revenue, though they are still miles behind Real Madrid €124 million, Manchester United €120 million, Barcelona €111 million and Arsenal €103 million. Part of the reason for the shortfall is that Bayern play less games, e.g. only 17 in the Bundesliga compared to 19 in the other major leagues. That in itself is worth €6.2 million, as Bayern earn around €3.1 million a match.

Compared to other German clubs, Bayern are once again in a league of their own, earning €30 million more match day income than Hamburg and twice as much as Schalke 04 and Borussia Dortmund. This was helped by the move to the Allianz Arena in 2005/06, which increased attendances from 53,000 to 69,000 today, significantly boosting match day revenue.

Bayern’s near capacity average attendance is the fourth highest in Europe, only beaten by Barcelona, Borussia Dortmund and Manchester United. In fact, eight of the top 20 European attendances last season came from German clubs, partly due to what Christian Seifert has described as the clubs’ fan orientated culture (low ticket prices), though this is also helped by more standing areas.

There’s little doubt of the Bavarians’ enduring popularity, as is also seen by the number of club members rising from 162,000 last year to what Hoeness described as an “unbelievable” 171,000.

On the cost side, the wage bill was cut by 5% (€8 million) from €166 million to €158 million, though some analysts expected the reduction might be even more, as director of sport, Christian Nerlinger, had spoken of trying to lower the wage bill, while performance bonuses had inflated the figure the previous season after the run to the Champions League final and the domestic double.

It should be noted that I have estimated the total wages bill by taking the “football” wages of €156.3 million and adding €1.4 million for the Allianz Arena, based on previous years.

From looking at the wages to turnover graph, it is clear that Bayern target a healthy ratio of 50%, as this has fluctuated in a tight band between 48% and 52% in the last six years. Since 2006, wages have only grown by €51 million, while revenue surged €117 million.

Bayern have taken a balanced approach to their salary structure. Many of the players are on comparatively low salaries, especially those developed in-house. However, the club is willing to pay high salaries for top talent, as explained by the former England international, Tony Woodcock, who played in Germany during the 1980s, “They have attracted Franck Ribéry, Mario Gómez and Arjen Robben. To get them, you have to offer good rates. Bayern realise this.” This was supported by the list of the top 100 footballers’ salaries last year, which included five from Bayern (Ribéry, Schweinsteiger, Robben, Klose and Gómez).

Nerlinger explained that “every case has to be dealt with individually and according to the market.” Bayern’s selective approach was confirmed by Rummenigge, “We’ll never pursue a risky business strategy, but we will continue to sign high quality players. We’ll invest in quality, not quantity. We’d rather have one more Ribéry than three surplus players.”

Domestically, Bayern evidently have the highest budget, e.g. Borussia Dortmund’s wage bill last season was almost €100 million lower at €62 million, but most of their peers abroad pay more, namely Barcelona €241 million, Real Madrid €216 million, Milan €193 million, Manchester City €193 million, Inter €190 million, Chelsea €186 million and Manchester United €169 million. That is based on the exchange rate used by Deloitte for the Money League, so the English clubs’ wage bills would have been even higher, if a more up-to-date rate had been used.

Many of these clubs can cover such burdensome wage bills with their high revenue, so they end up with reasonable wages to turnover ratios, e.g. Real Madrid 45%, Manchester United 46% and Barcelona 53%, but others are struggling, most notably Manchester City 114%.

After rising significantly in 2010 to €51 million, player amortisation fell €18 million back down to €33 million in 2011. This is relatively low for a major club, reflecting Bayern’s ability to progress academy players to the first team, as well as lower transfer spend than some clubs abroad. To place this into context, it is around a third of the amortisation at big spending Real Madrid and Manchester City. However, this expense should increase this season, according to Hopfner, “We were active in the transfer market at the beginning of the season, which means we have to write down higher sums for transfer fees in the current year.”

"Neuer kid in town"

For non-accountants, amortisation is the annual cost of writing-down a player’s purchase price, e.g. Manuel Neuer was signed for €22 million on a 5 year contract, but his transfer is only reflected in the profit and loss account via amortisation, which is booked evenly over the life of his contract, so €4.4 million a year (€22 million divided by 5 years).

Neuer’s signing is an example of Bayern’s capacity to spend big, as noted by Rudi Voller, sporting director at Bayer Leverkusen, “We should not close our eyes when it comes to Munich’s financial strength. They purchase a goalkeeper for €22 million and he only has a one-year contract with Schalke. Not even Real Madrid have done such a thing.”

Bayern have net spend of €236 million in the last decade with only one season (2007/08) showing net sales. It has been a fairly consistent pattern, as they spent €96 million in the five years up to 2006/07, rising to €139 million in the following five years.

This is a key aspect of Bayern’s ability to maintain competitiveness at the top of the Bundesliga. In fact, their gross spend of €44 million last summer accounted for around a third of the league’s total expenditure, including Neuer from Schalke, Jérôme Boateng from Manchester City €13.5 million, Rafinha from Genoa €5.5 million and Nils Petersen from Cottbus €2.8 million.

An element of rebuilding may have been necessary following van Gaal’s departure, but it is nothing new under the sun for Bayern. Over the last three seasons, their net spend of just under €100 million is about twice as much as the other Bundesliga clubs put together, bringing to mind the expression, “If you’ve got it, flaunt it.”

There are few signs of this slowing down, though Bayern’s status as the automatic destination for any top German talent took a blow when Marco Reus opted to move from Moenchengladbach to Dortmund. However, there were special circumstances here, as Reus grew up as a Dortmund fan and his parents live in the area. In any case, this allowed Bayern to snap up the exciting Swiss Xherdan Shaqiri for a bargain €11.6 million.

According to Hoeness, Bayern will have an additional €20-30 million a year to spend on transfers once the stadium debt is repaid. Some people are under the impression that Bayern have no debt, which is indeed the case for the football club, as confirmed by Hopfner, “We can state without reservation that the AG has no debts or bank liabilities whatsoever.” However, the group does have debt from the Allianz Arena company, which was used to finance the €346 million needed to build the stadium.

As the full accounts have not yet been published, we only know that total liabilities (bank debt, trade creditors and other creditors) decreased by €65 million from €243 million to €178 million, but it is reasonable to assume that bank debt has similarly come down by a substantial amount.

At the 2010 AGM, Hopfner informed the shareholders that €176 million had already been repaid: €90 million from Allianz itself with the remainder being funded by Adidas’ equity injection. According to Rummenigge, the €90 million investment from Audi was also largely going to be used as repayments on the Allianz Arena, “so our stadium will be free of debt considerably earlier than originally planned.” Hoeness has said that this should be achieved within six to seven years.

Bayern’s liquidity has already improved from €64 million to €129 million in 2011, so the club’s balance sheet is in great shape, encouraging Hoeness to brag, “When we’ve paid off the debt for the stadium, we’ll be the richest club in Europe.”

"Müller - Tommy gun"

They have equity of €268 million, which actually under-states their assets, as players are only shown at net book value in the accounts. In 2010, this equated to €83 million, while the market value is clearly higher. The respected website Transfermarkt has this at €360 million, though some values seem on the high side, e.g. €42 million for Mario Gómez.

A club as well run as Bayern should be one of the main beneficiaries of UEFA’s Financial Fair Play regulations, which encourage clubs to live within their means. Indeed, at the AGM Hopfner stated, “We have more than met UEFA’s financial fair play criteria.” Hoeness added that FFP would be “good for clubs such as Bayern and Arsenal, who are financially proper and make profits.”

For Bayern, it is almost a morality issue. After Bayern were beaten by the loss-making Inter in the Champions League final, Hoeness said, “I would not be happy to win like that. If I win a Champions League, I want to be in profit.” In the past, he has also put the boot into other clubs, saying that if FFP is not enforced, “It will be a disaster, because then all those crazy guys like Hicks and Gillett and the Glazers will be right.”

"Lahm to the slaughter"

Rummenigge has often been on the warpath too, particularly against one club in the north-west of England, “Let’s take the example of Manchester City. How does it work when you write about a €200 million loss? The financial doping must come to an end and lead to a virtual ‘equality of arms’ between the clubs.” That’s why they have argued that it would be a “total disaster” if UEFA’s bite failed to live up to its bark.

Others have suggested that the reason that Bayern are so keen on FFP is that it will further advantage those clubs that earn the most revenue, as their budgets will be correspondingly higher. The thrust of their argument is that if clubs are not allowed to have a benefactor investing substantial sums, it would be almost impossible for them to break the current monopoly. This is the line taken by Manchester City against the new rules, “This suggests that the big clubs, which make the most money, must remain the big clubs and that the status quo must remain.” On the other hand, for every Sheikh Mansour, there is a Craig Whyte waiting in the wings, as Rangers have discovered to their cost.

"Hoeness - Everybody's happy nowadays"

As part of the German rules, clubs have to provide a balanced budget before each season in order to receive a license, which does not completely prevent clubs falling into financial difficulties (see the problems experienced in the past by Dortmund and Schalke), but it undoubtedly helps. Indeed, the Bundesliga annual report for 2011/12 noted that 12 of the 18 clubs were profitable. To place that into perspective, only four of the 20 Premier League clubs reported a profit in 2009/10.

Conservatism is also endemic in the Bundesliga ownership model, known as the “50+1” rule, whereby club members must own a minimum of 50% of the shares plus a deciding vote. The idea is that this prevents an unwelcome owner from taking control, but it does allow considerable scope for private individuals or businesses to invest in the club, as is the case at Bayern with Adidas and Audi both featuring on the shareholder register.

However, continuity is a byword for success at Bayern, as seen by the club’s executive management, which largely comprises former players: the legendary “Kaiser”, Franz Beckenbauer, was the club’s president until last year; his replacement, Uli Hoeness, was the club’s General Manager since 1979; Karl-Heinz Rummenigge is the Chairman; while Christian Nerlinger is the new boy, trying to fill the large hole left by Hoeness climbing up the corporate ladder.

"Kroos control"

Despite the presence of so many of the old guard, Bayern’s model is equally reliant on their academy, which is one of the best in Germany. This was amply proved when they fielded no fewer than four homegrown players in the Champions League final: Philipp Lahm, Bastian Schweinsteiger, Holger Badstuber and Thomas Müller. Since then, Toni Kroos has also made a great impact.

So, what of the future for Bayern? Financially, everything looks rosy in this Bavarian garden. However, Hopfner did sound a cautionary note, when he pointed out that commercial success was still dependant on sporting success on the field of play. While Hoeness allowed himself the luxury of describing the club as “an oasis of happiness”, Hopfner surely spoke for all the fans, when he put away the calculator and got the ball out, “A year without a trophy is a lost year. We don’t want that twice in a row.”


  1. interesting as always :)
    however this part "... but most of their peers abroad pay more, namely Barcelona €241 million, Real Madrid €216 million, Milan €193 million, Manchester City €193 million, Inter €190 million, Chelsea €186 million and Manchester United €169 million..." does not take into account the fact, that in the wage bill of Barcelona for example, there are inter alia the wages of the Basketball Team (~18 mln - numbers off the top of my head), the Handball Team (~6 mln), the Futsal Team (~4 mln), the Hockey Team (~2 mln) included and hence the comparison is slightly misleading.

    1. Yes, that's fair comment. I took total wage bills for each club, but Barcelona's does include around €37m for other sports.

      Another important factor is the level of bonus payments, which can vary hugely between seasons. Unfortunately, not every club analyses this separately.

    2. Good point. Bayern has other sports divisions too. Particularly the Basketballers have seen heavy investment over the last two/three seasons to push them into the first division, where they are playing for the first time this season. Are those numbers included in the wage bill?

    3. Nope, those numbers are not included. The "FC Bayern AG" was solely founded for football purposes. The Basketball division (wages ~6 mln) is included in the e.V. ("eingetragener Verein" = registerd society) which is the main shareholder of the AG (~81%).

  2. Fantastic as always. Would love to see this wage structure implemented at my club, the 2nd to the throne of self sustaining clubs, Arsenal. On another note, perhaps when FFP does come in you could do a blog dedicated to that and offer your opinion re it being the saviour of responsible clubs or protecting the Spanish clubs.

  3. Hi Mr Ramble,

    Quick question regarding the ammortisation of the fee paid for a player.

    If a club pays €20m for a player and gives him a 5 year contract, the amount recognised in the accounts is €4m per year.

    However if the player then signs new 4 year deal (after 3 years of his contract), would the rest of the amount to be ammortised across the rest of the original contract (2 years remaining) or the new one?

  4. Excellent post, it's very interesting to see how their wage structure works and I think because of this, you can see that a particular club is being responsible with their money or not.

  5. My blog, wrote about the bubble football is in right now and whether it is about to burst, give a read if you like :)

  6. Hello mr ramble. do a piece on why seria a collapsed in such a spectactular fashion and whether the premier league is heading the same way.

  7. Great article. Hands down the best financial football website out there. I read your every post since I'm a big fan of football finances and football of course.

    Nice to see you write about my favorite team again.

  8. TV rights money for Bundesliga look way down compared to France & Spain .
    That's weird

    The commercial income is impressive though for most German clubs

  9. Rambler,

    Great article as usual. I was wondering since you are in Switzerland, albeit in Zurich if you could let us know what the reaction of Swiss fans was to Shaqiri moving to FCB. I thought it was a bit odd for him to go for only 11 million. Is there any info I am missing (does Basel get something in return, or do the clubs have a relationship to where they would get loan players in return)?


  10. great post as always..

    i also have some interest in that question above me regarding the amortisation. it can put every purchase in the world in a different light. (i am trying to better understand the Carroll move to my liverpool).

    do you have a post somewhere about the issue?

  11. What a great report!!!! Did you find also the official 2011 balance of Bayern Munchen AG? I tried to find it online , but Google is not always the answer.


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