Bundesliga Financial Results Show Continued Improvement Against Rivals

Stefan BienkowskiFeatured ColumnistFebruary 5, 2014

DatawrapperMatthias Schrader/Associated Press

The Bundesliga has published its financial reports, and with it the welcome news of the league's ninth consecutive turnover record as the German top division continues its quest to become one of the top franchises in European football. 

In total, the turnover of the 18 clubs and parent companies of the represented clubs within the top division increased to 2.17 billion, jumping up by a healthy 4.4 percent from last year's record-breaking total.

At the announcement of the latest financial news, Christian Seifert, CEO of the DFL, stated:

“The Bundesliga is succeeding in the split between top level sports performance and economic rationality, especially compared to others in Europe."

A statement that would initially sound quite tongue-in-cheek, but as we go through the figures of how the Bundesliga is structured on a corporate level, it becomes all too apparent that such 'economic rationality' is exactly why we have such a strong "sports performance" in the first place. 


Where Is the Money Coming From?


As the above graph shows, the relative nature of the Bundesliga's main revenue avenues are quite balanced in nature and the key feature of the league's financial success. 

According to the Deloitte financial report of 2011/12 (the last published figures), the English Premier League's revenue was made up primarily of TV deals to show the relevant games across the world. These TV deals accounted for no less than 50 percent of the league's total revenue. 

Yet as we can see, the Bundesliga's TV dealsas impressive and rapidly increasingly as they may be, as reported here by the BBConly account for 29 percent of the total revenue within the league, as the German top division puts a greater emphasis on corporate deals, as advertising, merchandising and other deals take up just under 50 percent, from one club to the next. 

This method of generating income is exactly what Seifert was referring to as "economic rationality," by the means of the league doing very well not to rely too heavily on one specific type of revenue. As we have seen throughout Italy over the course of the past decade, as reported in this article by Eurosport, the heavy reliance on TV revenue is a dangerous game to play in the ever-evolving world of football.

One day you may be top of the pops with the best clubs and players in the world, and then at the bottom the next. And with that switch comes a very drastic change in the amount of money people are willing to pay for your product. Stick all your eggs in that basket, as the Premier League has done, and you run the risk of a very quick turnaround in your financial fortunes. 


The Cost of Wages


It would be easy and slightly stereotypical to suggest that the German model of business was ever so efficient, but as we look at the numbers with regards to how much each league is splashing out on player wages, it seems as though it may be the only way to define such a contrast in results. 

Between 2009 and 2013, the Bundesliga's overall revenue rose by 22.7 percent, yet the total amount spent on player's wages throughout the division only rose by 13 percent—meaning the total amount spent on wages from the total revenue has fallen from 42.4 percent in 2009 to where it is now at 39 percent. 

As the graph above shows, the Bundesliga leads the way with a remarkable low figure of just 39 percent of total revenue spent on wages for players and coaching staff throughout last year's financial year (while England, France and Italy all struggle to keep their own ratio at 70 percent). Yet it is worth pointing out that the figures for the other three leagues are from the last available reports, which were last year, meaning that an updated graph may be a little less contrasting in the gap between the divisions. 

Still, the point is well made. As suggested in Deloitte's own financial report from last year, the average Bundesliga club spent just €53 million on wages, while the average Premier League club spent almost double that with a figure of €102 million. The English top division may be making more money than its German equivalent, but it is also spending more. 


The Future

Dr. Reinhard Rauball, president of the German League Association, summed up the feel-good feeling of the latest results when he stated the following in the 2014 Bundesliga report:

"The Bundesliga with its high investements in 'concrete layers instead of football players' has created long term value."

Dr. Rauball was, of course, referring to the fact that the value put on the German clubs and Bundesliga as a whole are greater determined by the equity within each club—i.e. the difference between what the clubs own and what is owned by their investors—rather than their day-to-day successes on the pitch and through the value of their squads. 

Total assets in the German football leagues rose to a record €2.1 billion in 2013, and of that figure, 89 percent is attributed to the 18 Bundesliga clubs themselves. In a financial sense, this league is in a very comfortable position. 

Attribute that to the ongoing commitment to youth development that has seen the 18 Bundesliga clubs contribute 816.72 million to youth projects throughout the country since 2001, and you have a very clear picture of just how well German football is doing at the moment.

It may not be as flashy as the Premier League, and it may not have Lionel Messi or Cristiano Ronaldo, but the Bundesliga does have the second-largest TV deal in world football and four remaining sides in a Champions League that was contested by an all-German final last year. This league is ticking along just perfectly.