Football is a passion for millions of fans around the world. But it’s also very big business here in Germany.
The Bundesliga recently released a report on its finances, Report 2015: The Economic State of German Football. It makes for fascinating reading — and shows just how big of a business football has become.
Just consider the following 17 facts about the Bundesliga’s role in the German economy:
From the 2003-2004 to 2013-2014 seasons, Bundesliga revenues grew 124.8% to €2.45 billion — growth of 8.4% per year. That’s a higher growth rate than 23 of the 30 stocks listed in the DAX!
Television is the biggest single contributor of revenues — 28.53% (€619.9 million). You can see the overall revenue picture in the pie chart below.
And with a new global broadcast deal beginning next season, international television/media revenues are set to double.
Next season, Twenty-First Century Fox Inc (NASDAQ:FOX) and the Deutsche Fussball Liga (DFL) begin a five-year agreement in which 21st Century Fox has broadcast rights to Bundesliga matches across about 80 markets worldwide, including the United States.
According to Report 2015, “For the coming rights period, takings from marketing media rights internationally are expected to again more than double, resulting in revenues of more than €150 million per season from 2015-16 onwards.”
Of the 18 Bundesliga clubs, 13 finished with an after-tax profit (72%). Of the 18 Bundesliga 2 clubs, 11 reported an after-tax profit (61%).
The Bundesliga’s top club, FC Bayern Munich, reported record revenues for the season of €528.7 million. Bayern’s revenues represent 22% of the entire 18-team Bundesliga take. (Bayern’s finances are so strong that it paid off its Allianz Arena stadium loan 16 years early.)
Bundesliga clubs collectively spent €120.15 million on youth academies in 2013-2014, the highest total ever. Only 23 German-domiciled publicly traded companies spent more on R&D in the past 12 months.
That youth academy spending is paying off. According to a Telegraph article from last July, “Only around a third of Premier League players are English, while 60% of players in the Bundesliga are German.” (There’s also the World Cup win to consider!)
Bundesliga clubs employed 31,344 people in full-time, part-time, or a contract capacity. More than half of those employed — 52% — were either contract caterers or contract security staff.
Bundesliga and Bundesliga 2 clubs paid €501.3 million to the German Treasury in the form of corporate income, trade, and value added taxes.
More fans watched Bundesliga matches at a stadium than in any other top-five league in Europe. A total of 13,038,305 paying spectators watched Bundesliga football in 2013-2014 — an average of 42,609 paid admissions per match.
According to Capital IQ, Borussia Dortmund GmbH & Co.KGaA (ETR:BVB) (FRA:BVB), the only publicly listed football club in Germany, has achieved 19.1% annualized revenue growth over the past five years — a period marked by the first of its two consecutive league titles.
In its first year of existence (2005-2006), spectators consumed 700,000 sausages and 3,000,000 liters of beer at Allianz Arena, home to Bayern Munich and 1860 Munich.
In their excellent book Soccernomics, Simon Kuper and Stefan Szymanski crunched the numbers on 40 English football clubs from 1978-97 and found that the more money spent on players’ wages, the better the team performed. In fact, they found that “the size of their wage bills explained a massive 92% of variation in their league positions.”
When the numbers were updated for them for the period 1991-2010, “wage spending still explained 87% of the variation in league position.”
The same would appear to hold true for the Bundesliga. The top six clubs last season — Bayern Munich, Borussia Dortmund, Schalke 04, Bayer Leverkusen, VfL Wolfsburg, and Borussia Mönchengladbach — on average spent more on player wages than the rest of the league combined.
- The top six clubs spent an average of €87.6 million on payroll (player) costs.
- Clubs 7-12 spent an average of €32.4 million on payroll (player) costs.
- Clubs 12-18 spent an average of €30.0 million on payroll (player) costs.
- For comparison, clubs 1-6 in Bundesliga 2 spent an average of €11.2 million on payroll (player) costs.
Four Bundesliga clubs are among the 20 Forbes world’s “most valuable” football teams: Bayern Munich, Borussia Dortmund, Schalke 04, and Hamburg SV.
That’s despite the fact that Schalke 04 and Hamburg SV have not won a league title since 1958 and 1983, respectively.
Top-tier German football clubs have long shown financial prudence. According to the Bundesliga’s media guide, “None of the clubs has been forced into administration during any season in the 51 years of the Bundesliga’s history.”
By contrast, over in England, Portsmouth entered administration in 2010, when it was still in the Premier League.
With the 21st Century Fox deal set to begin next season, Bundesliga matches will get far more exposure in the U.S. and elsewhere outside Germany. Sponsors — many of them home-grown German blue chips — stand to benefit from Bundesliga expansion abroad.
Bayern Munich, for example, opened a U.S. office last year. The club is minority-owned by Audi AG (ETR:NSU) (FRA:NSU), Allianz SE (ETR:ALV) (FRA:ALV), and Adidas AG (ETR:ADS) (FRA:ADS) (each owns 8.3%). Upon announcing its New York office, U.S. division Managing Director Rudolf Vidal told the New York Times, “With partners like Audi, Allianz, and Adidas, they wanted us to come to the United States first.”
And finally, according to a McKinsey study titled The Economic Impact of the Bundesliga, “Professional football generates added value of more than €5 billion every year, thus contributing €1 in €500 to the gross domestic product of Germany. That’s the equivalent of the gross domestic product of a medium-sized German city.”
And McKinsey wrote that in 2010 — since then, Bundesliga revenues are 38% higher.
Ein erneutes Aufflammen von Corona in China, Krieg innerhalb Europas und eine schwächelnde Industrie in Deutschland in Zeiten hoher Inflation und steigender Zinsen. Das sind ziemlich viele Risiken, die deinem Depot nicht guttun.
Hier sind vier Schritte, die man unserer Meinung nach immer vor Augen haben sollte, wenn der Aktienmarkt einen Rücksetzer erlebt.