Crisis? What Crisis? Football in Germany
Identifieur interne : 001165 ( Istex/Corpus ); précédent : 001164; suivant : 001166Crisis? What Crisis? Football in Germany
Auteurs : Bernd Frick ; Joachim PrinzSource :
- Journal of Sports Economics [ 1527-0025 ] ; 2006-02.
Abstract
The purpose of this article is to describe the financial situation and the development of club finances of the German “Bundesliga”. Using data provided by the football association and data collected from a number of different sources we find that the majority of the teams are economically well established: Revenues have increased steadily, liabilities are under control, and player salaries have considerably declined. The ongoing debate about the liabilities of the German soccer teams is clearly misleading because two largemarket teams are principally responsible for the overall increase of the clubs' liabilities.
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DOI: 10.1177/1527002505282868
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Football in Germany</title><author><name sortKey="Frick, Bernd" sort="Frick, Bernd" uniqKey="Frick B" first="Bernd" last="Frick">Bernd Frick</name><affiliation><mods:affiliation></mods:affiliation></affiliation></author><author><name sortKey="Prinz, Joachim" sort="Prinz, Joachim" uniqKey="Prinz J" first="Joachim" last="Prinz">Joachim Prinz</name><affiliation><mods:affiliation>Witten/Herdecke University</mods:affiliation></affiliation><affiliation><mods:affiliation>Witten/Herdecke University</mods:affiliation></affiliation></author></analytic><monogr></monogr><series><title level="j">Journal of Sports Economics</title><idno type="ISSN">1527-0025</idno><idno type="eISSN">1552-7794</idno><imprint><publisher>Sage Publications</publisher><pubPlace>Sage CA: Thousand Oaks, CA</pubPlace><date type="published" when="2006-02">2006-02</date><biblScope unit="volume">7</biblScope><biblScope unit="issue">1</biblScope><biblScope unit="page" from="60">60</biblScope><biblScope unit="page" to="75">75</biblScope></imprint><idno type="ISSN">1527-0025</idno></series><idno type="istex">CA2BBF3606186FAD70B558977A11D994CBC77119</idno><idno type="DOI">10.1177/1527002505282868</idno><idno type="ArticleID">10.1177_1527002505282868</idno></biblStruct></sourceDesc><seriesStmt><idno type="ISSN">1527-0025</idno></seriesStmt></fileDesc><profileDesc><textClass></textClass><langUsage><language ident="en">en</language></langUsage></profileDesc></teiHeader><front><div type="abstract" xml:lang="en">The purpose of this article is to describe the financial situation and the development of club finances of the German “Bundesliga”. Using data provided by the football association and data collected from a number of different sources we find that the majority of the teams are economically well established: Revenues have increased steadily, liabilities are under control, and player salaries have considerably declined. The ongoing debate about the liabilities of the German soccer teams is clearly misleading because two largemarket teams are principally responsible for the overall increase of the clubs' liabilities.</div></front></TEI><istex><corpusName>sage</corpusName><author><json:item><name>Bernd Frick</name><affiliations><json:null></json:null></affiliations></json:item><json:item><name>Joachim Prinz</name><affiliations><json:string>Witten/Herdecke University</json:string><json:string>Witten/Herdecke University</json:string></affiliations></json:item></author><subject><json:item><lang><json:string>eng</json:string></lang><value>revenues</value></json:item><json:item><lang><json:string>eng</json:string></lang><value>liabilities</value></json:item><json:item><lang><json:string>eng</json:string></lang><value>player salaries</value></json:item><json:item><lang><json:string>eng</json:string></lang><value>Bundesliga</value></json:item></subject><articleId><json:string>10.1177_1527002505282868</json:string></articleId><language><json:string>eng</json:string></language><originalGenre><json:string>research-article</json:string></originalGenre><abstract>The purpose of this article is to describe the financial situation and the development of club finances of the German “Bundesliga”. Using data provided by the football association and data collected from a number of different sources we find that the majority of the teams are economically well established: Revenues have increased steadily, liabilities are under control, and player salaries have considerably declined. The ongoing debate about the liabilities of the German soccer teams is clearly misleading because two largemarket teams are principally responsible for the overall increase of the clubs' liabilities.</abstract><qualityIndicators><score>6.104</score><pdfVersion>1.3</pdfVersion><pdfPageSize>612 x 792 pts (letter)</pdfPageSize><refBibsNative>true</refBibsNative><abstractCharCount>620</abstractCharCount><pdfWordCount>5600</pdfWordCount><pdfCharCount>33004</pdfCharCount><pdfPageCount>16</pdfPageCount><abstractWordCount>92</abstractWordCount></qualityIndicators><title>Crisis? What Crisis? Football in Germany</title><refBibs><json:item><host><author></author><title>Annual review of football finance</title></host></json:item><json:item><host><author></author><title>Deutsche Fußball-Liga. (2003).</title></host></json:item><json:item><host><author></author><title>Deutsche Fußball-Liga. (2004):</title></host></json:item><json:item><host><author></author><title>Dockter, R. (2002):</title></host></json:item><json:item><author><json:item><name>M. Ebert</name></json:item></author><host><volume>2002/2003</volume><pages><last>167</last><first>167</first></pages><author></author><title>Kicker Sonderheft Bundesliga</title></host><title>TV-Geld: Es fehlen 270 Millionen</title></json:item><json:item><host><author></author><title>Feddersen, A., & Maennig, W. (2003). Sportlicher Erfolg und Kapitalmarktbewertung—Das Beispiel der Borussia Dortmund GmbH & Co. KGaA. In H. M. Dietl (Ed.),</title></host></json:item><json:item><host><author></author><title>Frick, B. (2005). “... und Geld schießt eben doch Tore”: Die Voraussetzungen sportlichen und wirtschaftlichen Erfolgs in der Fußball-Bundesliga.</title></host></json:item><json:item><host><author></author><title>Frick, B., & Tolsdorf, F. (2003). Sportlicher Erfolg und Kapitalmarktperformance—Das Beispiel der Borussia Dortmund GmbH & Co. KGaA. In H. M. Dietl (Ed.),</title></host></json:item><json:item><author><json:item><name>S. Hall</name></json:item><json:item><name>S. Szymanski</name></json:item><json:item><name>A. S. Zimbalist</name></json:item></author><host><volume>3</volume><pages><last>168</last><first>149</first></pages><author></author><title>Journal of Sports Economics</title></host><title>Testing causality between team performance and payroll: The cases of Major League Baseball and English soccer</title></json:item><json:item><host><author></author><title>Sonderheft Bundesliga 04/05</title></host></json:item><json:item><host><author></author><title>Sonderheft Bundesliga 05/06</title></host></json:item><json:item><host><author></author><title>Littkemann, J., & Sunderdieck, B. (2002). Bilanzanalyse von Vereinen der Fußball-Bundesliga. In G. Schewe & J. Littkemann (Eds.),</title></host></json:item><json:item><host><author></author><title>Müller, C. (2003). Das Lizenzierungsverfahren für die Fußball-Bundesliga.</title></host></json:item><json:item><host><author></author><title>Müller, C. (2004). Wettbewerbsintegrität als Oberziel des Lizenzierungsverfahrens der Deutschen Fußball Liga GmbH. In K. Zieschang & C. Klimmer (Eds.),</title></host></json:item><json:item><host><author></author><title>Stadtmann, G. (in press). An empirical examination of the news model: The case of Borussia Dortmund GmbH & Co. KGaA.</title></host></json:item><json:item><host><author></author><title>Stadtmann, G., Weigand, J., & Wissmann, M. (2004).</title></host></json:item><json:item><host><author></author><title>WGZ-Bank. (2004).</title></host></json:item><json:item><host><author></author><title>Die Lederhosen AG: Was Sie schon immer über den FC Bayern wissen wollten</title></host></json:item></refBibs><genre><json:string>research-article</json:string></genre><host><volume>7</volume><publisherId><json:string>JSE</json:string></publisherId><pages><last>75</last><first>60</first></pages><issn><json:string>1527-0025</json:string></issn><issue>1</issue><genre><json:string>journal</json:string></genre><language><json:string>unknown</json:string></language><eissn><json:string>1552-7794</json:string></eissn><title>Journal of Sports Economics</title></host><categories><wos><json:string>social science</json:string><json:string>hospitality, leisure, sport & tourism</json:string><json:string>economics</json:string></wos><scienceMetrix></scienceMetrix></categories><publicationDate>2006</publicationDate><copyrightDate>2006</copyrightDate><doi><json:string>10.1177/1527002505282868</json:string></doi><id>CA2BBF3606186FAD70B558977A11D994CBC77119</id><score>0.023220785</score><fulltext><json:item><extension>pdf</extension><original>true</original><mimetype>application/pdf</mimetype><uri>https://api.istex.fr/document/CA2BBF3606186FAD70B558977A11D994CBC77119/fulltext/pdf</uri></json:item><json:item><extension>zip</extension><original>false</original><mimetype>application/zip</mimetype><uri>https://api.istex.fr/document/CA2BBF3606186FAD70B558977A11D994CBC77119/fulltext/zip</uri></json:item><istex:fulltextTEI uri="https://api.istex.fr/document/CA2BBF3606186FAD70B558977A11D994CBC77119/fulltext/tei"><teiHeader><fileDesc><titleStmt><title level="a" type="main" xml:lang="en">Crisis? What Crisis? Football in Germany</title></titleStmt><publicationStmt><authority>ISTEX</authority><publisher>Sage Publications</publisher><pubPlace>Sage CA: Thousand Oaks, CA</pubPlace><availability><p>SAGE</p></availability><date>2006</date></publicationStmt><sourceDesc><biblStruct type="inbook"><analytic><title level="a" type="main" xml:lang="en">Crisis? What Crisis? Football in Germany</title><author xml:id="author-1"><persName><forename type="first">Bernd</forename><surname>Frick</surname></persName><affiliation></affiliation></author><author xml:id="author-2"><persName><forename type="first">Joachim</forename><surname>Prinz</surname></persName><affiliation>Witten/Herdecke University</affiliation><affiliation>Witten/Herdecke University</affiliation></author></analytic><monogr><title level="j">Journal of Sports Economics</title><idno type="pISSN">1527-0025</idno><idno type="eISSN">1552-7794</idno><imprint><publisher>Sage Publications</publisher><pubPlace>Sage CA: Thousand Oaks, CA</pubPlace><date type="published" when="2006-02"></date><biblScope unit="volume">7</biblScope><biblScope unit="issue">1</biblScope><biblScope unit="page" from="60">60</biblScope><biblScope unit="page" to="75">75</biblScope></imprint></monogr><idno type="istex">CA2BBF3606186FAD70B558977A11D994CBC77119</idno><idno type="DOI">10.1177/1527002505282868</idno><idno type="ArticleID">10.1177_1527002505282868</idno></biblStruct></sourceDesc></fileDesc><profileDesc><creation><date>2006</date></creation><langUsage><language ident="en">en</language></langUsage><abstract xml:lang="en"><p>The purpose of this article is to describe the financial situation and the development of club finances of the German “Bundesliga”. Using data provided by the football association and data collected from a number of different sources we find that the majority of the teams are economically well established: Revenues have increased steadily, liabilities are under control, and player salaries have considerably declined. The ongoing debate about the liabilities of the German soccer teams is clearly misleading because two largemarket teams are principally responsible for the overall increase of the clubs' liabilities.</p></abstract><textClass><keywords scheme="keyword"><list><head>keywords</head><item><term>revenues</term></item><item><term>liabilities</term></item><item><term>player salaries</term></item><item><term>Bundesliga</term></item></list></keywords></textClass></profileDesc><revisionDesc><change when="2006-02">Published</change></revisionDesc></teiHeader></istex:fulltextTEI><json:item><extension>txt</extension><original>false</original><mimetype>text/plain</mimetype><uri>https://api.istex.fr/document/CA2BBF3606186FAD70B558977A11D994CBC77119/fulltext/txt</uri></json:item></fulltext><metadata><istex:metadataXml wicri:clean="corpus sage not found" wicri:toSee="no header"><istex:xmlDeclaration>version="1.0" encoding="UTF-8"</istex:xmlDeclaration><istex:docType PUBLIC="-//NLM//DTD Journal Publishing DTD v2.3 20070202//EN" URI="journalpublishing.dtd" name="istex:docType"></istex:docType><istex:document><article article-type="research-article" dtd-version="2.3" xml:lang="EN"><front><journal-meta><journal-id journal-id-type="hwp">spjse</journal-id><journal-id journal-id-type="publisher-id">JSE</journal-id><journal-title>Journal of Sports Economics</journal-title><issn pub-type="ppub">1527-0025</issn><publisher><publisher-name>Sage Publications</publisher-name><publisher-loc>Sage CA: Thousand Oaks, CA</publisher-loc></publisher></journal-meta><article-meta><article-id pub-id-type="doi">10.1177/1527002505282868</article-id><article-id pub-id-type="publisher-id">10.1177_1527002505282868</article-id><article-categories><subj-group subj-group-type="heading"><subject>Articles</subject></subj-group></article-categories><title-group><article-title>Crisis? What Crisis? Football in Germany</article-title><subtitle></subtitle></title-group><contrib-group><contrib contrib-type="author" xlink:type="simple"><name name-style="western"><surname>Frick</surname><given-names>Bernd</given-names></name></contrib><contrib contrib-type="author" xlink:type="simple"><name name-style="western"><surname>Prinz</surname><given-names>Joachim</given-names></name><aff>Witten/Herdecke University</aff></contrib></contrib-group><pub-date pub-type="ppub"><month>02</month><year>2006</year></pub-date><volume>7</volume><issue>1</issue><fpage>60</fpage><lpage>75</lpage><abstract><p>The purpose of this article is to describe the financial situation and the development of club finances of the German “Bundesliga”. Using data provided by the football association and data collected from a number of different sources we find that the majority of the teams are economically well established: Revenues have increased steadily, liabilities are under control, and player salaries have considerably declined. The ongoing debate about the liabilities of the German soccer teams is clearly misleading because two largemarket teams are principally responsible for the overall increase of the clubs' liabilities.</p></abstract><kwd-group><kwd>revenues</kwd><kwd>liabilities</kwd><kwd>player salaries</kwd><kwd>Bundesliga</kwd></kwd-group><custom-meta-wrap><custom-meta xlink:type="simple"><meta-name>sagemeta-type</meta-name><meta-value>Journal Article</meta-value></custom-meta><custom-meta xlink:type="simple"><meta-name>search-text</meta-name><meta-value> 10.1177/1527002505282868 JOURNAL OF SPORTS ECONOMICS / February 2006Frick, Prinz / FOOTBALL IN GERMANY Crisis? What Crisis? Football in Germany BERND FRICK JOACHIM PRINZ Witten/Herdecke University The purpose of this article is to describe the financial situation and the development of club finances of the German "Bundesliga". Using data provided by the football associa- tion and data collected from a number of different sources we find that the majority of the teams are economically well established: Revenues have increased steadily, liabilities are under control, and player salaries have considerably declined. The ongoing debate about the liabilities of the German soccer teams is clearly misleading because two large- market teams are principally responsible for the overall increase of the clubs' liabilities. Keywords: revenues; liabilities; player salaries; Bundesliga THE HISTORY OF PROFESSIONAL FOOTBALL IN GERMANY Although the foundation of the German Football Federation (Deutscher Fußball-Bund [DFB]) on January 28, 1900, in Leipzig was not even mentioned in the daily newspapers, football soon became a sport that gained broad public sup- port. Beginning in 1903, the national champion was crowned at the end of an elimi- nation tournament to which the 8 regional champions were admitted. The first title was won by VfB Leipzig, which defeated DFC Prague 7 to 0. Following a reorgani- zation of the league structure in 1932, 16 teams from the regional top divisions (including the actual as well as the defending champions) competed for the national title in a final elimination round from 1933 to 1944. During and immediately after the two world wars, no championship rounds were played (1915 to 1919 and 1945 to 1947).1 60 AUTHORS'NOTE: The title of this article is borrowed from an album issued in 1975 by one of the top bands of the 1970s and 1980s, Supertramp. JOURNAL OF SPORTS ECONOMICS, Vol. 7 No. 1, February 2006 6075 DOI: 10.1177/1527002505282868 © 2006 Sage Publications Soon after World War II (in 1946), eight regional divisions had been formed in the western zones. In 1949, the delegates of the regional associations decided to merge those eight divisions into five regional leagues consisting of 16 clubs each (with the exception of the "city league" of Berlin, with only 12 teams) and to allow players to become "semiprofessionals" (with a maximum salary of DM320 per month).2 On July 28, 1962, the representatives of the 21 different regional associa- tions agreed to introduce a single first division. Moreover, minimum and maximum salaries were introduced (the former being DM250 per month and the latter DM1,200 per month); moreover, the maximum transfer fee was set at DM50,000, of which a maximum of DM5,000 could be paid to the player (all these caps were finally abandoned in 1972). On August 24, 1963, the Bundesliga started its first season, with 16 teamsthat had been admittedout of 46 applicants.3 It was not before 1974-1975 that a second division (with a northern and a southern league) was intro- duced; the latter two leagues merged before the 1981-1982 season to form the second Bundesliga. Following the reunification of East Germany and West Germany, the first Bundesliga in 1991-1992 was expanded to 20 teams to integrate the top 2 teams from the former first division in East Germany (Dynamo Dresden and Hansa Rostock). In the same year, the second Bundesliga was once again divided into northern and southern divisions with 12 teams each to integrate 6 more top teams from the former East Germany. Although the first Bundesliga reduced its size again after only one season by relegating 4 teams and promoting only 2, the second Bundesliga played a second season with 24 teams but this time in one division (i.e., each team had to play 46 games instead of 22, as in the season before). On two different occasions, the integrity of the sport was severely threatened. After the second season (1964-1965) Hertha BSC Berlin was relegated to its city league not because of its poor sporting performance but because the management had paid higher wages and signing bonuses than allowed under the statutes of the DFB. The two weakest teams (Karlsruher SC and Schalke 04) were allowed to stay in the league, and the champion of Berlin, Tasmania 1900, was admitted without further qualification (because of "political" considerations, a team from Berlin was considered indispensable).4 The second "scandal" occurred in 1970-1971, when officials of Kickers Offenbach and Arminia Bielefeld tried to avoid their teams'relegation by offering bribes to some of their opponents' players. Following an investigation that lasted for more than 5 years, 52 players (mostly from Eintracht Braunschweig, Hertha BSC Berlin, and Schalke 04), 2 coaches, and 6 officials were fined and disqualified for several years. Moreover, Offenbach and Bielefeld lost their licenses as profes- sional teams and had to pay high fines too. This event had a significantly negative impact on the attendance figures in the following two seasons: Compared with 1970-1971, ticket sales declined by 13% and 20% in 1971-1972 and 1972-1973 (see Figure 1). Following the success of the German national team in the 1974 Frick, Prinz / FOOTBALL IN GERMANY 61 World Cup, ticket sales increased rapidly until 1978 (when the German team failed early in the World Cup tournament) and declined again thereafter. When, in 1988, TV rights were sold to a private station for the first time in the history of German football, attendance started to rise again (although most com- mentators expected a further decline because of the more appealing presentation of the matches in a "highlight show" on Saturday evenings). Moreover, the success in the 1990 World Cup final again boosted fans' interest. Because of changes in the number of teams as well as the composition of the clubs in the league, aggregate attendance figures may be misleading. Closer inspection of the data reveals that first, attendance per match more than doubled (from a low of 16,387 in 1972-1973 to a high of 35,048 in 2003-2004), and second, capacity use has also increased con- siderably: It started at about 55% in 1963-1964, went gradually down to 46% in the 1972-1973 season, and finally peaked at 78% in 2003-2004.5 Despite the steep increase in ticket demand, real ticket prices have remained more or less constant over the years. The price of an average ticket was, and still is, slightly less than the hourly wage rate of a blue-collar worker. Moreover, the differ- ence in ticket prices between first- and second-division teams has remained more or less constant, too. In general, ticket prices are rather low in Germany. Moreover, compared with other European countries, such as England, Italy, and, to a lesser extent, France, the TV rights have always been and still are rather cheap. When, in the late 1990s, the league sold the TV rights to the Kirch group (which 62 JOURNAL OF SPORTS ECONOMICS / February 2006 Figure 1: Average Ticket Demand per Match in the German First and Second Divisions, 1963- 1964 to 2003-2004 SOURCE: Kicker (2005). runs, among other things, a pay-TV station called Premiere), revenues skyrocketed for a short period of time (see Figure 2): In 1999, aggregated TV revenues were about 170 million and increased to more than 350 million in 2000. When, in 2002, the Kirch group went insolvent, TV revenues went down again to 280 mil- lion for the 2001-2002 season (they have remained at that level until today). Com- pared with the initial contract, the 36 first- and second-division teams in the three seasons from 2001-2002 to 2003-2004 received about 270 million less than expected (see Ebert, 2002, p. 167). However, because TV revenues in the Bunde- sliga are partly shared equally and partly on the basis of past and current perfor- mance,6 the teams were not equally affected by the insolvency of their major TV partner. Successful teams such as Bayern Munich and Borussia Dortmund lost about 5 million per season, whereas the teams that had been promoted recently only lost about 1.5 million per year. At present, Premiere, which had been dissolved from the Kirch group after its insolvency, pays about 150 million per year for live cov- Frick, Prinz / FOOTBALL IN GERMANY 63 1989/90 1991/92 1993/94 1995/96 1997/98 1999/00 2001/02 2003/04 0 50 100 150 200 250 300 350 400 TV Revenues Advertising/Sponsorships Ticket Revenues Figure 2: Composition of Aggregate Team Revenues in the German First Division, 1989-1990 to 2003-2004 (in millions of euros) SOURCE: Kicker (2004) and Deutsche Fußball-Liga (2004). erage of each match. At the same time, the largest public TV station (ARD) pays 55 million for the right to produce a highlight show on Saturday evenings, and DSF (a rather small but freely available sports channel) pays 30 million for the right to produce a highlight show of the two Sunday games.7 The current contract with ARD will expire at the end of the 2005-2006 season, and most observers expect that Premiere, following its successful initial public offering (IPO) in early 2005, will aggressively bid for a new contract. At present, the number of house- holds that have subscribed to Premiere is about 3.5 million, and it is estimated that an additional 100,000 subscribers will enable Premiere to increase its offer by 10 million. THE RECENT DEVELOPMENT OF CLUB FINANCES Compared with the situations in Italy, Spain, and England, where many teams have constantly been losing money, the situation is less dramatic in Germany: In 2002-2003, for example, 13 of 20 Premier League teams, but only 5 of 18 in Bundesliga, reported pretax losses.8 The financial stability of the clubs is usually attributed to the licensing system practiced by the league's organization since the 1960s.9 In Germany, clubs are required to submit budgets for the forthcoming sea- son, including forecasts of their expected revenues. This system ensures that there is continued control over costs, particularly wage costs (see Deloitte and Touche, 2003, p. 16). Therefore, the ratio of player wages to revenues is significantly lower in Germany (about 45%) than in any of the other major European leagues (England about 60%, France close to 70%, and Italy and Spain more than 70%). Revenues Because German football clubs have generally not been required to publish their accounts in the past (until the late1990s, allclubs were nonprofitorganizations, and until 2004, only nine of them had changed their legal status), information on their financial situations is rather limited. Although some teams have started to publish detailed accounts, longitudinal data on individual teams are still hard to find. It is therefore necessary to rely on aggregated figures provided by the DFB and on anec- dotal information from either the individual teams or from press reports.10 In the 1998-1999 season, the aggregated revenues of the 36 teams amounted to 818 million, of which 80% were realized by the first-division clubs. Compared to the respective previous season, the revenues increased by 10% (1999-2000), 28% (2000-2001, mainly because of the new TV contract), 13% (2001-2002), and 4% (2002-2003) before declining again in the last season (6%). Extending the period of investigation (starting in 1989-1990), it appears that even in the long run, reve- nues have increased consistently, albeit at a declining rate (see Figure 3). Looking at levels as well as the composition of the revenues, it appears that both are heavily influenced by the teams'performance on the field (see Figure 4). Teams 64 JOURNAL OF SPORTS ECONOMICS / February 2006 finishing in the top 6 positions had twice the revenues of those finishing 7th to 12th or 13th to 18th in 2002-2003 (about 95 million vs. 50 million). The surprisingly small difference between the middle and the bottom clusters is because the bottom 6 teams had relatively high TV revenues.11 Although the top teams generate most of their revenues from advertising (including shirt sponsorships), TV revenues appear to be the most important revenue source for the rest of the clubs. Given the rather low ticket prices in Germany, this revenue category contributes equally moderately to the teams' incomes. In summary, it appears that on average, only 10 million of 65 million in reve- nues comes from ticket sales, with 20 million from advertisement and sponsor- ships as well as TV revenues. Transfer fees received for departing players are a neg- ligible quantity, and "other" revenues (mostly from merchandising) reach about 12 million per season. The close relationship between sporting success and ability to pay is docu- mented in Figure 5: The six teams spending the most for player salaries have more Frick, Prinz / FOOTBALL IN GERMANY 65 1989/90 1991/92 1993/94 1995/96 1997/98 1999/00 2001/02 0 10 20 30 40 50 60 70 1st Division 2nd Division Figure 3: Average Annual Revenues per Team in the German First and Second Divisions, 1989-1990 to 2002-2003 (in millions of euros) SOURCE: Deutsche Fußball-Liga (2003, 2004). than twice the revenues of those in the middle cluster. Compared with the six teams forming the bottom cluster, the ratio is five to one. Although for the rich teams, dif- ferent revenue categories are equally important (advertising and sponsorships, TV revenues, merchandising), TV money is the dominant income source for the poor teams, for which merchandising is virtually nonexistent.12 Liabilities At the beginning of the 1977-1978 season, the aggregated liabilities of the 18 first-division teams were estimatedat some 7.5 million (of which Werder Bremen and Hertha BSC Berlin each had 2 million).13 On June 30, 2004, the 36 teams reported accumulated liabilities of 698 million (an increase of about 100 mil- lion compared with June 2003). Some years earlier (in the summer of 1999), the respective amount was only 351 million (an increase of slightly more than 100% 66 JOURNAL OF SPORTS ECONOMICS / February 2006 Pos. 1 - 6 Pos. 7 - 12 Pos. 13 - 18 Average 0 10 20 30 40 50 60 70 80 90 100 Other Transfer Fees TV-Revenues Advertising Tickets Figure 4: Composition of Average Revenues by First-Division Teams According to Final League Position, 2002-2003 (in millions of euros) SOURCE: Deutsche Fußball-Liga (2004). in only half a decade). Not surprisingly, the liabilities are not distributed equally among the 18 teams in each of the two divisions.14 It appears that two of the "big three" teams (Borussia Dortmund and Schalke 04) have accumulated nearly half of the liabilities (231 million of 547 million) that are currently threatening the first-division teams.15 This is surprising insofar as these two teams enjoy particularly favorable conditions: Apart from their large and loyal fan bases (in the 2003-2004 season, Dortmund sold about 74,000 tickets per match, resulting in capacity use of nearly 90%, and Schalke 04 about 56,000 tick- ets, resulting in capacity use of 93%), both teams have above-average revenues Frick, Prinz / FOOTBALL IN GERMANY 67 Group 1 Group 2 Group 3 Average 0 20 40 60 80 100 120 Other Transfer Fees TV-Revenues Advertising Tickets Figure 5: Composition of Average Revenues by First-Division Teams According to Ability to Pay, 2002-2003 (in millions of euros) SOURCE: Deutsche Fußball-Liga (2004). NOTE: Group 1 consists of six "rich" teams, with annual wage bills of more than 27 million (Bayern Munich, Borussia Dortmund, Schalke 04, Hamburger SV, Hertha BSC Berlin, and Bayer Leverkusen); Group 2 is composed of six teams with annual wage bills of more than 15 million and less than 27 million (VfB Stuttgart, Werder Bremen, TSV 1860 Munich, Borussia Moenchengladbach, VfL Wolfsburg, and Hannover 96); and Group 3 consists of six "poor" teams, with annual wage bills of less than 15 million (1. FC Nuremberg, 1. FC Kaiserslautern, VfL Bochum, Arminia Bielefeld, Hansa Rostock, and Energie Cottbus). from merchandising as well as from shirt sponsoring (the latter resulting in 12 millionfor Borussia Dortmund and 7.5 millionfor Schalke04 in 2004-2005).16 On the other hand, both teams have been paying extraordinary high salaries to their players: Over the past five seasons, Dortmund paid more than twice the league average to its players, while Schalke 04 was third in this respect, with wages about 50% higher than average.17 Moreover, both teams have invested extensively in the quality of their squads, with rather modest success. Following its IPO in October 2000, Dortmund spent nearly 100 million to sign 9 top players (Marcio Amoroso, Evanilson, Thomas Rosicky, Jan Koller, Thorsten Frings, Sunday Oliseh, Ewerthon, Jörg Heinrich, and Sebastian Kehl). Moreover, Schalke 04 signed nearly 20 players costing between 2 million and 8 million each during the 8-year period from 1997-1998 to 2004-2005 (see, among other sources, http://www.transfermarkt.de). The financial situation of Borussia Dortmund deteriorated dramatically when, in the summer of 2003, the team failed to qualify for the European Champions League by losing the qualification match against the Belgian champion, FC Brugge. The subsequent participation in the Union of European Football Associa- tions (UEFA) Cup was not a success either, because the team was relegated early. The recent financial difficulties clearly reflect the incompetence of the team's man- agement: On October 31, 2000, the day of the IPO, about 13.5 million shares were sold atan initialprice of 11, resulting in revenues of more than 130 million.18 Moreover, the team received some 20 million from Gerling, a large German insurance company, for the right to use its brand name and 30 million from addi- tional shares issued in September 2004. In early 2005, more than 80% of the money had been burned by the responsible managers (Gerd Niebaum and Michael Maier), who had to retire soon thereafter. The management of the second "patient" among the first-division teams, Schalke 04, is known for its "creative accounting": In 2003, the team bought from the city of Gelsenkirchen the stadium where it had been playing at a symbolic price of 1. In the team's balance sheets, however, the stadium appeared at a cost of 15.6 million, presumably because the piece of land can, in some distant future, be sold at that price (note, however, that pulling down the stadium will cost several million euros, which must be financed as well). Moreover, in 2003, the team took a 75 million loan from Stephen Schechter at an interest rate of 8% (in March 2004, the amount was increased to 85 million). The conditions of the contract stipulate that the annual amount to be paid over the next 23 years is 6.75 million (resulting in a total amount of 153 million). Surprisingly, neither Dortmund nor Schalke had a problem in getting a license for the 2005-2006 season. The reason is that the league's organization looks only at the liquidity of the teams. As long as a club can signal that it will be able to pay its wage bill for the season to come, the presumably "strict" licensing procedure will always come to a positive result, irrespective of the liabilities of the club under consideration. 68 JOURNAL OF SPORTS ECONOMICS / February 2006 Despite a similar amount spent on transfer fees than its opponents, Bayern Munich, the most successful team in the history of the Bundesliga, managed to avoid financial losses for various reasons. First, the team from Munich qualified every single year between 1994-1995 and 2003-2004 for a European cup competi- tion (eight appearances in the European Champions League and two in the UEFA Cup). Dortmund and Schalke, in turn, were able to qualify only eight times and six times, respectively. Moreover, Bayern was on average far more successful on and off the field than its national rivals. Whereas Munich earned about 200 million in the European cup competitions, Dortmund made about half that amount and Schalke less than a third. Second, because of the significantly larger number of fan clubs across the coun- try, Bayern Munich has much higher returns from merchandising and licensing than its major opponents. In the 2001-2002 season, for example, Bayern earned about 20 million, Dortmund 12 million, and Schalke 04 7 million with replica shirts and other fan articles. These differences can easily be explained: Bayern Munich has more than 2,000 registered supporter clubs with 132,000 individual members, whereas Dortmund has about 600 clubs with 20,000 members and Schalke 1,200 clubs with 43,000 members. Moreover, Bayern Munich sells a sig- nificantly higher percentage of its tickets on match days, implying that not only "football aficionados" but also occasional fans have access to the stadium. This in turn extends the size of the market for fan articles considerably. Among the remaining teams, only a few have no liabilities at all (Werder Bremen and SC Freiburg being the most notable exceptions). Three teams (Ham- burger SV, Hertha BSC Berlin, and 1. FC Nuremberg) report liabilities ranging from 15 million to 20 million,19 and VfL Bochum and Energie Cottbus admit debt of less than 10 million. A second notable exception in the first division is VfB Stuttgart, for which the incumbent management has succeeded in reducing the team's liabilities from nearly 19 million to some 8 million within 2 years (the team was managed for many years by the acting president of the DFB, Gerhard Meyer-Vorfelder, who nearly ruined the club by hiring extremely expensive players and paying exorbitant salaries during the 1980s and 1990s). Looking at the average annual profits and losses in the first and second divisions (see Figure 6), itappears thatfirst, over the years, the variance has increased consid- erably: Whereas in the first half of the 1990s, profits and losses on average never exceeded 1 million per season, this has become a "normal event" since then. Sec- ond, comparing the development of profits and losses between the first and second divisions, it appears that these are uncorrelated: In most years when the average first-division team reports a profit, the average second-division team reports a loss (2000-2001, 2001-2002, and 2002-2003) and vice versa. Only at the turn of the century did profitsand losses seemto coincide in the firstand the second divisions. What is even more surprising, however, is that economic performance and per- formance on the field also seem to be uncorrelated (see Figure 7): In 2001-2002, the top six finishers in the first division realized a profit of about 1.5 million each, Frick, Prinz / FOOTBALL IN GERMANY 69 whereas in the season thereafter, they lost about 2 million each. In the second division, a similar picture emerges: In the first of the two seasons under consider- ation, the top teams lost about 2 million each, whereas in the second season, they were profitable (earning 1.5 million each).20 Moreover, the economic performance of the teams in contention and the teams fighting relegation is also highly volatile: In the first division, the contenders as well as the teams at the bottom of the league were profitable in one season and los- ing money in the other. In the second division, a slightly similar picture emerges: Irrespective of their particular sporting performance, teams in the middle and at the bottom of the final ranking on average lost money. This is not surprising for at least two reasons: First, teams losing contact with the spots that guarantee promotion at the end of the season early usually experience dramatic drops in ticket sales. Sec- ond, the teams at the bottom of the league tend to sign more new players over Christmas break than their more successful opponents. This in turn means that they often increase their usually rather small budgets considerably, with predictable consequences for their economic performance. Moreover, being relegated from the 70 JOURNAL OF SPORTS ECONOMICS / February 2006 -2,5 -2 -1,5 -1 -0,5 0 0,5 1 1,5 2 1998/99 1999/00 2000/01 2001/02 2002/03 1998/99 1999/00 2000/01 2001/02 2002/03 First Division Second Division Figure 6: Average Annual Profit and Loss in the German First and Second Divisions, 1998- 1999 to 2002-2003 (in millions of euros) SOURCE: Deutsche Fußball-Liga (2003, 2004). second to the third division is, in relative terms, usually associated with a much poorer economic perspective than being relegated from the first to the second divi- sion: A second-division team on average gets approximately 20% of the TV money a first-division team receives, but a third-division team gets only about 10% of the amount that goes to a second-division team. This is particularly problematic for the top teams in the third division, because their player costs quite often exceed the wages that second-division teams pay to their players. A GOLDEN FUTURE? Compared with professional football in other European countries, the German Bundesliga is rather healthy in economic terms. The aggregated liabilities are less than half of those that have been accumulated in England, Italy, and Spain. More- over, fan interest, as measured by ticket sales, is high and still increasing (perhaps because of the comparatively low ticket prices in Germany). Whereas revenues from sponsoring activities are among the highest in Europe, TV revenues are sur- prisingly low. According to the 2004 edition of the "rich list" published annually by Deloitte and Touche, the German Bundesliga hosts three of Europe's most successful teams in terms of revenues: Bayern Munich, Borussia Dortmund, and Schalke 04. Frick, Prinz / FOOTBALL IN GERMANY 71 -7 -6 -5 -4 -3 -2 -1 0 1 2 Division 1, Position 1 - 6 Division 1, Position 7 - 12 Division 1, Position 13 - 18 Average Division 2, Position 1 - 6 Division 2, Position 7 - 12 Division 2, Position 13 - 18 Average 2001/02 2002/03 Figure 7: Average Annual Profit and Loss in the German First and Second Divisions by Final League Position, 2001-2002 and 2002-2003 (in millions of euros) SOURCE: Deutsche Fußball-Liga (2003, 2004). Munich's financial as well as its sporting performance is indeed quite impressive: Revenues are close to 180 million per year, and the team has just won its 19th national title (the 6th within the past 10 years). Its operating profits are among the highest in professional football, as is its market value (see WGZ-Bank, 2004, p. 103). Whereas Munich is highly profitable and successful, its major national opponents are in severe financial distress: Borussia Dortmund as well as Schalke 04 have completed securitization deals to fund their recent losses. Moreover, Dortmund has just recently avoided the obligation to file for bankruptcy by buying its stadium back from a consortium of investors who therefore had to renounce to interest payments of several million euros. The remaining 15 teams are more or less "healthy" in economic terms, with none of them threatened by bankruptcy (average liabilities for these 15 teams are around 20 million each). Therefore, in none of the past three seasons was any of these teams in danger of being expelled from the first division because of a lack of liquidity. Although the league has recently suffered from diminishing TV revenues be- cause of the insolvency of the Kirch group, its overall economic prospects are rather promising: The teams have succeeded in reducing their wage bills and have increased ticket sales as well as revenues from sponsoring and advertisement: Average roster sizehas been reduced from 28 in 2001-2002 to just 25 in 2004-2005, and player salaries went down from 28.7 million in 2001-2002 to less than 26 million in 2004-2005. Transfer spending in turn went down from 150 million in 2001-2002 to 65 million in 2004-2005. Moreover, revenues coming from ticket sales and shirt sponsoring increased from 143 million and 75 million, re- spectively, to nearly 180 million and 100 million during the period under investigation. The current debate about the increasing liabilities of German football teams is clearly misleading, because the overall increase in liabilities is by and large due to the mismanagement of two large-market teams. Compared with its major European counterparts, the Bundesliga remains a success story. Irrespective of their financial difficulties, it is unrealistic that either Dortmund or Schalke will become insolvent. In this unlikely event, local and regional politicians striving for reelection will out- bid one another with suggestions on how to rescue either of the two clubs with taxpayers' money. Because the current TV contract will expire after the next season, most com- mentators expect a steep increase in TV revenues thereafter. Following its success- ful IPO, the German pay-TV station Premiere is apparently prepared to outbid its rivals (be they public or private TV stations) in the next round. The company has already announced that it will insist on Friday-night matches again (these were abolished 2 years ago) and also ask for one Sunday match early in the afternoon and a second early in the evening (presently, the two Sunday matches are played at the same time). 72 JOURNAL OF SPORTS ECONOMICS / February 2006 Irrespective of the outcome of these negotiations, most of the teams in Germany seem well prepared to cope with the problems they are facing, be it the transfer-fee system developed by the European Commission or the legal requirements they have to fulfill as for-profit organizations. As long as the teams are staffed with com- petent management teams (which is not always the case), the future is likely to be a bright one. NOTES 1. In 1904,the final matchbetweenVfB LeipzigandBritanniaBerlin was cancelledonshortnotice, and in 1922, no championship title was awarded because the first final as well as the replay between Hamburger SV and FC Nuremberg ended in a tie. 2. Following a discussion begun in 1924(when footballofficials prohibitedmatches against profes- sional teams), the delegates of the 1932 annual meeting of the DFB decided to allow players to become professionals. This decision, however, was immediately revoked by the Nazi government in 1933. 3. The selection committee had based its decision primarily on the teams'sporting performance (a weighted average of the final league positions over the previous 10 seasons) but had also taken into con- siderationtheireconomicperformanceandthecapacityandqualityoftheirstadiums.Twooftherejected teams (Alemania Aachen and Offenbacher Kickers) went to court to gain admission to football's new elite but did not succeed with their claims. The formerregional divisions continuedto exist as the highest amateur leagues, with the five champions and the three best performing vice champions having the right to compete for promotion to the Bundesliga. 4. The latter team proved to be the weakest that ever belonged to German football's elite division: After just 2 wins and 4 ties (plus 28 losses), the team was relegated again. In 1973, its management filed for bankruptcy. 5. Moreover, ticket demand is likely to reach a new record level this year and again next season, when three weak-drawing teams (VfL Bochum, Hansa Rostock, and SC Freiburg) will be replaced by a number of "large-market teams," such as 1. FC Cologne and Eintracht Frankfurt. See Frick (2005) for an econometric identification of differences in the drawing power of small- and large-market teams. 6. In 2004, exactly 217 million (77.5%) of the TV revenues went to the first division and 63 mil- lion (22.5%) to the second division. Although in the second division, each team receives an equal amount, the money is distributed according to the following formula among the first-division teams: 50%(108.5million)is sharedequally, andoftheremaining50%,threequartersaresharedaccordingto finalleaguepositioninthepastthreeseasonsandonequarteraccordingtoactualperformance(see Zdral, 2004, p. 264). 7. The remaining 45 million comes from another sports channel (Eurosport), radio, and German Telekom (for online coverage). 8. While the liabilities of the 18 Bundesliga teams were estimated at 550 million at the end of the 2002-2003 season, comparable figures for the English Football Association Premier League are 1.1 billion, for the Italian Serie A about 1.2 billion, and for the Spanish Primera Division approximately 1.3 billion. 9. For a discussion of the licensing procedure, see, among others, Müller (2003, 2004) and Littkemann and Sunderdieck (2002). 10. The data presented in the following two sections come from a large number of daily newspapers, two different soccer magazines, and various Internet sources. 11. These latter revenues were due to the teams' past sporting performance or their success in the domestic cup competition. Frick, Prinz / FOOTBALL IN GERMANY 73 12. In this context. the question arises whether sporting success is a precondition for economic suc- cess or a consequence thereof. Because the data used here to analyze the financial situation of profes- sional footballin Germany are available onlyin aggregated formandfora rathershortperiodof time, it is not possible to give a detailed answer to that question. There is limited evidence, however, that Granger causality from higher payrolls to better performance cannot be rejected (see Hall, Szymanski, & Zimbalist, 2002, with data from English football). 13. At the same time, the liabilities of the 40 second-division teams (at that time, a northern and a southern division existed, with 20 teams each) were estimated at some 20 million, of which more than 50% had been accumulated by only five teams: Hannover 96, Kickers Offenbach, Preussen Münster, Wuppertaler SV, and FC St. Pauli. With the exception of Hannover 96, all other teams have been rele- gated to the Regionalliga, a semiprofessional league with northern and southern divisions consisting of 18 teams each. 14. Roughly 75% of the overall liabilities have been accumulated by the first-division teams. Detailedinformationonthedistributionofdebtamongtheteamsintheseconddivisionis notavailable. 15.Thisimpliesthattheremainingteams have accumulatedliabilities of316million(orabout19 million per team). 16. Surprisingly, Bayern Munich has fewer spectators (about 56,000, resulting in capacity use of approximately89%)but receives moremoney fromits shirt sponsor(GermanTelekompays20million per season until 2008). Merchandising revenues reached 40 million (Munich), 25 million (Dort- mund), and 7 million (Schalke 04) in 1997 (see Dockter, 2002, p. 36). 17. In the period under investigation, Bayern Munich spent about 10% less on player salaries than Borussia Dortmund (see Frick, 2005). 18.Foran empiricalanalysis ofthe determinantsofchangesin the stockpriceofBorussia Dortmund, see, among others, Stadtmann (in press), Stadtmann, Weigand, and Wissmann (2004), Feddersen and Maennig (2003), and Frick and Tolsdorf (2003). 19. The management of 1. FC Nuremberg, one of the "yo-yo teams" in the Bundesliga, reports that the club loses about 2 million each season in the second division, although most of the players'salaries will be reduced significantly in case of relegation. 20. A similar picture emerges when we distinguishaccordingto the teams'ability to pay: In one year, therichteamslosemoney,whereasinthenext,theyarehighlyprofitable.Moreover,poorteams(interms of players' salaries) do not always lose money but are often surprisingly profitable. REFERENCES Deloitte and Touche. (2003). Annual review of football finance. Manchester, England: Author. Deutsche Fußball-Liga. (2003). Die wirtschaftliche Situation im Lizenzfußball. Frankfurt, Germany: Clausen und Reitsma. Deutsche Fußball-Liga. (2004): Die wirtschaftliche Situation im Lizenzfußball. Frankfurt, Germany: Clausen und Reitsma. Dockter, R. (2002): Rekrutierungs- und Beschäftigungspolitik im professionellen Teamsport: Eine Effizienzanalyse des deutschen Berufsfußballs. Munich, Germany: Hampp. Ebert, M. (2002). TV-Geld: Es fehlen 270 Millionen. Kicker Sonderheft Bundesliga, 2002/2003, 167. Feddersen, A., & Maennig, W. (2003). Sportlicher Erfolg und Kapitalmarktbewertung--Das Beispiel der Borussia Dortmund GmbH & Co. KGaA. In H. M. Dietl (Ed.), Globalisierung des wirtschaft- lichen Wettbewerbs im Sport (pp. 119-134). Schrondorf, Germany: Hofmann. Frick, B. (2005). ". . . und Geld schießt eben doch Tore": Die Voraussetzungen sportlichen und wirtschaftlichen Erfolgs in der Fußball-Bundesliga. Sportwissenschaft, 35, 250-270. Frick, B., & Tolsdorf, F. (2003). Sportlicher Erfolg und Kapitalmarktperformance--Das Beispiel der Borussia Dortmund GmbH & Co. KGaA. In H. M. Dietl (Ed.), Globalisierung des wirtschaftlichen Wettbewerbs im Sport (pp. 135-140). Schrondorf, Germany: Hofmann. 74 JOURNAL OF SPORTS ECONOMICS / February 2006 Hall, S., Szymanski,S., & Zimbalist,A. S. (2002).Testingcausalitybetweenteam performanceandpay- roll: The cases of Major League Baseball and English soccer. Journal of Sports Economics, 3, 149- 168. Kicker. (2004). Sonderheft Bundesliga 04/05. Nuremberg, Germany: Olympia-Verlag. Kicker. (2005). Sonderheft Bundesliga 05/06. Nuremberg, Germany: Olympia-Verlag. Littkemann, J., & Sunderdieck, B. (2002). Bilanzanalyse von Vereinen der Fußball-Bundesliga. In G. Schewe & J. Littkemann (Eds.), Sportmanagement: Der Profi-Fußball aus sportökonomischer Perspektive (pp. 67-82). Schorndorf, Germany: Hofmann. Müller, C. (2003). Das Lizenzierungsverfahren für die Fußball-Bundesliga. Betriebswirtschaftliche Forschung und Praxis, pp. 556-570. Müller, C. (2004). Wettbewerbsintegrität als Oberziel des Lizenzierungsverfahrens der Deutschen Fußball Liga GmbH. In K. Zieschang & C. Klimmer (Eds.), Unternehmensführung im Profifußball (pp. 21-44). Berlin, Germany: Schmidt. Stadtmann, G. (in press). An empirical examination of the news model: The case of Borussia Dortmund GmbH & Co. KGaA. Zeitschrift für Betriebswirtschaft. Stadtmann, G., Weigand, J., & Wissmann, M. (2004). Extreme Aktienkursreaktionen und neue Informationen--Das Reversed-News-Modell am Beispiel der Borussia Dortmund GmbH & Co. KGaA. Unpublished manuscript, Institute for Industrial Organization, WHU Koblenz. WGZ-Bank. (2004). FC uro AG: Börsengänge europäischer Fußballunternehmen--Chancen für den deutschen Bundesligafußball (4th ed.). Düsseldorf, Germany: Author. Zdral, W. (2004). Die Lederhosen AG: Was Sie schon immer über den FC Bayern wissen wollten. Munich, Germany: Econ. Bernd Frick is Professor of Personnel and Organizational Economics and Dean of the Faculty of Business AdministrationandEconomicsat Witten/Herdecke University, Germany. Before taking his current position he was a professor at the University of Greifswald and an assistant professor attheUniversity ofTrier,wherehereceivedhisPh.D.in1990andhis"Habilitation"in1996. Joachim Prinz received his M.A. in economics from the Copenhagen Business School in 1999 and his Ph.D. in business administration from Witten/Herdecke University in 2003. He is now Assistant Professor in the Faculty of Business Administration and Economics at Witten/ Herdecke University. Frick, Prinz / FOOTBALL IN GERMANY 75 </meta-value></custom-meta></custom-meta-wrap></article-meta></front><back><notes><p>1. In 1904, the final match between VfB Leipzig and Britannia Berlin was cancelled on short notice, and in 1922, no championship title was awarded because the first final as well as the replay between Hamburger SV and FC Nuremberg ended in a tie.</p><p>2. Following a discussion begun in 1924 (when football officials prohibited matches against professional teams), the delegates of the 1932 annual meeting of the DFB decided to allow players to become professionals. This decision, however, was immediately revoked by the Nazi government in 1933.</p><p>3. The selection committee had based its decision primarily on the teams' sporting performance (a weighted average of the final league positions over the previous 10 seasons) but had also taken into consideration their economic performance and the capacity and quality of their stadiums. Two of the rejected teams (Alemania Aachen and Offenbacher Kickers) went to court to gain admission to football's new elite but did not succeed with their claims. The former regional divisions continued to exist as the highest amateur leagues, with the five champions and the three best performing vice champions having the right to compete for promotion to the Bundesliga.</p><p>4. The latter team proved to be the weakest that ever belonged to German football's elite division: After just 2 wins and 4 ties (plus 28 losses), the team was relegated again. In 1973, its management filed for bankruptcy.</p><p>5. Moreover, ticket demand is likely to reach a new record level this year and again next season, when three weak-drawing teams (VfL Bochum, Hansa Rostock, and SC Freiburg) will be replaced by a number of “large-market teams,” such as 1. FC Cologne and Eintracht Frankfurt. See Frick (2005) for an econometric identification of differences in the drawing power of small and large-market teams.</p><p>6. In 2004, exactly 217 million (77.5%) of the TV revenues went to the first division and 63 million-(22.5%) to the second division. Although in the second division, each team receives an equal amount, the money is distributed according to the following formula among the first-division teams: 50%([UNKNOWN]108.5 million) is shared equally, and of the remaining 50%, three quarters are shared according to final league position in the past three seasons and one quarter according to actual performance (see Zdral, 2004, p. 264).</p><p>7. The remaining 45 million comes from another sports channel (Eurosport), radio, and German Telekom (for online coverage).</p><p>8. While the liabilities of the 18 Bundesliga teams were estimated at 550 million at the end of the 2002-2003 season, comparable figures for the English Football Association Premier League are 1.1 billion, for the Italian Serie A about 1.2 billion, and for the Spanish Primera Division approximately 1.3 billion.</p><p>9. For a discussion of the licensing procedure, see, among others, Müller (2003, 2004) and Littkemann and Sunderdieck (2002).</p><p>10. The data presented in the following two sections come from a large number of daily newspapers, two different soccer magazines, and various Internet sources.</p><p>11. These latter revenues were due to the teams' past sporting performance or their success in the domestic cup competition.</p><p>12. In this context. the question arises whether sporting success is a precondition for economic success or a consequence thereof. Because the data used here to analyze the financial situation of professional football in Germany are available only in aggregated form and for a rather short period of time, it is not possible to give a detailed answer to that question. There is limited evidence, however, that Granger causality from higher payrolls to better performance cannot be rejected (see Hall, Szymanski, & Zimbalist, 2002, with data from English football).</p><p>13. At the same time, the liabilities of the 40 second-division teams (at that time, a northern and a southern division existed, with 20 teams each) were estimated at some [UNKNOWN]20 million, of which more than 50% had been accumulated by only five teams: Hannover 96, Kickers Offenbach, Preussen Münster, Wuppertaler SV, and FC St. Pauli. With the exception of Hannover 96, all other teams have been relegated to the Regionalliga, a semiprofessional league with northern and southern divisions consisting of 18 teams each.</p><p>14. Roughly 75% of the overall liabilities have been accumulated by the first-division teams. Detailed information on the distribution of debt amongthe teams in the second division is not available.</p><p>15. This implies that the remaining teams have accumulated liabilities of[UNKNOWN]316 million (or about[UNKNOWN]19 million per team).</p><p>16. Surprisingly, Bayern Munich has fewer spectators (about 56,000, resulting in capacity use of approximately89%) but receives more money from its shirt sponsor (German Telekompays[UNKNOWN]20 million per season until 2008). Merchandising revenues reached [UNKNOWN]40 million (Munich), [UNKNOWN]25 million (Dortmund), and [UNKNOWN]7 million (Schalke 04) in 1997 (see Dockter, 2002, p. 36).</p><p>17. In the period under investigation, Bayern Munich spent about 10% less on player salaries than Borussia Dortmund (see Frick, 2005).</p><p>18. For an empirical analysis of the determinants of changes in the stock price of Borussia Dortmund, see, among others, Stadtmann (in press), Stadtmann, Weigand, and Wissmann (2004), Feddersen and Maennig (2003), and Frick and Tolsdorf (2003).</p><p>19. The management of 1. FC Nuremberg, one of the “yo-yo teams” in the Bundesliga, reports that the club loses about[UNKNOWN]2 million each season in the second division, although most of the players'salaries will be reduced significantly in case of relegation.</p><p>20. Asimilar picture emerges when we distinguish according to the teams'ability to pay: In one year, the rich teams lose money, whereas in the next, they are highly profitable. Moreover, poor teams (in terms of players' salaries) do not always lose money but are often surprisingly profitable.</p></notes><ref-list><ref><citation citation-type="book" xlink:type="simple"><name name-style="western"><surname>Deloitte and Touche</surname></name>. (<year>2003</year>). <source>Annual review of football finance</source>. <publisher-loc>Manchester, England</publisher-loc>: <publisher-name>Author</publisher-name>.</citation></ref><ref><citation citation-type="other" xlink:type="simple">Deutsche Fußball-Liga. (2003). <italic>Die wirtschaftliche Situation im Lizenzfußball</italic>. Frankfurt, Germany: Clausen und Reitsma.</citation></ref><ref><citation citation-type="other" xlink:type="simple">Deutsche Fußball-Liga. (2004): <italic>Die wirtschaftliche Situation im Lizenzfußball</italic>. Frankfurt, Germany: Clausen und Reitsma.</citation></ref><ref><citation citation-type="other" xlink:type="simple">Dockter, R. 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Football in Germany</title><subTitle></subTitle></titleInfo><name type="personal"><namePart type="given">Bernd</namePart><namePart type="family">Frick</namePart><affiliation></affiliation><role><roleTerm type="text">author</roleTerm></role></name><name type="personal"><namePart type="given">Joachim</namePart><namePart type="family">Prinz</namePart><affiliation>Witten/Herdecke University</affiliation><affiliation>Witten/Herdecke University</affiliation><role><roleTerm type="text">author</roleTerm></role></name><typeOfResource>text</typeOfResource><genre type="research-article" displayLabel="research-article"></genre><originInfo><publisher>Sage Publications</publisher><place><placeTerm type="text">Sage CA: Thousand Oaks, CA</placeTerm></place><dateIssued encoding="w3cdtf">2006-02</dateIssued><copyrightDate encoding="w3cdtf">2006</copyrightDate></originInfo><language><languageTerm type="code" authority="iso639-2b">eng</languageTerm><languageTerm type="code" authority="rfc3066">en</languageTerm></language><physicalDescription><internetMediaType>text/html</internetMediaType></physicalDescription><abstract lang="en">The purpose of this article is to describe the financial situation and the development of club finances of the German “Bundesliga”. Using data provided by the football association and data collected from a number of different sources we find that the majority of the teams are economically well established: Revenues have increased steadily, liabilities are under control, and player salaries have considerably declined. The ongoing debate about the liabilities of the German soccer teams is clearly misleading because two largemarket teams are principally responsible for the overall increase of the clubs' liabilities.</abstract><subject><genre>keywords</genre><topic>revenues</topic><topic>liabilities</topic><topic>player salaries</topic><topic>Bundesliga</topic></subject><relatedItem type="host"><titleInfo><title>Journal of Sports Economics</title></titleInfo><genre type="journal">journal</genre><identifier type="ISSN">1527-0025</identifier><identifier type="eISSN">1552-7794</identifier><identifier type="PublisherID">JSE</identifier><identifier type="PublisherID-hwp">spjse</identifier><part><date>2006</date><detail type="volume"><caption>vol.</caption><number>7</number></detail><detail type="issue"><caption>no.</caption><number>1</number></detail><extent unit="pages"><start>60</start><end>75</end></extent></part></relatedItem><identifier type="istex">CA2BBF3606186FAD70B558977A11D994CBC77119</identifier><identifier type="DOI">10.1177/1527002505282868</identifier><identifier type="ArticleID">10.1177_1527002505282868</identifier><recordInfo><recordContentSource>SAGE</recordContentSource></recordInfo></mods></metadata><serie></serie></istex></record>Pour manipuler ce document sous Unix (Dilib)
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