Analysis: Bayern Munich’s prudent finances reflect German approach

Tariq Panja London

For clues to how the German economy stands out from the EU debt crisis, look no further than Champions League finalists Bayern Munich.

MUNICH, GERMANY - JANUARY 13: Karl-Heinz Rummenigge speaks at Uli Hoeness' 60th birthday celebration at Postpalast on January 13, 2012 in Munich, Germany. (Photo by Alexandra Beier/Bongarts/Getty Images). Credit: Bongarts/Getty Images

Germany’s most successful club on the field will go into the match tomorrow at its own Allianz Arena having not made a loss off it for 19 consecutive seasons. It plays Chelsea, the English team that has been propelled to the top of European soccer thanks to more than $1 billion (R8.3bn) of cash from Roman Abramovich.

The Russian oligarch has covered financial losses during each of the nine years since he bought the London club.

“We have always had one philosophy and that’s not to spend more than we generate,” said Bayern Munich chief executive Karl-Heinz Rummenigge, among the former players who have swapped soccer jerseys for suits.

“From the very beginning when I came into the executive in 1991 after my career as a player it was quite clear that we have to follow this way.”

Bayern is a microcosm of how Germany manages its economy. While rival soccer nations England, Italy and Spain are in recession, Germany is growing, its unemployment rate is at a two-decade low and Chancellor Angela Merkel is telling euro partners they must stick to austerity measures to undo years of overspending.

The German economy unexpectedly grew 0.5 percent in the first quarter after contracting 0.2 percent the quarter before, helping the euro area avoid a second recession in three years, according to figures published this week.

Bayern meanwhile is forecasting record sales of over e350 million (R3.7bn) this year, and profit of as much as e20m.

“Bayern is just run in a very German way,” ING Group senior economist Carsten Brzeski said. “They only spend on players what they’ve got in their bank account. You might get quick wins out of the debt-fuelled Chelsea model, but in the long run you have to ask, is it sustainable?”

Bayern chairman Uli Hoeness was the architect of the club’s philosophy. Since quitting a career on the pitch that included three European Cups with Bayern between 1974 and 1976 and a World Cup with Germany, he has guided the club into the money.

The southern German team has grown to become soccer’s fourth richest. It took e321.4m of revenue last year compared with the equivalent of e6m when Hoeness took over in 1979.

While the Union of European Football Associations (Uefa) estimates top-level European soccer teams have amassed losses totalling e1.6bn in pursuit of soccer success, Bayern has refused to overstretch to add to the fourth European Cup it won in 2001.

“Is it as interesting when you have a person behind you who is paying everything?” Hoeness said in Munich in January. “To win the Champions League by working hard and generating your own money is much more satisfying.”

Chelsea has enjoyed the most successful period in its history under Abramovich. He has bought players and made managerial changes that cost more than $100m. In return, he has got three league titles, four FA Cups and now a second Champions League final.

Over the same period, Bayern won four German championships and four German Cups, while being beaten in the 2010 Champions League final by Milan’s Internazionale, which recorded an e80m loss the same year.

Still, Bayern’s recent success has not come cheaply. The club spent more than e80m acquiring its trio of attackers, Arjen Robben, Franck Ribery and Mario Gomez, and has the sixth-highest payroll in soccer, according to the Sporting Intelligence website. Chelsea is ranked fourth.

While its prudent housekeeping mirrors the German economy, its structure of turning to former players to run the business is also redolent of the “Mittelstand”, or family-run, companies that have been the backbone of German growth.

There are now 15 members of staff who wore Bayern’s colours over the years.

Bayern may profit from new financial regulations being introduced by Uefa. The rules stipulate that clubs must limit losses or face sanctions, including exclusion from the Champions League from 2014.

Hoeness said it would be a “disaster” for his team if Uefa failed to implement its so-called financial fair play directive, saying Bayern would be unable to keep pace with the likes of Chelsea and Manchester City.

City ended a 44-year wait for an English league title thanks to £400m (R5.3bn) worth of new talent bought by its Abu Dhabi-based owner Sheikh Mansour bin Zayed Al Nahyan since he acquired the team in 2008.

Teams that relied on cash infusions from wealthy benefactors faced risky futures, Hoeness said.

“It’s like Mr Abramovich has I believe put £700m into Chelsea,” he said. “What will happen if he one day said, ‘I’m now going on my yachts and I buy pictures’ and so on? That’s a big question.” – Bloomberg