German football clubs setting example on and off pitch

BERLIN/LONDON Thu May 23, 2013 2:26pm BST

A Champions League trophy of German Bundesliga first division football club Bayern Munich is seen in a museum 'Erlebniswelt' in Munich May 14, 2013. REUTERS/Michaela Rehle

A Champions League trophy of German Bundesliga first division football club Bayern Munich is seen in a museum 'Erlebniswelt' in Munich May 14, 2013.

Credit: Reuters/Michaela Rehle

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BERLIN/LONDON (Reuters) - Champions League finalists Bayern Munich and Borussia Dortmund are the envy of football fans across Europe for the way the German clubs run their business as well as their success on the field.

Bayern and Dortmund are the top two teams in the Bundesliga where clubs boast the largest crowds in Europe, keep ticket prices low, are largely profitable and have produced a crop of talented young players.

"The German clubs best balance the economic, social and cultural requirements of football teams in Europe," said Ben Shave of Supporters Direct, an organisation that campaigns to get fans more involved in the running of clubs.

"There is a feeling within Germany that it is fitting that they have made it through to the Wembley final," he added.

Indeed, the German clubs appear to be the ideal model for a new more sustainable financial approach that UEFA, European soccer's governing body, is trying to enforce.

Germany is not the richest football league but is one of the most stable and sustainable.

In Spain, the market is skewed by the fact that top clubs Real Madrid and Barcelona do their own TV deals rather than selling collectively, meaning smaller clubs struggle to survive.

The economics of English football have been distorted by the takeover of clubs like Chelsea and Manchester City by billionaire investors, the ambitions of the new owners driving up wage and player transfer costs across the board.

In Germany, rules on ownership ensure that members retain control of clubs, shielding them from foreign takeover.

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Bayern, bidding to become European champions for a fifth time in Saturday's final, is the richest club in Germany and finished 25 points ahead of Dortmund to recapture the German league title.

The one cloud on its horizon is an investigation into club president Uli Hoeness for suspected tax evasion after he told the German authorities about a Swiss bank account.

Bayern, from the southern German region of Bavaria, was fourth in the latest Deloitte Football Money League, while Dortmund was 11th in a list that ranked international clubs according to their revenue in 2011-12.

The Bavarians enjoyed a considerable advantage over their rivals from the northwest Ruhr valley, with core revenues of 368 million euros ($474 million) against 189 million for Dortmund, according to figures compiled by Deloitte.

Bayern has used that financial muscle to sign attacking midfielder Mario Goetze from Dortmund for next season for an estimated fee of 37 million euros.

Bayern has generated a profit for the last two decades while Dortmund, the only major German football club listed on the stock market, flirted with bankruptcy less than a decade ago.

Having won the Champions League in 1997, Dortmund began to live beyond its means and needed a short-term 2 million euro loan from Bayern in 2005 to help ensure its survival.

Dortmund has since drastically cut costs and focused on developing younger players while attracting the biggest crowds in European football.

In terms of the stock market, Dortmund remains a small company with a valuation of only around 200 million euros. That compares with $2.9 billion (1.9 billion pounds) for English champions Manchester United, which is listed on the New York Stock Exchange and claims to have more than 650 million followers worldwide.

Bayern and Dortmund both get more than half of their income from sales of merchandise and sponsorship deals, which bears witness to the strength and reach of German commerce.

Deutsche Telekom is the shirt sponsor for Bayern and Adidas the long-standing kit supplier. Dortmund has chemicals company Evonik on its yellow shirts, while Puma became its sportswear partner at the start of this season.

German football will get a further financial boost next season when a new TV contract worth 628 million euros per year begins, up more than 50 percent on the current deal.

UEFA's new Financial Fair Play rules forcing clubs to curb their losses mean that German teams are well placed to build on their current success.

"It took them 10 years to get there, to put in place the disciplines and get the results," said Emmanuel Hembert of business consultancy A.T. Kearney.

"With Financial Fair Play, if UEFA really enforce it, it will play completely into the hands of German football," he added.

($1 = 0.7766 euros)

(Editing by Mark Potter)

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