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German football bridges the gap

German football bridges the gap

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It’s official. German club football is the best.

It’s official. German club football is the best.

Two years ago, admittedly, it was Spanish club football courtesy of FC Barcelona winning the UEFA Champions League at a canter. And five years ago, it was English football when Manchester United and Chelsea fought out the final in Moscow. But this year, the plaudits are going to Germany’s finest – Champions League finalists Bayern Munchen and Borussia Dortmund – and not just on the pitch, but off the pitch too.

Not so long ago, German club football was European football’s ugly sister – invited to all the big parties, but never making it to the dance floor. For seven seasons between 2002-03 and 2008-09, for example, not a single German club progressed beyond the Champions League quarter-final stages.

Why the slump? Some football analysts in Germany felt that club ownership structures, requiring 51% ownership by the fans, would forever hold German club football back in Europe. Sure, Bayern could raise the cash to compete every now and then, but the rest? Not against the financial might in England and the Spanish duopoly.

Well, Dortmund has exploded that myth and now everyone is looking at the German model for sustainable growth that can’t be touched by Financial Fair Play rules. But just how financially healthy is German football compared to the free market English Premier League?

One indicator is the commercial value of their respective central sponsorships. Recent research by Sports Sponsorship Insider shows that sponsorship revenue from the central partners of German football’s Bundesliga has grown by over 150% in the last four years, and will increase further in 2013-14. The league will earn more than Eur27 million in 2012-13, from central partners, up from about Eur10 million in 2009-10.

In comparison, the English Premier League’s central sponsorship revenue is expected to increase by up to 50% in the three-year cycle to 2015-16 to around £70 million (Eur82.8 million) per year, a figure swelled by the £40 million (Eur47.3 million) per year Barclays pay for the title sponsorship.

That’s a hefty advantage over the Bundesliga, which does not sell a league title rights deal and has far less appeal internationally. But the Bundesliga has a more buoyant domestic economy to tap into and natural demarcation lines between club and league sponsors.

Says Andy Meyer, director of sales, sponsoring and licensing for DFL Sports Enterprises: “Most of the club deals are regionally-oriented; they are not nationally or internationally focused so there is no big conflict and, importantly, there is no reduction in club income as a result.”

And with more German teams in Europe’s grand finals, one would expect the league’s international status to grow and commercial revenue to increase accordingly. The commercial gap between the two leagues is closing.

“More tension”

That was the unusual demand from some delegates at the European Sponsorship Association’s Sponsorship Summit in London in April.

The tension in question is that between sponsor brands and rights holders – and the argument is that sponsors and their agencies have soft peddled their demands on rights holders for too long for fear of exclusion from the rights club.

Football organisations have, at times, been particularly adept at side-stepping complaints from sponsor brands in terms of better governance but also better access to content. A more robust approach from sponsors is overdue – and might just do the trick.

This is a personal perspective of Matthew Glendinning, editor of Sports Marketing Frontiers.