Germans march on Wembley as masters of Europe – for now

It’s got nothing to do with your vorsprung durch technik you know. Despite the smart business model, German dominance of the Champions League may not last. flikr/lordkhan

The all-German Champions League final has predictably generated the usual discussions about the potential “dominance” of a particular nation’s league. But before non-German fans get into a panic, it’s worth remembering that we’ve been here before.

This will be the fourth final this century featuring two sides from the same country, and periods of domination by one team or one country are nothing new. Just eight teams account for 68% of the winners and more than 60% of final appearances.

Predicting future Champions League winners will be a question of selecting from a small pool of teams with the most money, as it is in all the leagues across Europe. The four teams competing in this season’s Champions’ League semi-finals were 1st, 3rd, 4th and 16th in Deloittes’ annual Football Money League. The previous season it was 1st, 2nd, 4th and 5th. Unless their financial situations change dramatically, we can discount teams such as Nottingham Forest, Aston Villa, Steaua Bucharest and Celtic from ever winning again.

Deutschland dominance

So the real question is, have the Germans got the best business model to deliver continued dominance?

It is clear that both Bayern and Dortmund who meet at Wembley are well run financially. Bayern’s model relies heavily on generating significant commercial revenue from associating with powerful regional businesses and government. The commercial relationship with the Bavarian based financial services giant, Allianz, has been a significant force since its inception in 2000. This reliance on commercial relationships was reinforced with the completion of the Allianz Arena in 2005. Most recently, Allianz has extended its premium partnership commitment with a further comprehensive sponsorship package.

Dortmund’s strategy is based on their position as the biggest city in the Ruhr Valley and the “heart of Westphalia”. Dortmund now play in the 80,000 capacity Westfalenstadion, currently named the Signal Iduna Park in a deal with another financial services company which runs until 2021.

The German football federation, regional government and commercial sponsors accounted for 80% of the stadium’s funding. Hans-Joachim Watzke, Dortmund’s CEO, has candidly admitted, “we would not be playing in the Bundesliga anymore without the sale of the stadium naming rights.”

The German model is, therefore, more domestic in a business sense than the English and Spanish leagues. Bayern’s commercial revenue outstrips even that of Manchester United and Real Madrid, compensating for the greater international appeal of the top Premier League and La Liga sides. The strength and relative stability of the German economy has helped helped the emergence of both Bayern and Dortmund.

Leagues ahead

But it’s important not to mistake the health of individual clubs for the health of a league.

Bayern are currently well clear of second placed Dortmund — champions of the past two years. They in turn are well clear of third.

Bayern remain the only German club among the top ten richest in Europe. Only twice in the past 20 years has a team outside the top 20 money earners won the Champions’ League, with the most recent being FC Porto in 2004.

German lessons

Is there anything English clubs can learn from the German business model? Probably not. Each country develops a business model that fits its own particular needs and the German model, with its corporate, political and social alliances with regional organisations would be particularly difficult to replicate in England. Historically,the English regions have been saturated with clubs such that no single club carries the banner for any one region. Barcelona’s special relationship with the Catalan region provides the best parallel to this outside Germany.

Follow the money

As for the England national side, no amount of copying from successful nations is likely to make much difference. Based on the statistics, England has the record it should. As Simon Kuper and Stefan Szymanski argue in their book, Soccernomics:

The sad fact is that England are a good team that do better than most. This means they are not likely to win many tournaments, and they don’t.

It’s always tempting to take an event like two German teams competing for the Champions League title as an augur of things to come. But statistically speaking, it’s not unusual for the two richest clubs from one of the best football playing nations to meet in the final.

Every now and again a club like Porto will come along to make things interesting. But success still generally follows the money. In years to come Germany may not dominate the Champions League, but cash will continue to do so.

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