Could the Premier League learn from the Germans?

 

The party is over, it's time to grow up.

January's announcement that English football must become more prudent by introducing reforms within a year or face government intervention, followed by Thursday's warning from the Premier League on spending, signalled what could be an end to the era of extravagance.

The government is essentially looking for clubs to balance the books and for those books to be regularly checked by the Football Association.

The Premier League has stated it has regulations in place and is working towards what has been asked of them.

Premier League v Bundesliga

Premier League Bundesliga

1992

Formed

1963

20

Clubs

18

34,601

Av. attendance 2011-12

44,293

£28.30

Av. ticket price 2011-12

£19.55

£550m

Transfer spending 2011-12

£253m

£2.3bn

Revenue 2010-11

£1.6bn

£68m

Operating profit 2010-11

£154m

Across the continent in Germany, the Bundesliga  is flourishing because of a licensing system that has been in place since the league's inception in 1963.

This is essentially a set of guidelines for clubs to follow to ensure they remain financially solvent. The German football league (DFL) is the sheriff.

On the Bundesliga's licensing system, the German body states: "The DFL examines each club's fitness to participate in the league according to a range of criteria covering sporting, legal, staffing, administrative, infrastructural, security, media-technical and above all financial competence."

Failure to 'stay fit' could result in the club not having their license renewed and relegation. 

It sounds boring because there is no room to speculate to accumulate. However, the recent 50-page report detailing Bundesliga finances for the 2011-2012  season is proof of the success of the league's long-held philosophies.

Key points from the report:

  • Turnover of 2bn euros (£1.68m) for the first time in its 50-year history
  • Fourteen of the 18 clubs had posted a profit - double the total from the 2009-10 period
  • Highest average attendance figures of any of the top four European domestic leagues - more than the Premier League, Serie A and La Liga - with 44,293 spectators on average (about 10,000 more than the Premier League)

"The licensing system prevents clubs from going too far into debt," German football league (DFL) president Dr Reinhard Rauball told BBC Sport.

Continue reading the main story

Making and having high debt is not popular in our society

Dr Reinhard Rauball German league president

"It goes with the German mentality. Making and having high debt is not popular in our society."

Rauball, who also happens to be the president of league champions Borussia Dortmund,  has sat in the DFL hot-seat since 2007. He says the stringent rules have had positive knock-on effects.

"It's simple. The clubs control costs and don't spend more than they can afford," he added.

"Club management is more professional now and creates higher revenue. The increase in media revenue created by the DFL is also a factor."

The former lawyer then proudly reeled off a statistic about Bundesliga ticket costs.

"The average price in stadiums is about 23 euros," he stated.

"Bundesliga matches should be affordable for everybody - that's what we want and that's our philosophy. Our passionate fans contribute to its success."

The figure of 22.85 euros equates to about £19.55. According to BBC Sport's 2012 Price of Football survey, the average price for the cheapest Premier League matchday ticket was £28.30.

But what the Dortmund president seemed proudest of is that the Bundesliga is currently "the most profitable league in Europe" - a title it has held since the 2008-09 season. 

Last year, Deloitte's report for the 2010-2011 season  revealed that the Premier League was by far the richest league with revenues of £2.3bn, while the Bundesliga and Primera Liga had generated £1.6bn each.

However, while the English league made an operating profit of £68m (down by £16m on the previous season) the German high-flyers accumulated £154m - a 24% increase on the previous campaign.

Wunderbar for Rauball.

Euro 2012 highlights: Germany 4-2 Greece

Income from advertising, media distribution and ticket sales have helped produce the record revenues, but the Dortmund chief believes it is the outlay on transfers, or lack of, that have boosted profits.

"Profit is the base of our success," he added.

"We've worked on developing our youth programme. Players like Mario Gotze [Dortmund], Thomas Mueller and Bastian Schweinsteiger [both Bayern Munich] were educated in our youth centres. That's why we don't need to spend millions and millions of euros on foreign players.

"We can attract the world's best, but we're not willing to spend crazy amounts of money. We'll continue to focus on German talent that comes out of our academies. Clubs invest about 105m euros a year in those academies. We are proud of them."

To put that into context, the 18 Bundesliga clubs spent about £253m on transfers during the 2011-12 season, while the 20 clubs of the Premier League  splashed out £550m.

Rauball is adamant heavy investment in foreign talent has had a detrimental effect on the England national team, who have not reached the last four of a major tournament since Euro 1996, while Germany have reached five semi-finals in that time.

"That was a problem. The quality players in Premier League have been from other countries," he said.

"When you try to build a team for the World Cup, the coach hasn't many players to pick from. In Germany we want to go down two lines - one of them is to help our coach Joachim Loew."

Paul Rawnsley, director in the Sports Business Group at financial analysts Deloitte, recognised the Bundesliga's success, but added that football associations could also learn from the English model.

Bayern Munich Thomas Mueller

Bayern's Thomas Mueller is a product of Germany's successful club youth academies

"In terms of its global exposure and revenue generation, the Premier League has achieved an unassailable position for the foreseeable future," he told BBC Sport.

"Sports clubs from around the world look to learn from England about aspects such as facilities investment and business development.

"Premier League clubs already face an array of financial regulations and this will be further enhanced when Uefa's financial fair play break-even requirement applies from next season for international competitions, and the Premier League clubs are also considering additional cost control regulations at a domestic level.

"In some respects the evolution of German club football within the context of that country's business culture and state funding of stadia provides an interesting case study. Different leagues can maybe learn different things from each other."

Perhaps the British government has already started learning. In 2010, former DFL chief financial officer Christian Muller provided a detailed written submission to the Department of Culture, Media and Sport  outlining why the Bundesliga has been a rip-roaring success.

So, maybe it's time to swallow some pride. England might claim to have given the world football, but it could be that Germany has provided the framework for its future.