The season of 2001-02 was the last time when four Bundesliga clubs participated in the Champions League. Since then, the Bundesliga had to remain satisfied with three Champions League berths, trailing nearest rivals Serie A in the UEFA’s coefficient ranking system. But a recent surge in Bundesliga’s performance has made it again a force majeure in Europe. Their consistent performance in Europa League had recently earned them enough points to come within striking distance of Serie A in the ranking system. With Napoli‘s defeat in the round of 32 of last season’s Europa league, Bundesliga finally surpassed Serie A. From season 2012-2013 we will see four Bundesliga teams feature in the Champions League. How long they can keep that one extra important slot from their nearest competitor is, of course, another discussion!

The Ranking System

Let us first take a look at how the system works. Two points are rewarded for every win in the continental competitions, and one point for a draw. Similarly there are other incentives as well. Teams that qualify for the group stage get 4 bonus points. Qualifying for the knockout rounds fetch 5 bonus points. Qualification to the quarter/semi/final of either of two tournaments fetches an additional point. Coefficient of a league for a single season is just an average of the total points gathered by clubs of the league for that season in the continental competitions i.e total points earned by teams representing a league divided by the number of teams representing the league in that season’s Champions League or Europa League. The actual coefficients are calculated for a period of 5 years where the coefficients of each year is added up to make the final calculation.

UEFA Coefficient till 2010

The above image gives an idea of where it stood at the end of last season. It shows that Inter needed to win at any cost against Bayern in 2009-2010’s Champions League final or else they would have fallen 0.49 points short off Bundesliga(Bundesliga =64.21 + 2/6 = 64.54 and Serie A =64.34 – 2/7 = 64.05). Even a stalemate after normal and extra time in the final would have ensured Bundesliga’s lead as win via penalty shootouts are not a part of results. As a result, Bundesliga would have won the right to send four teams in the Champions League of 2011-12. Presently, Bundesliga have a healthy lead of 10.93 over Serie A. This ensures that from 2012-13′, Bundesliga will have an additional representative in Europe as compared to Serie A and since Bundesliga will have four representatives, the lead could prove fatal for Serie A to surpass them any time sooner.

However, the validity of the coefficient ranking system may be questioned. In the last five years, two Serie A clubs have won the Champions League whereas Bayern Munich was the Bundesliga club to qualify for Champions League final, that too once. It can be seen that only by the virtue of strong performances in the now defunct UEFA Cup and Europa League, Bundesliga has enjoyed a growth in the ranking system. So much so that even in the season where Inter won the Champions League, Bundesliga outscored their Italian counterparts by 2.6 points.

Serie A fans might argue over the fact that the ranking system in which Champions League and Europa League carry similar weight in points is flawed. Champions League must have a different calculating approach. N’est-ce pas? No! It is not. The ranking system was there when Serie A was at the top (2002-03). It was still there when La Liga overtook them. And it is still there as Bundesliga surpassed it. What remained same is Serie A teams’ consistent perfunctory attitude towards Europa League. When it is a known fact that both Champions League and Europa League comes under similar calculating system, Serie A clubs should have pulled their socks off to perform in Europa League. It is almost suicidal to concentrate only on Champions League when it is known that ignoring Europa League makes qualifying for the former more difficult. It is a mess which is own making of the Serie A clubs’ and they would do better to take a necessary action instead of complaining.

How Bundesliga Overcame The Slump

At the turn of the millennium, Bundesliga and its alter ego, the Nationalmannschaft, had to toil hard as quality players became a rare commodity. A disconcerting alarm bell set off following Germany’s inglorious ouster from the quarter final of World Cup 1998 against not so fancied Croatians. After having ousted from the group stage of Euro 2000, it was evident that Germany’s footballing tradition is slowly but steadily rolling towards an inevitable demise, with names like Matthäus, Klinsmann, Völler, Sammer etc seemed like mythical beings of a forgotten folklore. The situation took its toll on the coefficient ranking system as well, as Bundesliga surrendered their fourth qualifying spot to England in 2002.

The Story Of Assimilation

At such a chaotic crossroad of German football, the DFB took certain decisions to steer the country’s football future back to where it belong to. Much of Bundesliga’s recent burgeoning recognition can be categorically attributed to its cultural soufflé, an envious youth development program and a visionary financial reorganization. Click here to know more about how Germany, a pied-à-terre for the players with migratory background, was helped by its socio-political milieu.

The Story Of Catching ‘em Young

In 1999, DFB vice president Franz Beckenbauer, national team manager Erich Ribbeck, Bayer Leverkusen general manager Reinhold Calmund and DFB Director of Youth Development Dietrich Weise put forth a concept to set up a youth development program. Under the new vision, all 36 clubs from both Bundesliga 1 and 2 were obliged to operate centrally regulated academies. Clubs failing to do so wouldn’t be granted license for practicing professional football.

The system was soon implemented. 121 national talent centers were built for youngsters from nine to seventeen years old. These academies would have fulltime coaches for training, emphasizing primarily on the technical and individual skills of the lads. The estimated cost to make it functional exceeded €10m for over five years. Most of the clubs would start with the U-9 kids. To hone their individual skills the kids are made to play 4-a side matches in small pitches and the drill continues till U-12 level after which the youngsters practice with full teams and learn more about the technique on the ball.

Under the radar there was also another issue which needed to be addressed through the implementation of this new system. Bundesliga, which had only 17% foreigners plying trade in 1992, saw a healthy influx of foreigners. In 1997, the numbers of foreigners shoot up to 34% and by 2003 it reached about 44%. So, there was a need to prioritize the hunt for young Germany-qualified talent. To implement it, it became mandatory for the clubs to recruit at least 12 kids at the very junior level who are eligible to play for Germany. Thanks to the ignited system, these days the number of foreigners has gone down to 38%, which means at least 62% of the Bundesliga players will be able to represent the nation.

A young Germany, with the youthful exuberance of its 23 representatives in the latest edition of the World Cup, was the brainchild of this experiment. Thus, by Innovations at the grass-root level combined with a strong financial and ideological commitment at the top, which is between the clubs and DFB, have put German football in a position where it can look optimistically towards the future.

German team in the World Cup

The Story Of Book-keeping

German football’s Zen – it’s harmony of fans, parity amongst competitors and financial solvency, is a direct result of its chi-like financial landscape.

Sepp Herberger, who managed West Germany to World Cup glory in 1954 used to ask, “Why do people go to football matches?” Bundesliga CEO Christian Seifert answered it, “It’s because they don’t know how it ends. Our championship has been absolutely unpredictable.” In the last five seasons Bundesliga has had four different champions, making it one of the most competitive amongst the top five football leagues in the Europe. And all this makes the fans of the teams to get more involved with their teams.

The Shareholders

Fans are an integral part of the German football culture. Such is their importance that Bundesliga’s prime target is to attract them to the stadiums to watch the team they follow, live in action. The league has the lowest average ticket price in Europe (around €20). It also has the highest average match-day attendance, accommodating nearly 42000 fans (seventh time in a row). Borussia Dortmund’s stand, The Yellow Wall, which holds 26000 fans and is the biggest in the world, has an average ticket price of €15. Some tickets at the Allianz Arena are available for as low as €12. To attract fans, the clubs limit sell of season tickets so that it can attract more number of different sets of fans. Even the away teams reserve the right to avail 10% of tickets for their fans. Sell of match tickets double as free rail passes with supporters travelling in a relaxed atmosphere in which they can sing or booze, and are generally treated as desirables.

The real shareholders

The Equilibirum

Simon Chadwick, a sports economist from the University of Coventry in England, once said,

The Bundesliga is being held up as a model of financial virtue and good governance. What you’re not getting is entrepreneurs buying up clubs and amassing massive debt and then leaving the club behind in difficulty.”

Until the late Nineties, fans, who paid to be a part of the clubs, were the owners. In order to remain competitive with their English and Spanish counterparts the clubs soon realized they need to attract third party for investments. But while doing so, Bundesliga made sure that there will be a financial fair play involving all the teams so that German football stave off the financial instabilities which results from when rich entrepreneurs swooping in to purchase clubs.

During early time, Seifert voiced a caveat, “You have great and serious investors but the question is: What happens if you have investors who maybe only have a short-term interest, who want to trade their shares in the clubs?” In order to lay the foundation of a system devoid of hostile takeovers by wealthy foreign investors who doesn’t really care for the national team, Bundesliga came up with the 50+1 model. Here, the fans will still hold 50% of the club’s share, as well as 1% extra of the spinoff. This way the clubs aren’t allowed to behave like irresponsible teenagers with their parents’ credit cards at their disposal. Of course, there are clubs who are completely owned by private investors, viz Wolfsburg who are owned by Volkswagen, Leverkusen who are owned by Bayer Pharmaceuticals. But in both cases, ownership is still community-based.

The Balancing Act

There is a handbook in which all the financial details are stipulated, including the details on liquidity, debt etc. Each and every club, irrespective of their reputation, will have to abide by the rules. One of the rule states that the clubs will have to demonstrate their financial projections like the expected expenditure, budget, expected revenue etc. In other words they have to prove that they are financially stable enough to play  in league, or at least head towards breaking even, and pay the footballer’s wages timely.

If clubs fail to maintain the strict financial guidelines, they could be fined; their license could be denied or withdrawn so that they do not get to practice professional football. A couple of seasons back Bundesliga 2 side Arminia Bielefeld were docked four points and later fined €50000 for breaching the terms of their license for suffering a financial shortfall. To keep a track of the financial numbers of all the clubs DFB also reserves the right to order an additional audit by a third party if the numbers aren’t adding up. In the words of Seifert, “We make sure that the licensing system doesn’t work in a way that somebody just writes a letter and draws some flowers around the numbers. We make sure all the figures are reliable because they have to be checked by professional accountants.

The strict regulatory rules are placed so that clubs could run without facing any hiccups in the financial front unlike their other continental peers. These checks also ensure that they do not engage themselves in paying inflated transfer fees or by not letting payrolls mushroom. Last year, the financial regulations played a huge boost in Bundesliga’s financial division as they charted €1.7bn turnover which also included €30m profit. The clubs paid less than 50% of their revenues for player’s wages, the lowest in Europe.

Bundesliga has three streams of fetching revenue – gate receipts, sponsorship deals and broadcasting revenues. The gate receipts in Serie A are much low as compared with Bundesliga, partly because of the high ticket price which often works as a negative catalyst among fans. Empty seats are nothing like an out of the ordinary sight. Huge sponsorship deal with Deutsche Telekom along with shirt sponsorship deals, in which Bundesliga even surpassed the tally of Premier League in 2008, mounted their combined sponsorship deal worth €573m last year, highest in Europe. However, in TV revenues they are well off from their other continental counterparts and Seifert has explained it all,

When pay-TV was introduced in 1991 the average household already received 34 channels for free. Therefore we had the most competitive free TV market in the world, so this influenced the growth of pay-TV very much. We were forced to show all of the 612 games of the Bundesliga and second Bundesliga live on pay-TV. So we have to carry the production costs of this.