⚽️ Have you ever wondered about the business model behind a major European soccer club?

Apologies in advance to our ex-U.S. readers for not using “football.”

Today, we'll break down one of the most profitably run sports teams in the world, and more, in just 4 minutes to read.

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SOCCER CLUB’S BUSINESS MODEL

A standout club

When you think of the biggest soccer clubs in the world, often the English Premier League or clubs in Spain like Real Madrid or Barcelona come to mind, but F.C. Bayern Munich is, arguably, the best-run (financially speaking).

The club has been profitable for three decades, has won 32 Bundesliga titles — Germany’s top soccer league, and sports an enterprise value of nearly 3 billion euros ($3.2 billion) but no debt.

In 2022, Bayern Munich earned about $704 million, placing it sixth in the international pecking order, with Manchester City earning the most at around $786 million.

Conservative finances

Bayern Munich was one of the only clubs not to lose money during the Covid pandemic, a testament to the organization’s financial prowess.

Marie Schulte-Bockum, a Munich-based European soccer reporter, explains, “They’re very prudent, and they’re very frugal in how they handle money. To put it in layman’s terms, they do not spend what they do not have. And that is exceptional in European football.”

Unlike other clubs, Bayern Munich has made it clear they don’t want “quick money,” aka large foreign capital injections. Schulte-Bockum says its “recipe for success” relies on “no oligarchs, no sheikhs, and no states.”

75% of Bayern Munich is club owned, with the remaining 25% split equally amongst the German conglomerates Adidas, Audi, and Allianz Insurance.

In German soccer, a rule was established in the 1990s to shield clubs from short-sighted investors who wanted to use the sport as a “money printing machine,” forcing the clubs to retain majority ownership of their businesses.

Player run

On top of this, the club’s been run by former players for years. For example, Karl-Heinz Rummenigge, who played with Bayern for a decade and led Germany to a World Cup victory, served as the club’s Chairman of the Board, President, and Sporting Director.

Franz Beckenbauer, the Kaiser of Germany as he was fondly known, played for the team and spent years in charge of the club.

So did Uli Hoeness, a Bavarian local and player for Bayern who became the club’s Sporting Director after a career-ending injury.

Despite having no university education, Schulte-Bockum adds, “(Hoeness) really commercialized Bayern,” seeing a blank slate on players’ jerseys that could be better utilized for financial gain. He pioneered covering jerseys in ads — a decision now worth hundreds of millions of dollars each year.

Competitive dynamics

An interesting wrinkle in German soccer is that ticket prices are relatively cheap, costing 170 euros a season for 18 home games in the Bundesliga. This enables the country’s top team, Bayern Munich, to almost always sell out its arena holding 70,000 fans.

German TV revenue only compounds the club’s advantages: Bayern earned some 90 million euros in domestic TV-rights revenue, compared to the lowest-placed team, which received an 18 million-euro payout.

To address this structural disparity in German soccer, where the biggest teams earn the most, allowing them to bid more for the best talent, Schulte-Bockum highlights that smaller clubs often “sell their players” to larger clubs to “cash in on the talent on their balance sheets.”

This differs from the English Premier League, where TV revenue is shared equally between the league’s 20 member clubs.

The biggest costs

Bayern is, ultimately, a big global company, employing more than 1,000 people in offices from Munich to Shanghai and New York. Of course, its 27 players consume the majority of its salary expenses, though, costing about 250 million euros a year.

Paying the rest of its 1,000+ employees and coaching staff, not counting players, adds another 100 million euros to Bayern’s annual expenses.

Revenue streams

In the early 1980s, 80% of the club’s revenues were earned on match days, namely ticket and beer sales. Today, Bayern has brought that figure down to 14%, diversifying into other revenue streams.

In addition to match-day sales, the club also counts 300,000 fans as paying members who, somewhat symbolically, pay 60-euro fees to get discounted merchandise, a monthly magazine, and a few other perks.

Bayern draws considerable revenues from broadcasting rights. As mentioned earlier, a chunk of that comes from German TV, but international broadcasts pay handsomely, too. In fact, Bayern pulled in 115 million euros from Champions League TV last year.

The Champions League, which crowns the best European soccer club each year, is quite lucrative just to participate in. But having done well in the past also makes a difference financially.

See, the Union of European Football Associations (EUFA) runs the Champions League, and it uses what’re known as “UEFA club coefficients,” weighted points-based calculations derived from a club’s previous five years’ performance, to partially determine payouts from Champions League broadcasts.

Another revenue source for Bayern comes from its “commercial” division, yielding some 378 million euros.

That’s driven primarily by ad spots on the club’s jerseys (a single spot can run for tens of millions of euros) and the merchandise it sells worldwide (there are more than 4,500 Bayern Munich fan clubs globally).

Qatar Airlines paid 20 million euros just to claim a spot on the players’ jersey sleeves.

Dive deeper

For more, listen to this podcast breaking down Bayern Munich’s business.

See you next time!

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