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In the future without Gazprom:
The highly indebted football club Schalke 04 has said goodbye to its jersey sponsor Gazprom
Photo: Markus Endberg / imago images/Markus Endberg
What hasn't the Bundesliga had to go through in the past two years: The corona pandemic with its lockdowns and ghost games abruptly ended a rapid, unprecedented growth phase.
The license to print money turned into a loss-making business model overnight, traditional clubs were threatened with bankruptcy, the vaccination status of players was temporarily more important than the results of the match day.
And as soon as something like light appears at the end of the tunnel, Russia's war against Ukraine throws the next spotlight on the system's weaknesses: With Schalke 04, a former top club finally becomes a social case in the league because events force it to break away from its to separate the controversial Russian main sponsor Gazprom.
But these are all just symptoms of a much deeper problem.
Desolate finances: the fatal consequences of short-term thinking
Up until the 2019/20 season, the Bundesliga was still considered an economic success story.
But within a few months, the far-reaching loss of income caused by the Corona crisis revealed how little sustainably financed many clubs were and how quickly they could get into financial difficulties.
According to the DFL economic report, the 18 first division clubs lost almost 220 million euros in revenue in the 2019/20 season compared to the previous season, the first decline in 15 years.
The following year things continued to decline as TV money and merchandising revenue dwindled.
The pandemic had sapped clubs of business while at the same time developments in the transfer market and player salaries remained rampant.
Declining sales with stagnating expenses at a high level: This vicious circle continues to this day.
Solidarity funds, state guarantees, fan bonds and much more were the result, but they could not replace a viable business model.
The feared insolvencies did not materialize, but former top teams such as Werder Bremen and Schalke 04 were defeated in sporting terms.
Many clubs have still not changed their minds.
A robust long-term strategy would be needed that builds sporting success on solid finances, pronounced fan welfare maximization and sustainable corporate and management structures.
Instead, short-term thinking and squad planning according to the cash situation continue to rule.
In September 2020, the DFL created a task force for the future of professional football, which, in addition to the economic recovery of the league and its clubs, is also intended to take care of sustainability in the areas of ecology, economy and social affairs.
This is commendable, but in reality little of it has arrived so far.
The professional football business model is currently not economically sustainable and therefore not crisis-proof.
Lack of attitude: inadequate governance structures
But a number of clubs are not only in deficit economically: the Ukraine war shows that things are also in trouble on a socio-political level.
Example Schalke 04: After the Russian invasion, the club parted ways with its main sponsor Gazprom.
The fact that this partnership was extremely questionable from the point of view of social sustainability should have been clear to those responsible in Gelsenkirchen long before February 24, 2022.
Nevertheless, the heavily indebted club collected ten million euros per season from Vladimir Putin's state-owned company for 15 years and gave Matthias Warnig, a close confidant of the Russian President, a seat on the supervisory board.
Schalke fans have been protesting against both the partnership and the personnel for years.
But war had to break out before management acted.
The rules of good corporate governance are of crucial importance for the long-term viability of a club.
It has been scientifically proven that good corporate governance has a positive influence on the performance of companies - and professional football clubs are no different.
It can also make a significant contribution to more stable corporate development, in particular through a clever and transparent composition of the Supervisory Board.
In this context, it sounds like mockery when people are now considering giving Schalke 04 financial support from the league after Gazprom has left as the main sponsor.
Any company would have been penalized for such a cooperation policy on the capital market.
Good corporate governance structures must become standard in the Bundesliga if it wants to be economically successful in the long term.
Weak leadership: Lack of personalities
On March 11, 2022, the new DFB President is to be elected at the 98th Bundestag of the German Football Association.
With Peter Peters, one of the people up for election is a person who accompanied and was responsible for the Gazprom deal at Schalke 04 and the economic decline of the club.
His candidacy is therefore controversial, his election would call into question the credibility of the entire association.
Nevertheless, Peters is not without a chance.
The personnel is an example of a lack of professionalism and credibility in many areas of professional football, both at club and association level.
Strong, business-savvy leaders are urgently needed to stabilize both the economic situation and the reputation of the industry.
A survey by Ansbach University and the University of Würzburg in cooperation with the sports magazine "Kicker" shows how bad the reputation of the DFB is: A good 90 percent of those surveyed criticize the lack of transparency in the election process, almost 74 percent are in favor of primary elections Presidents by the members.
Almost 91 percent rate the image of the DFB as bad overall.
A disastrous picture that urgently needs to be corrected if you don't want to gamble away professional football's most important asset in the long term: the loyalty of the fans.
A restart is necessary
The Corona crisis has plunged the Bundesliga into an economic crisis, but little has been learned from it.
However, with the Ukraine war at the latest, it has become clear that clubs and league associations have decided to "Keep it up!"
can no longer afford.
They need to remember that social responsibility is part of their DNA, yes, part of their business foundation.
If the institutions and the individuals who represent them do not understand this, football's credibility crisis will deepen and make the long-awaited economic recovery even more difficult.
Short-term activism replaces responsibility that is not lived.
Such charades are exposed very quickly.
You can already tell that this game won't go well for much longer,
Henning Zülch is Professor of Accounting and Auditing at the HHL Leipzig Graduate School of Management. He is the author of over 450 journal articles on international accounting and financial communications. He is also the scientific director of the "Investors' Darling" competition organized annually by manager magazin. In addition, his research focuses on the transferability of basic business principles to the successful management of sports clubs. This column does not necessarily reflect the opinion of the editors of manager magazin.
