Economics of football: how the Bundesliga can become more exciting again
Created: 07/22/2022, 21:20
Prof. Justus Haucap is director of the Düsseldorf Institute for Competition Economics (DICE) at the Heinrich Heine University in Düsseldorf.
© Bruckmann/M.
Litzka/DICE
The Bundesliga is very popular – for now.
But given the dominance of FC Bayern Munich, the championship is threatened with boredom - with far-reaching economic consequences.
In order to make the league more attractive again, ownership should no longer be taboo, writes competition economist and football fan Prof. Justus Haucap in the guest article.
Düsseldorf – The Bundesliga starts again in two weeks.
Many fans hope that the race for the German championship will not be as boring as in previous years.
While in the English Premier League the champion wasn't certain even ten minutes before the final whistle of the last matchday, for us it's more a question of how many matchdays before the end of the season FC Bayern Munich can celebrate the next championship.
Bundesliga: Premier League and La Liga can better exploit the demand potential
In the traditional survey of the professional magazine
kicker
among the first division coaches, FC Bayern should again be at the top.
On the betting markets, a tip on Bayern as champions in 2023 currently gets around 1.20 euros for every euro wagered if Bayern actually become German champions for the eleventh time in a row.
For a tip on Borussia Dortmund you get seven euros or more, for everyone else an even higher odd.
So the markets clearly expect Bayern to be back at the top of the table at the end of the season.
On the other hand, it is hardly to be expected that another team will become German champions.
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Despite this supposed boredom, the interest of spectators and sponsors in the Bundesliga has not waned – yet.
The revealed preferences therefore do not suggest that the consumers – viewers and advertisers – find the Bundesliga boring.
In an international comparison, only the English Premier League has more viewers than the Bundesliga in absolute terms.
However, if you put the number of spectators in relation to the population of the respective country - assuming that football spectators come primarily from within Germany - it is noticeable that La Liga in Spain is also able to exploit the demand potential much better.
In the last pre-Corona season 2018/19 without restrictions, 13.7 million spectators made the pilgrimage to English stadiums, which is 21.4 percent of the English population.
In Spain there were 9.9 million viewers and thus 21.0 percent in relation to the population, in Germany 13.3 million viewers and thus only 16.5 percent.
It is striking that the championship is much more exciting in both England and Spain.
In the past ten years there have been three different champions in Spain and five in England.
The other two major leagues that have also been dominated by individual teams over the past ten years – i.e. France by Paris Saint-Germain and Italy by Juventus Turin – also have significantly lower attendance figures.
Maybe this is an indication to do something to make the competition in the Bundesliga more balanced.
Bundesliga: Soli contribution would weaken the international competitiveness of the top clubs
A first possibility would be to extend the redistribution of funds not only to media rights revenues, as is the case today, but to all club revenues, including advertising, ticket sales, merchandising, etc. This could be done by Solidarity levy is levied on all income and this pot is then redistributed.
The problem with this approach, however, is that it is likely to further weaken the top German clubs in European competitions, since money does score goals after all.
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Bundesliga: Upper salary limits are hardly transferrable
Approaches from the American professional leagues NFL or NBA, such as the introduction of upper salary limits for teams, cannot easily be transferred to Europe, because on the one hand they would only make sense Europe-wide and the interests here are very heterogeneous, on the other hand because they can actually be circumvented with tricks , for example by “parking” players elsewhere, by receiving sponsorship contracts or by employing relatives.
It would nevertheless be worth considering how anti-competitive behavior can be better prevented.
Jürgen Klinsmann recently remarked in an interview that one of Bayern's competitive advantages is "always being able to damage the competitor by ripping out important pieces from those who come too close to them."
In competitive economics, a similar problem has been discussed for some time under the keyword "killer acquisitions".
This means that companies – for example in the pharmaceutical industry – acquire competitors just to stop their operations so that no competition arises from them.
In the Bundesliga one could – at least with regard to players – consider imposing penalties on clubs if new players whose value or salary exceeds a certain amount are not used or are hardly used and only sit on the bench.
Bundesliga: Abolishing the 50+1 rule could counteract financial unequal distribution
Probably the most drastic measure, and one that is least popular with football fans, would be to repeal the so-called “50+1” rule, according to which it is not possible for investors – with a few exceptions – to take the majority of votes in corporations in which football clubs put their professional teams have outsourced.
The majority of the shares in an association must (almost) always be in the hands of the members.
However, only almost always, because there are exceptions for Bayer Leverkusen, TSG Hoffenheim and VfL Wolfsburg.
The Bundeskartellamt has been dealing with this rule for some time and is particularly concerned that the three exceptions will distort competition.
At the same time, RB Leipzig, for example, manages to circumvent the meaning of the rule through a clever club construction without violating the wording of the regulation.
In England, investor equity has ultimately not led to a waning of interest from fans and viewers.
The English league is - compared to the Bundesliga - much more exciting, at least as far as the outcome of the championship race is concerned, and the English clubs are also more successful internationally than the German clubs.
Abolishing the 50+1 rule could counteract the extreme unequal distribution of financial resources in the Bundesliga.
Given the current shaky legal situation and the monotony of the championship race, it would be a good time to reconsider.
About the author: Prof. Justus Haucap is director of the Düsseldorf Institute for Competition Economics (DICE) at the Heinrich Heine University in Düsseldorf. From 2006 to 2014 he was also a member of the Federal Government's Monopolies Commission, four of which as chairman (2008-2012). Haucap has been campaigning for the legalization of cannabis for years.