The merits of the 50+1 Rule in the Bundesliga: An insight into Bayern’s recent success

The novel coronavirus pandemic has had a negative impact on the entire sporting industry. For football, it has meant the loss of revenue for several months and resultant salary cuts and austerity measures imposed by different sporting bodies. The biggest sufferers include those Clubs whose main source of revenue is the selling of matchday tickets. Hence, lower league teams of England, Spain and Italy, where clubs largely depend on matchday revenue were on the verge of bankruptcy. In Germany, unlike the other ‘Europe Top 5 Leagues’, the coronavirus pandemic has affected all tiers of German football. It has once again sparkled and resurfaced the debate about the need for continuing the “50+1 Rule” followed by the teams in Germany and especially the ‘Bundesliga’, the German top football division.

This article aims to explain the 50+1 Rule followed by whether it merits continuance in the Bundesliga. This would be explained by analysing the enormous success of Germany’s big hitters, FC Bayern Munich.

The 50+1 Rule: Protecting the fans

The 50+1 Rule had been imbibed into German statutes since 1998 to prevent investors such as millionaires and multi-national corporations to take over the complete control of the Club. As is described by one of our articles, the 50+1 Rule stipulates that registered associations, and its members must hold a majority of voting rights in the football club. The German Footballing Association (“DFB”) states that Clubs cannot participate in the Bundesliga if they are in violation of this rule. The external investor seeking to own a stake in the Club, would need a sporting license, which would be issued only if majority stake of voting rights is owned by the member association and this majority stake is in turn owned by several fans of the Club, thereby implying that the fans are involved in the decision making of the Club.

Hence, in effect it is a rule enforced to dissuade potential investors from completely controlling and managing the football club. As most investors see football as a large business opportunity, they are ready to pump in their own funds. However, in the event that Clubs fail to meet expectations and generate a loss, what is to stop this investor from neglecting the interests of the Club and walk off? Stability and continuity are hallmarks of all successful teams, and hence the DFB has sought to protect and legitimise the interests of the Clubs and fans. Owners under the 50+1 Rule are not barred from acquiring 100% shares, however they can acquire only a maximum of up to 49% of the voting rights. Logically speaking from a business perspective, it makes no sense to inject millions of euros to not have a majority stake at the voting table.

Nevertheless, it does not imply the Bundesliga has not seen a private investor own the majority of a club. There are three exceptions to date. An exception was made by the DFB for Bayer Leverkusen and VfL Wolfsburg where the pharmaceutical giant Bayer and automobile manufacturer Volkswagen respectively, were allowed to acquire the majority voting stake as these groups demonstrated an interest in the Club for more than 20 years. The latest exception was made for SAP owner Dietmar Hopp to acquire Hoffenheim recently. Hence, if a private investor has an interest in the Club for 20 years or more, the DFB can make an exception for these investors.

Is the Bundesliga suffering or prospering?

The coronavirus has led to a sharp decline of revenue for several Bundesliga clubs. As there have been no spectators inside stadiums for several months now, a large chunk of revenue is unavailable for Clubs to spend. Hence, there have been eyebrows raised about the merits of the 50+1 Rule, and whether it would have been better off to have private investors infuse millions of euros and protecting clubs in these times of crisis.

While Premier Clubs in England are much better off in terms of revenue, their high expenditure has led to large number of losses over the last several years. However, it is apparent that Premier League Clubs are able to attract top talent and lure young prodigies due to large wages and bonus packages. This has led to some discontentment from various top persons in the Bundesliga circle, such as Bayern Munich CEO Karl-Heinz Rummenigge and Hannover 96 President Martin Kind, as they cannot match the Clubs in England on a financial level.

While it would be foolish to say that private investors would not be able to improve the financial pull of Clubs, a departure in the 50+1 Rule would be shambolic news for German fans. The entire concept of German football is that it is run by its supporters. As many footballers have continuously stated, football is nothing without the fans. The 50+1 Rule brings the fans together with the top Club officials, the players and the community itself. This is why German stadiums have a staggering 40,000 people average every game, the highest in the world. Affordable ticket pricing and large sellouts to loyal fans is what sets German football apart from the rest of Europe. While it is true that the extra injection of money can aid the Bundesliga Clubs in recruiting better players and competing for higher places in the Champions and Europa Leagues, it is not a sure fire method. This is highlighted by Bayern’s resurgence under Hans-Dieter Flick, as illustrated below.

Bayern’s resurgence under Flick:

To accentuate Flick’s genius since he took over from the sacked Niko Kovac, let us put Bayern’s woes into perspective. He was unexpectedly promoted from Assistant Manager to Head Coach in 2019, when Bayern were in 5^th place, 11 points behind leaders and arch rivals Borussia Dortmund. Flick had no new additions to his existing squad, and had two key defenders, namely Niklas Sule and Lucas Hernandez injured for large parts of the season. The team had very few consistent performers and the team was struggling to resemble the same Bayern Munich who were champions previously for seven continuous seasons.

When Flick took over, he revitalised the entire team, and transformed a decent squad on paper into a world class squad. Flick had revived the roles of twos World Cup winners in Thomas Muller (the ‘Raumdeuter’) and Jerome Boateng. He found a new left-back and centre-back in 19-year-old Canadian Alphonso Davies and Austrian David Alaba respectively. What Flick got to Bayern was a change in their style of play, while sticking to Kovac’s 4-2-3-1 formation. From the attacking sense, Flick allowed for more creativity in the team and allowed youngsters like Gnabry and Davies to express themselves. No player was constantly in their original starting role, with different players found at different sides of the field, making it hard for opponents to prevent them from scoring. Muller, Gnabry and Lewandowski frequently interchanged positions in the central part of the top third of the field, with full-backs Davies and Pavard pushing on and delivering crosses at regular intervals. While defending, Flick ensured that they played a high-press and would close down gaps for all short passes forcing opponents to hit the ball long. This led to them winning the ball back quickly for large parts of the game. Flick’s tactics ensured that one of the two central midfielders, Thiago or Kimmich would sit in front of the two central defenders and cover up for the wingers or midfielders. Bayern’s weakness was quick counterattacks from long balls in behind the defense, but who better to save you than 34-year-old world cup winner Manuel Neuer, who is often known as the ‘sweeper keeper’.

Flick’s brilliant team and man management ensured that he has till date, won 46 out of his 51 games in charge, while winning 5 trophies in his relatively short career, with the possibility of adding the sixth when they play in the Club World Cup in February 2021. To put this into perspective, he has won more trophies than he has lost games as a head coach! Flick, an individual who has never even been head coach before, has therefore revolutionized the same Bayern team previously performing miserably under Niko Kovac. He had no new acquisitions in the transfer market, had the same set of players and had key players missing for large parts of the season.

While Flick was a large reason for Bayern’s recent success, one has to give due consideration to the structure of a club in the Bundesliga i.e. who are the top officials at the Club. All of Bayern’s key managerial and administrative positions are spearheaded by their very own. From Uli Hoeneß to Karl Rummenigge to Miroslav Klose, all are former Bayern players and this helps in the proper functioning of the entire Bayern unit. How was this possible? The 50+1 Rule. As fans are involved in the decision making, the trust level and rapport with their own players is laudable. Unlike many English Premier League clubs who hire managers or have owners who have no relation to the Club whatsoever, the 50+1 Rule ensures that the fans themselves feel the responsibility to be rested on their own idols. They also allow for more trust in the Chairman, President and other positions and believe that they understand the fans the best and represent their needs and ideas.

To pull off a season like that makes you wonder if it really matters if a Club has an owner who can inject billions of dollars. Football is not about the money. Sometimes it is just about a manager and set of key persons who get the team together, know how to man-manage the squad and ensure that they play like one unit, as illustrated by Flick’s reign at Bayern. The Bayern resurgence demonstrates that money doesn’t buy success, and the 50+1 Rule is unfairly criticised.

The 50+1 Rule is here to stay!

At the end of the day, one has to remember why has football has been so popular for the last several decades in comparison to other sports? The clear answer is the connection of football to its fans. If people do not associate football so closely to their hearts, we wouldn’t see thousands of fans pouring in every week to watch their boyhood club play in spite of their hectic schedules, bad weather or a poor run of games. As Bill Shankly once famously said:

“Some people think that football is a matter of life and death. I assure you, it’s much more serious than that.”

The beauty of this quote is that it orchestrates how football fans see their club and their sport. They feel a connection like no other, and for many, the success of their club would keep them up and about even if they are personally not doing so well.

Now when you look at the 50+1 rule, you realise why it is so important. Even if this rule is replaced and we see new multi-millionaires pump their business money into the club, that success will never taste the same as compared to when the fans themselves feel part of the history and tradition of the club. Bayern’s recent success epitomizes on that spiritual connection between fans and their Club. In addition, one must not rule out the merits of this system. The 50+1 Rule ensures financial stability, as is adequately highlighted by the former UEFA president Michel Platini at the 41^st DFB Conference:

“While the rest of Europe has boring leagues, half-empty stadiums and clubs on the verge of Bankruptcy, German football is in remarkable health”.

The DFB sought to balance between investment by private investors in order to compete with the likes of teams in England or Spain, while also ensuring financial stability. One should remember that the 50+1 Rule does not completely prohibit private investment. They do allow for these investors acquiring a majority stake if they show substantial interest and dedication towards the Club (a period of 20 years) as can be seen in the cases of Bayer Leverkusen or Hoffenheim. Further, it ensures and maintains the legacy of footballing clubs, hence earning the respect of supporters from other teams. For example, Chelsea FC’s fortunes have only turned after the ownership was handed over to Russian billionaire Roman Abramovich. In comparison, the legacy of clubs like VfB Stuttgart, Werder Bremen, Aston Villa, or even Leeds United would always bode well with players, owners, football pundits and fans alike.

Conclusion:

Football has been successful for generations due to the close intimacy it has with its loyal supporters. Football from being a sport played competitively for the pleasure of the sport itself, has now hit the commercial and finance racks. In today’s day and age, football is fast commercializing and is as much as a business and livelihood as it is a sport. Fans tend to blame owners and investors for lack of funds instead of appraising their own style of play and what can be done to improve the existing squad. Football has never been about the money at a Club’s disposal. Never was, never has been. If there is anything football has taught us, it is that money does not buy success. It certainly helps, but it cannot ensure consistency of results and trophies, as can be seen by Paris Saint German’s and Manchester City’s mega projects. It is fairytales like Leicester City winning the English Premier League or Atlanta FC’s rise to the Champions League that makes us want to stay glued to the sport, no matter what. While the 50+1 Rule somewhat limits the Bundesliga teams’ financial capabilities, it ensures that football remains associated to its fans and enshrines the mantra: “Football first, business second”, a rule so engraved within the heart of the football community. When doubters question the merit of such a rule, let success stories such as Flick’s stint at Bayern make the noise!

Anshul Ramesh

Anshul Ramesh, is a fourth year law student pursuing BA.,LL.B. (Hons.) from Jindal Global Law School, Sonipat, India. He is an avid football fan and is a die hard supporter of FC Bayern Munich.