FC Bayern Munich is a rather unique club, not just because of their success, but because how the club is run. The club has neither crushing amounts of debt on the balance sheet nor an ultra-rich investor as most of its international competitors do. In this article we will try to pinpoint how the club has managed to become one of the most prominent clubs in world football and maintain financial stability.
FC Bayern Munich is by far the most successful club in Germany. Since its founding (in 1900) the club has won more than 50 national titles and achieved international glory by winning the Champions League more often than any other German team. But it wasn’t always like that. To understand how they got there, we must go back to the 70s, which marked the turning point for the club. After five years without a national title, Bayern was struggling with a lot of debt. They decided it’s time for change and hired their former player Uli Hoeneß as a new general manager. To financially stabilize the club, Hoeneß realized that they had to expand their revenue streams.
It is important to point out that at that time, matchday sales made up around 85% of the total revenue. To put this into perspective: In 2019, Bayern’s matchday sales made up only 14% – with more than half of the income coming from various commercial activities, like sponsorships and merch sales. And that’s largely thanks to Hoeneß. After taking over, one of the first things he did was to focus on merchandising. He adapted strategies from American sports leagues – that significantly boosted the club’s revenue. In the past, fans might have been able to buy a jersey and maybe a scarf. Today fans can sleep in their favorite club’s bed sheets, shave their beards with a Bayern razor and even eat toast with the club’s logo on it. All thanks to the vision of Hoeneß.
But besides his strong focus on merchandising and marketing, Hoeneß realized the importance of a state-of-the-art stadium. For a long period, Bayern was taking advantage of the Olympic stadium that the city of Munich built for the 72 Summer Games. With a capacity of more than 60.000 spectators, it was one of the largest arenas in Europe at that time. And due to Bayern’s success, the home games were usually sold out. The matchday revenue laid an important financial foundation for the club for decades.
That’s why Hoeneß strongly advocated the construction of a new arena. He saw that Bayern had grown out of the multifunctional Olympic stadium and needed their own tailormade arena. Like for the Olympic stadium in 72, they took advantage of another major sporting event in Germany: The Fifa World Cup 2006. The “Allianz Arena” was completed right before the world cup, with a capacity of 75.000 spectators. Despite harsh critique from fans and Bayern executives, Hoeneß convinced enough people to make the stadium come to reality.
Even after the Allianz Arena was built, some fans complained that the atmosphere in the Arena would be bad and the ticket prices too high. This confrontation at the Annual Shareholders’ Meeting led to a raging speech of Hoeneß: ‘If we didn’t have the Allianz Arena, you’d be playing in ice and snow again. We’d only have 12.000 watching against Bolton Wanderers.’
Now let us see where the club is currently in terms of finances. The club has paid off all its debt. Bayern is the exclusive owner of the arena and therefore receives 100% of the matchday revenue without having to pay rent to the city or any other owners, like many other clubs have to. Whether it is the vast merchandise business or the paid-off Allianz arena. The financial success of Bayern today is largely shaped by Hoeneß and his legacy.
But while a business model relying on sponsors, matchday and broadcast revenues is not that different from other European top clubs, what really makes Bayern unique is their shareholder model. Bundesliga clubs are obliged by the association to hold the majority of their voting shares. This is known as the 50+1 rule, ensuring that the respective club always has the last say when it comes to strategic decisions. FC Bayern restricts those percentages even further when it comes to their shareholders: According to their statute, they will never sell more than 30% of their shares. Currently, 25% of the shares are equally distributed amongst three investors: Adidas, Audi and Allianz. The remaining 75% are owned by the club itself.
This has two major benefits: the club is independent of investors in its decision making; and receives a large share of its profits to reinvest back into the club – for example to buy new players. While their competitors are either owned by private investors or hugely in debt, the FC Bayern GmbH is still owned by the club. Their so-called ‘Festgeldkonto’ is a legendary reference in German media, alluding to the hundreds of millions in cash on their bank account.
Since the beginning of the Hoeneß-era, Bayern has never returned to be in the red again. With that philosophy in mind, the club would only acquire players that they could afford without having to go into debt. They also don’t want to be dependent on one single player like Barca with Messi. A recent example: the negated contract extension of David Alaba. Despite Alaba being a vital part of Bayern’s success, the club was not willing to pay his demanded salary.
Let’s summarize: Hoeneß built the financial success of Bayern on organic growth, independence from external investors and national dominance. The national dominance is not just seen in their success in the Bundesliga, but also by their investment into the German market. Hoeneß positioned the club as a national hero by always making sure to sign some of the best German national team players.
That in turn makes the club attractive to sponsors who target the German market and its 80M consumers. It’s no coincidence that the three external stakeholders of the club are German companies. We’re done telling the story about Bayern as the national hero. And so is the club itself. With Hoeneß stepping down from presidency, the emphasis on the national hero now takes a back seat to the focus on becoming a global player. This process will be guided by the new president Herbert Hainer. Hainer was CEO at Adidas for 15 years and led the company to unprecedented global success. This expertise is what Bayern needs to expand on the international market.
Pairing Hainer’s economic knowledge with the football knowledge of Oliver Kahn, who is the new chairman, taking over in 2022, allows the club to move into its desired direction without detaching from its core values. By establishing “…a holistic club-strategy, which reduces complexity and grants orientation”, as Kahn explains, the club wants to “expand their strengths and exploit their potentials”. This strategy is laid out in a secret master plan labeled: “FC Bayern AHEAD”.
The key pillars of the internal document leaked already: Consistent positioning among the top 5 clubs in Europe. Financial common sense regarding superstar transfers and heavy investment in their own academy to become more independent from the transfer market in general. And to develop a more consumer centric approach to stay true to its roots.
At first, the plan might sound exactly like the things that Hoeneß has already done in the past. But on closer inspection, Hainer and Kahn follow a more strategic approach than just their gut-feeling. Some recent moves of the club show a clear emphasis on international marketing, especially regarding the Asian market. Bayern invests in its own youth academies in Asia to develop talents and potentially have them play in the Bundesliga. This very organic market development strategy could be the key for opening the revenue-floodgates of the Asian market. They have already made a first step into this direction by partnering with KONAMI. During this partnership, FC Bayern made their first appearance in the world of eSports in 2020.
By choosing ProEvolution Soccer and KONAMI, not FIFA and Electronic Arts, the club specifically targets the Asian market. The investment into eSports is a first clear distinction from the Hoeneß era, who always refused to make that move. The new management duo of Kahn and Hainer wants to distance the club from the management style of former president Uli Hoeneß. While Hoeneß was famous for short-term gut decisions and polemics, the concept paper sounds more like a long-term and level-headed strategy for the future.