RB Leipzig – Can one team change the financial future of German Football?

Full time at the Allianz Arena, 1860 Munich 0 – 3 RB Leipzig. RB Leipzig won their first ever game in the 2^nd division this past weekend after a disappointing draw against VfR Aalen on the opening weekend. While this may seem insignificant to many, this could be the start of something that could change the financial future of German football.

German Football couldn’t be higher at the moment. Combined with their recent World Cup win, the Bundesliga is attracting record TV audiences for their games with new and improved TV deals with companies such as BT Sport in the UK bringing in more money than ever. Of the big 5 European leagues (English Premier League, Primera Division, Serie A, Ligue 1 and the Bundesliga) the Bundesliga can boast the highest average attendance per game, 43,502 to be exact. Also in the Top 20 average attendances of European football clubs last year there were 7 Bundesliga sides and even one Bundesliga 2 side, FC Köln, who came 19^th with an average of 46,235 (they were promoted to the Bundesliga for the upcoming season). In European competition as well the German teams compete with the rest. There is of course the 2013 Champions League Final for example which was Bayern vs Dortmund and this season Dortmund were unlucky to be eliminated whilst Bayern dominated the first leg of their semi-final but fell apart in the return fixture against Real Madrid.

Before going into detail about RB Leipzig I will give some background on the financial side of German football. Until 1998 all clubs were structured as ‘eingetragener Verein’ or member associations, which meant they were owned by their members and any money made had to be invested back into the organisation. Then clubs were allowed to separate the professional football section into external limited companies, however these clubs were still under the influence of the ‘50+1’ rule, which ensured the members still maintained a majority in the club. This rule along with other measures were put into place to help clubs create long-term growth strategies as well as restricting overspending and debt. This combined with the fact that UEFA’s Financial fair play is being more strictly enforced, we’ve already seen Manchester City and PSG fined, points to a bright future ahead for German football.

While all this was going on a small club called SSV Markranstädt was bought in 2009 by media-shy billionaire Dietrich Mateschitz the co-founder of Red Bull and who now owns a 49% stake in his company. He had already caused controversy when he bought Austrian team SV Austria Salzburg and changed the name to RB Salzburg before pumping millions and helping the club to win the title and get into Europe. When he arrived he changed the name from SSV Markranstädt to RB Leipzig (the RB officially stands for RasenBallsport because he wasn’t allowed to name the club Red Bull Leipzig). When he bought the club they were in the fifth division and he came up with the goal of reaching the Bundesliga within ten years and in 2010 moved them to a 44,300-seater stadium that was built for the World Cup. In 2012 the ex-Schalke and Hoffenheim coach Ralf Rangnick was installed as sporting director and given a budget believed to be around €100 million to invest in the club.

Many German fans are extremely worried that they could undermine all the years of work that went in to make the Bundesliga the financially sound force that it is today. Although RB Leipzig doesn’t break the 50+1 rule it doesn’t strictly adhere to it. There are only 11 members, most of whom are club employees, (Bayern have 224,000 members) and membership costs €800 a year after a €100 joining fee (Bayern’s membership fee is €60 per year) and unlike other clubs RB Leipzig can refuse an application without reason. At the end of the 2013/14 season RB Leipzig finished second in the 3^rd division, which meant promotion but they were nearly excluded due to licensing issues. This was due to the fact that the top 2 divisions in German football are run by the DFL who are a separate organisation within the DFB who run German football as a whole. The DFL have stricter financial and commercial guidelines that the club have to abide by and because of this RB Leipzig were forced to alter their badge to look less like Red Bull’s logo.

One upside of RB Leipzig’s rise is that it would be beneficial to East German football, which ever since the country was reunited has suffered, there are currently no East German clubs in the Bundesliga and in the 2014 World Cup squad only Toni Kroos, now of Real Madrid, was born in East Germany. Because East German football is suffering many young players are leaving and moving to the academies of West German clubs, like Toni Kroos who although born in East Germany moved to Bayern age 16.

To conclude RB Leipzig will most likely be in the Bundesliga soon, if not next season and although their rise has been controversial they haven’t broken any rules and will therefore continue to operate as they are currently doing so. Although other clubs such as Bayern could decide to copy RB Leipzig this is unlikely as fans are important to the clubs and they won’t take kindly to that style of ownership.