Bayern Munich: The money minting monster

After five years without a national title in the 1970s, Bayern was struggling with debt. They decided it was time for a change and hired their former player Uli Hoeneß as new manager. To financially stabilize the club, Hoeneß realized Bayern had to expand its revenue streams.

Back then, 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% of their revenue – with more than half of the income coming from various commercial activities, like sponsorships and merchandise. Hoeneß was in many ways ahead of his time. Upon taking over, he focused more efforts on merchandising, and adopted fan engagement strategies from American sports leagues, significantly boosting the club’s revenue.

Before Hoeneß, fans might have been able to buy a jersey and a scarf, but that was the extent to it. Today fans can sleep in their favorite club’s bedsheets, 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. The matchday revenue laid an important financial foundation for the club for decades.

That’s why Hoeneß strongly advocated for the construction of a new arena. He saw that Bayern had grown out of the multifunctional Olympic stadium and needed their own tailormade arena. The “Allianz Arena” was completed shortly before the 2006 FIFA World Cup, with a capacity of 75,000 spectators. Having now paid off all its debt in stadium costs, Bayern is the exclusive owner of the arena. Die Roten receive 100% of the matchday revenue, without having to pay rent to the city or any other external owners, like many other clubs.

But marketing and merchandise aren’t the only areas of expertise that the German club focus their attention on. Bayern has a unique shareholder model, going further than just adhering to the Bundesliga’s 50+1 rule, to extend their own set of principles even further. They have vowed to never sell more than 30% of their shares. Currently, the club only has three equal shareholders holding 25% of shares in total – Adidas, Audi, and Allianz. 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. Their so-called ‘Festgeldkonto’ is a legendary reference in German media, alluding to the hundreds of millions in cash on their bank account.

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 80 million consumers. It’s no coincidence that the three external stakeholders of the club are all German companies.

It’s evident for all to see that Bayern Munich are doing well in the financial market, but the club continues to have ambitions to progress, and extend their dominance to a global stage. Herbert Heiner will now lead the charge of making Bayern a global player. Hainer was the CEO of Adidas for fifteen 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 will be the new chairman in 2022, allows the club to move into its desired direction without detaching from its core values. In Julian Nagelsmann, they have a manager capable of winning trophies, and extending their dominance.

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 five clubs in Europe. Bayern want to be the best, by consistently beating the best. But they don’t stop there. The club also emphasize financial stability in balancing superstar transfers with heavy investment in their own academy to become more independent from the transfer market in general. Historically, Bayern don’t pay the outlandish fees to sign big name players like Real Madrid or Manchester United do. The one time they broke that model was in signing Lucas Hernandez on an €80 million, making him the most expensive Bundesliga player of all time. It’s safe to say that Hernandez hasn’t exactly paid back his debts and that Bayern could be reluctant to spend such a hefty fee again in the future, instead making more sensible transfers based on the needs of the team.

The third and final pillar leaked in the document is to develop a more consumer-centric approach, staying true to its roots as a community club. 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 in regards to the Asian market. Bayern have started training camps in various Asian countries to scout new talent and sell merchandise through verified partners. Bayern also collaborated with Konami, the Japanese video game company to tap into the E-sports market. Football is growing in countries like China, India, and Japan, and Bayern is taking advantage of the potential gains of this upcoming wave. 

With the growing global viewership and support for the club, it will be interesting to observe the upcoming business innovations that Bayern brings to the table against the ongoing COVID-19 backdrop. For now, regardless of COVID-19, Bayern remain in a financially secure position and continue to put the work in on the field to win titles.

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