Robust Bayern Munich stay in profit

Bayern Munich, champions of Germany for a record-breaking 10th consecutive season in 2022, have also underlined their commercial resilience in making a profit throughout the pandemic years. Bayern are the only German club to make a profit in each of the past three seasons, in 2021-22, their pre-tax profit was € 12 million. In 10 years, Bayern’s most successful era, they have won 19 major trophies, but they have also built a corporate model that is much envied around football. The value of Bayern Munich has quadrupled in recent years.

Bayern’s president, Herbert Hainer, explained at the AGM the club stands on three pillars: sporting success; economic stability; and social commitment. The pandemic does not appear to have caused any of Bayern’s key areas to collapse. “We continue to be absolutely stable as a club overall with all departments. Even more than that, we have made profits every year and continue to set standards as a club. Our club is a role model throughout Europe,” he said.

Bayern Munich’s income totalled € 639.9 million, an increase of 2% on 2020-21’s € 630 million. The club said they had come through the past difficult year very well, a period characterised by high gas prices, inflation and the continuing hangover of covid-19. “This is a strong result,” said Bayern’s Chief Financial Officer Jean-Christian Dessen. “We never spend more than we earn and we are completely debt free.”

This is quite evident in Bayern’s transfer activity. In 2021-22, they spent just € 57.7 million, but their outlay in 2022-23 has so far totalled € 137.5 million, although they recouped € 104 million in sales. Among the big fees was the € 67 million paid for Matthijs de Ligt of Juventus and € 32 million for Liverpool’s Sadio Mané. On the either side of the ledger, Bayern received € 45 million from Barcelona for goal machine Robert Lewandowski.

Bayern are now 100% owners of the Allianz Arena and they have 295,000 members making them the biggest membership club in the world. The Bayern campus has now been fully paid off and the site has already appreciated considerably. The portents are good for further growth, despite the difficult backdrop, and Bayern anticipate group revenues to rise to € 770 million in 2022-23.

Bayern have received some criticism for benefitting from a sponsorship deal with Qatar Airways, notably at the 2021 AGM. Bayern receive some € 20 million a year from the airline, which represents 10% of their sponsorship and advertising income. The club has said it will discuss the issue after the forthcoming World Cup. Oliver Kahn, Bayern’s CEO, commented that the club is discussing the issue with its stakeholders: “If you want to change something, you have to meet people, talk to them and exchange ideas… you have to listen, understand and explain. We’re doing that within our partnership with Qatar Airways.”

Bayern remain one of the world’s most proficient clubs when it comes to commercial activity and overall, their earnings from this stream totalled more than € 375 million in 2021-22. Overall income from matches totalled € 160 million while media revenues from domestic fixtures totalled € 100 million. Bayern’s wage bill was € 324 million, which equated to 51% of income.

Bayern’s position in the game has meant that sponsors are happy to maintain and broaden relationships with the club. For example, Bayern’s shirt sponsor, Deutsche Telekom, has been involved with them for 20 years, the T logo becoming synonymous the country’s most successful football entity. Similarly, Bayern have extended their partnership with Proctor & Gamble for a seventh year.  This is spearheaded by the club’s “stronger together” initiative which promotes mental health. As part of this, P&G donates € 500 for every Bundesliga goal scored by Bayern’s men and women first teams.

Three huge icons of German corporate life, Audi, Allianz and Adidas, all have 8.33% stakes in Bayern. But Bayern is not just a German brand, it is very much a global club and offices have been opened in the US and Asia. Bayern almost acts as a conduit for Deutschland AG to break into new markets.

Bayern’s domination of German football shows no sign of letting up, despite the loss of key players. They have qualified for the last 16 of the Champions League after winning their first four group fixtures and they have lost just once in 10 league games. They are second in the table, four points behind Union Berlin, but nobody would seriously bet against them adding another Bundesliga title to their trophy cabinet.

FC Bayern’s failure – early onset decline?

ALTHOUGH the Real Madrid-Chelsea tie captivated the continent, the seismic news was actually the shock elimination of Bayern Munich at the hands of Villareal. Defeat by a Spanish club is not unknown to FCB, indeed in the last decade, they have gone out to La Liga representatives six times, but usually, its Real Madrid, Barcelona or Atlético Madrid that have inflicted the damage.

Villareal are managed by Unai Emery, who has bounced back from his unhappy time at Arsenal to win the UEFA Europa League and now reach the last four of the Champions League. There may more than a few Arsenal fans who now wonder if the likeable Emery deserved more time than 78 games to turn the Gunners into something credible.

But nobody really expected Villareal to turf Julian Nagelsmann’s team out of the Champions League, even when the “Yellow Submarine” won the first leg of the quarter-final tie by a solitary goal. Now, people are starting to ask if 34 year-old Nagelsmann has arrived at the Allianz Arena too early in his somewhat charmed career. The Bayern top brass will undoubtedly decide whether the gamble has worked. After all, the club may well win their 10th successive Bundesliga title, but that will be the only piece of silverware to be polished in the close season.

Bayern are currently nine points ahead of second-placed Borussia Dortmund, with five games to go. The two sides meet on April 23 at the Allianz. Over the previous nine years, the average margin between Bayern and the runner-up in the Bundesliga has been more than 12 points. This year it may be similar, but Bayern’s goalscoring has declined. The nine-year average is 91, but the past two years have seen Bayern score 100 and 99 respectively.

The team that drew 1-1 with Villareal included four players who are at the veteran stage of their careers, including Manuel Neuer (36), Robert Lewandowski (33) and Thomas Müller (32). This trio has been pivotal in the Bayern story and there are hints that Lewandowski, whose contract runs until June 2023, will not sign a new deal and will move to Barcelona. Müller, who missed a golden chance to clinch the tie in Munich, and Neuer, also come to the end of their current deals in 2023.

The rest of the squad includes a cluster of players – the likes of Pavard, Kimmich, Goretzkam Coman and Gnabry – who are probably at their very peak. It’s only two years since Bayern last won the Champions League, but have this collection got another victory within them given Lewandowski, for example, will need to be replaced soon? The prolific Pole has scored 235 Bundesliga goals in his time with Bayern, representing 33% of their total output.

Bayern have the money to find a replacement and potential heirs to Lewandowski’s throne include Bayer Leverkusen’s Patrik Schick (26), Stuttgart’s Sasa Kalajdzic (24) and Benjamin Sesko (18) of RB Salzburg. Bayern have spent € 747 million over the last 10 years, less than Borussia Dortmund, but the position of the Bundesliga is underlined by the expenditure of Manchester City and Chelsea, whose gross outlay is around double the total spent by Germany’s biggest two clubs. Dortmund have made their name in selling talent, hence their income from transfers over 10 years is dramatically higher than Bayern’s. While their income was higher than their expenditure, Bayern had a net spending deficit of € 376 million. Basically, they don’t need it to be any other way as the club has made a profit for 29 consecutive years.

So it is clear – Bayern can win Bundesliga titles quite comfortably given their financial model and cultural position in Germany, but where does that leave them (indeed, Germany) in Europe? We have seen the power of the Premier League over the past three seasons and the 2021-22 final may well be another all-English affair, but Germany is increasingly becoming a little uncompetitive at the very highest level. This season, three of the four Bundesliga teams went out at the group stage (Leipzig, Dortmund and Wolfsburg). In 2020-21, German interest ended at the quarter-finals. In 2020, Bayern were champions and Leipzig semi-finalists. There has been something of a decline, which may be temporary or may become exacerbated by the Premier’s economic advantages.

Furthermore, Bayern’s dominance in Germany may not necessarily be good for them in terms of making them competitive beyond their domestic league. RB Leipzig and Borussia Dortmund are their biggest rivals, they have occupied positions two and three in the Bundesliga for four of the last five years, but they are way behind FCB on and off the pitch. As for the rest, few clubs are consistent (or rich) enough to put excessive pressure on Bayern.

Whether Nagelsmann can ride the stormy weather ahead is open to question, although it cannot be denied Bayern have, at times, played superbly in 2021-22. Yet some Bayern fans want him to leave and others don’t always warm to his demeanour. Nagelsmann has said his first campaign has not been a success, but that inevitable Bundesliga title will be his first major trophy. One big landmark for a relatively young man, one small step for his employer.