Schalke’s relegation – a jolt for big club immunity

THE POPULAR view is that Europe’s dominant clubs, those with more money, fans and business acumen than their rivals, will never get relegated again. To some extent, closed leagues, the rationale for the aborted European Super League, have almost been created in some countries in all but name. But how do you define a big club and just how secure are they?

A truly huge footballing institution earns its status based on a number of criteria, including: heritage, financial strength, spectator appeal, cultural position and influence, contribution to the development of the game, contribution to their home country’s national team, and ultimately, success on the field of play.

When these things become disconnected, a big club can suddenly find itself falling into decline. The assumption is that the group of elite clubs are so well insulated that failure is not necessarily relegation, but more likely not qualifying for the Champions League or delivering a trophy-less campaign.

Underachievers

At the end of 2020-21 season, Schalke 04 finished bottom of Germany’s Bundesliga and were relegated. Schalke are regularly named among Europe’s top 20 (KPMG #15, Deloitte #16, Soccerex #97, Brand Finance # 20) clubs and one of the most passionately supported in Germany. They are underachievers, but their position in German football is very significant, even though they have been relegated before. Furthermore, they are one of the biggest clubs not to have won the UEFA Champions League.

Germany’s footballing structure and its conservative ownership rules mean that Bayern Munich aside, the rest of the league is fairly democratic. Hence, in recent years, some of the top names have suffered relegation, including 1FC Köln and Hamburg. Schalke’s collapse has been building over three seasons. In 2018, they were runners-up to Bayern Munich, admittedly by 21 points. But since then, they have finished 14th, 12th and 18th.

Schalke’s relegation is the culmination of a broad range of problems, not least financial issues. The club has a high level of debt – € 200 million – and saw its revenues fall by 31% to € 222.8 million in 2019-20, largely due to a 41% decrease in broadcasting income. The club’s chief financial officer, Peter Peters, departed in June 2020 to add to the gloom.

It’s hard to think of a bigger club going through relegation in recent years, which does feed the theory about the rich having some level of immunity, but is a reminder that if things get out of hand, the mighty can fall.

Fortified

Clubs like Real Madrid and Barcelona would seem to be among the most fortified against relegation. In England, the big six clubs would also fall into this category, but Manchester United and City, Chelsea, Tottenham and Liverpool have all been relegated at some stage in their history. The most recent was Chelsea, who were relegated three times between 1975 and 1988. Tottenham went down in 1977 but bounced back immediately.

Manchester United’s demotion in 1974 is now the stuff that legends are made of: the famous Denis Law backheel (in the colours of Manchester City) that was NOT responsible for sending his old club down, the feral crowd invasion and the club’s bounce-back in 1975. City have been relegated several times in the past 50 years and as recently as 2002, they were in the second tier of English football and even had a year in the third tier in 1998-99.

Taking the formation of the Premier League as the start of recent football history, of the 49 clubs that have played in the top flight, only seven have never been relegated: Arsenal, Brighton, Chelsea, Everton, Liverpool, Manchester United and Tottenham. 

Over the past decade, the average time in the lower division for a relegated Premier team has been just over three seasons, which is comparable to Ligue 1’s average. Only Spain’s La Liga among the top five leagues has a higher number – 3.36 seasons. The lowest is Serie A at 2.80 seasons per relegated club and the Bundesliga is not far behind at 2.90. 

Unsurprisingly, since 1992, most of Europe’s blue riband clubs have remained in their top divisions: Real and Barcelona in Spain;  PSG, Lyon and Bordeaux in France; Inter and AC Milan in Italy (Juventus were “relegated” in 2006 as punishment for their part in the Calciopoli scandal); Bayern and Dortmund in Germany; and five of England’s “big six” (Manchester City the exception).

Advantage

What would send a major club down in this age of hubris and elitism? The obvious answer is financial crises, either macro problems or a club losing its benefactor, owner or main sponsor. Over-leveraged clubs are particularly vulnerable when an unexpected event occurs. Given that success is now so tightly bound to financial power, it is perfectly conceivable that we may witness a transformational event that sends a club to the wall or, at best, enforces relegation upon a club. In some ways this is more likely than a conventional relegation created by poor performances on the pitch.

Most football clubs have golden periods but these can end and often they are never reclaimed. Scan the names in England’s Championship and the lower divisions and you will come across former champions Nottingham Forest (also twice European Cup winners), Sunderland, Derby County, Portsmouth, Huddersfield Town and Preston North End. No club has a divine right to enjoy prolonged success. 

Schalke 04, for example, have long been considered to be on the fringe of the elite, thanks to their huge support. Like Tottenham in England, their last league title was over 60 years ago – Schalke fans can barely remember being the top club. They will, of course, be favourites to win promotion, but 2. Bundesliga also includes Werder Bremen, Hamburg SV, Fortuna Düsseldorf and Hannover 96, clubs who may feel they belong in the top flight. They may have a competitive advantage if the crowds return to the Veltins-Arena in Gelsenkirchen. If they don’t or normal services becomes further delayed, then Schalke may find it just that little bit harder to return to the Bundesliga.

@GameofthePeople

Photo: Alamy

Schalke 04 are defining what crisis really means

IN the past few years, some big clubs have suffered relegation from the Bundesliga: Hamburg, Köln, VFB Stuttgart and Fortuna Düsseldorf to name but four. The list could see Schalke 04 from Gelsenkirchen added this season if the current form of the royal blues continues over the coming weeks. 

It has been a grim 12 months for Schalke, they have won just one league game in that period, a surprise 4-0 victory over Hoffenheim, and they have financial problems to contend with. Unless there’s a dramatic turnaround, Schalke will drop into Bundesliga 2 for the first time since 1991.

It’s not just on the field where problems exist. The club has a high level of debt – € 200 million – and saw its revenues fall by 31% to € 222.8 million in 2019-20, largely due to a 41% decline in broadcasting income. The club’s chief financial officer, Peter Peters, departed in June 2020 to add to the gloom.

The club initiated a series of money-saving measures one of which, a proposal to shift Schalke from a 100% member-controlled to a corporate partnership, has not gone down well with the club’s fans. Schalke has 160,000 members, the second largest group in Germany. The club’s roots are in the working-class mining communities and have more than a hint of socialism about them. 

Problems started to gather momentum in 2019-20 when Schalke went 16 games without a win, dropping from the top six to below mid-table. The malaise continued into 2020-21, Schalke starting with an 8-0 defeat at the hands of Bayern Munich. David Wagner, who was appointed coach in July 2019, was sacked in late September 2020 and Manuel Baum was appointed as his successor. Baum didn’t last long – 11 games – making way for interim manager Huub Stevens. Schalke hired Christian Gross at the end of December with the aim of rescuing the club’s Bundesliga status. Gross, a much-travelled coach, has worked in Egypt, Saudi Arabia, Switzerland, and England, as well as the Bundesliga with VFB Stuttgart.

Schalke lacked substantial resources to reinforce their squad. They needed some financial assistance and were offered cash from former president Clemens Tönnies. The club’s supervisory board prevented the injection of cash from Tönnies, but shortly afterwards, two new sponsorship deals were secured from cleaning company Stötling and sausage producer Böklunder. To make matters more complicated, it emerged that Böklunder was a subsidiary of one of Tönnies’ business interests. The new sponsorship gave Schalke around € 6 million of funds that could be used in the transfer window.

This is relatively small beer, though, and Schalke need radical reconstruction if they are to have any chance to staving-off relegation. What’s more, the club has had to implement a salary cap. New faces have arrived, including 37 year-old former favourite Klaas-Jan Huntelaar and a couple of loan signings, William (Wolfsburg) and Sead Kolašinac (Arsenal). Schalke II striker Matthew Hoppe has also stepped-up to the first team. Schalke do have a promising defender in Turkish central defender Ozan Kabak, who has interested Liverpool. The Premier League may have to wait until Schalke’s future is decided.

Schalke are hoping that the veteran Huntelaar can provide the sort of impetus that Zlatan Ibrahimovic has given AC Milan, but it’s a tall order. The influx of new players may simply lack the quality to change the outcome.

Has Schalke’s decline been exacerbated by empty stadiums? They normally average 60,000-plus at the Veltins-Arena and it’s a very passionate crowd. If relegation does come and covid-19 continues to wipe-out matchday income, Schalke’s financial position will not improve in the near-term. On the field, you would normally expect they should have enough to challenge for a swift return to the Bundesliga, but these are very challenging and uncertain times for one of Germany’s biggest clubs.

@GameofthePeople
Photo: PA