Coronavirus and German football's 50+1 rule

Despite all the discussions surrounding the logistical, medical, social and ethical implications of a Bundesliga restart, the decision was ultimately a financial one.

With 13 of the 36 clubs which make up the Bundesliga and Bundesliga 2 reportedly facing existence-threatening shortfalls without the fourth and final installment of broadcast rights payments, the German Football League (DFL) has had little choice but to try and finish the season. 

Now that the German government has given the green light to resume play, the broadcasters have paid up and the clubs are safe for now, although they will have to do without matchday revenue.

In the absence of any action on the pitch over the past two months, the spotlight has fallen on German football's finances. Given the industry's increasingly obvious reliance on TV money, a fundamental debate has re-emerged.

The 50+1 rule

"We have to see it as a fact that the 50+1 rule hasn't helped certain clubs," Bayern Munich's new club president Herbert Hainer told broadcaster ZDF last week. "Some have a greater need for capital than others."

The so-called 50+1 rule has been written into German league statutes since 1998 and stipulates that a German football club must hold a majority of its own voting rights in order to compete in the Bundesliga, thus preventing the sort of takeovers by external investors which are commonplace in England. 

The crux of Hainer's argument is that, were German clubs able to sell majority stakes, they would potentially have had rich backers prepared to step in and plug the financial gap during the current crisis.

Hainer's comments certainly piqued the interest of Martin Kind, the former president of second-division side Hannover 96 and outspoken critic of the 50+1 rule. In 2018, Kind failed in an attempt to secure an exemption from the rule.

"I shall be following the debate closely," the 76-year-old told Sky television, repeating his long-held belief that those clubs with more corporate structures are in better financial health.

"I personally recommend that the [50+1] rule falls," he said at the end of March. "For me, Bundesliga clubs are commercial enterprises and the coronavirus crisis has revealed current weaknesses."

But would adjusting, relaxing or even abolishing the 50+1 rule help at all? And at what price?

"Certainly, from a cash point of view, the 50+1 rule is restrictive," says Kieran Maguire, an expert in football finance at the University of Liverpool management school.

"However, it's restrictive for good reasons. Would it allow investors to come in if the rule were abolished? Yes. But then the clubs would cease to belong to the fans. They would belong to the hedge fund or sovereign wealth fund or whoever else chooses to get involved."

Who does football belong to?

German football fans are fiercely protective of the 50+1 rule and are quick to man the barricades at any suggestion that it might be under threat. 

In March 2018, with Kind's attempted takeover of Hannover still in the balance, the "50+1 stays!” campaign handed over a 30-meter-long petition signed by over 3,000 fan groups from across the country ahead of the DFL's annual general meeting.

"50+1 is the one rule which still shows German football where it belongs and who the clubs belong to – namely to their fans and members, not to individuals or businesses," Manuel, a spokesperson for the "50+1 stays!” campaign, told DW.

"I like being a fan of my club because I can also be a member of it and be part of it. I don't know if I'd like to be part of club if I knew that it actually belonged to one rich individual, a company or a foreign country which is using it for geopolitical reasons."

Sovereign wealth funds such as Saudi Arabia's Public Investment Fund aside, football finance specialist Maguire believes there are not many potential billionaire buyers of football clubs in the current market anyway.

"If you're a high net-worth individual, do you really want the aggravation of owning a football club?" Maguire asks. "Unless you get it exactly right, it can be a very expensive and painful exercise."

'50+1 not up for negotiation' - DFB

Nevertheless, for every Martin Kind and Herbert Hainer, there are also voices within the game who remain in favor of the rule.

"The 50+1 rule is not up for negotiation," DFB treasurer Dr. Stephan Osnabrügge told DW.

"It is firmly anchored in our constitution – and with good reason. It protects clubs against the sort of cases which have taken place in other countries, where a large investor comes and buys a club, pumps in a lot of money and then withdraws it two years later, leaving the club to drop down the leagues because they haven't operated sustainably."

The issue of sustainability has been raised by organized supporters' groups who have questioned how a multi-billion-euro industry can suddenly find itself on the brink of collapse.

"We can see now that football has got a lot wrong in the past and that many clubs have been badly managed," says fan campaigner Manuel. "But that has nothing to do with the 50+1 rule. There are examples of clubs who are doing absolutely fine without big, external investors."

SC Freiburg, for instance, eighth in the Bundesliga when it was suspended with nine games left in the season, have made a combined profit of €18 million ($19.4m) in the past two years and are considered one of Germany's best-run clubs. In a recent survey, the club's ultras found that 92.4 percent of Freiburg fans were in favor of the 50+1 rule while only 1.8 percent would like to see it scrapped.

"50+1 is a core element of German football," the club's financial director, Oliver Leki, told German football magazine kicker. "We need to do all we can – even if that means making certain adjustments – to ensure that it can stand up to any legal challenge."

Borussia Dortmund CEO Hans-Joachim Watzke has also dismissed the idea of not having 50+1 in place – at least as long as the current Bundesliga season is played to its conclusion and clubs remain financially secure.

"People have been ringing me up for years offering hundreds of millions of euros if we abolish the 50+1 rule, so that they could then control a majority stake," he told German tabloid BILD in April. "That's out of the question at BVB, but the more clubs which come under existential financial pressure, the more likely it could become.”

Changes afoot?

With the Bundesliga to return on May 16, German clubs are safe for now.

Still, the two-month break has given German football ample time to think about the way it is run, and DFL chief executive Christian Seifert has suggested setting up a task force to investigate potential future changes. 

"It's about players' wages, shamelessly touted wealth, transfer fees and agents who make millions for a standard employment contract which they can download from us online," he recently told German newspaper Frankfurter Allgemeine Zeitung.

"If we have the courage and endurance to think about changes in professional football and implement them in the long term, perhaps something positive can arise out of this crisis."

Whatever changes are made as a result of the coronavirus crisis, the 50+1 rule appears safe for the time being.