Success on and off the pitch: The business model of the German Bundesliga

During the 2015-16 season the Deutsche Bundesliga (Germany's first division soccer league consisting of 18 clubs) generated revenues in excess of 3 billion Euros for the first time in its 52 years of existence. The 23.7% increase in total revenues from the previous season was the 12th consecutive revenue increase. 13 of the 18 clubs earned revenues in excess of 100 million Euros during the 2015-16 season, whereas in the previous season only 9 of the 18 clubs did so. Three of the clubs were among the top 20 revenue generating clubs in European professional soccer. The Bundesliga recorded a record breaking after tax profit of over 200 million Euros and 16 of the 18 clubs reported positive operating profits. Financial success was accompanied by "success of the pitch" as well. 4 of the 18 Bundesliga clubs are ranked consistently among the top 20 teams in the UEFA club rankings. During the 2014 World Cup in Brazil, the Bundesliga had 73 players competing for various national teams ranking third. The Bundesliga club FC Bayern Munich led all club teams by having 15 of its players participating in the World Cup. As Christian Seifert, the CEO of the Deutsche Fussball Liga (DFL) expressed, the Bundesliga "is succeeding in the split between top level sports performance and economic rationality."

This paper provides an empirical analysis of the "Business Model" of the Deutsche Bundesliga. We compiled a set of financial data and a set of proxies for "success on the pitch" utilizing various sources, including the DFL's Bundesliga Reports, Deloitte's Football Money League Reports and online databases such as Statistics.de and transfermarkt.com. This data set allows us to identify the sources of the financial success of the Bundesliga and its clubs as well as how the financial success translates into "success on the pitch". We perform regression analyses (ordinary least squares (OLS) and fixed effects models with robust standard errors) to determine the causes of the financial success. We find that the financial and sporting success of the Bundesliga is based on a business model that emphasises the importance of having a balance of several revenue sources (match day, broadcasting, commercial sponsorship, and transfer), rather than relying heavily on one source (as it is for example the case in the EPL). We also show that the Bundesliga's revenue sharing model for broadcast revenues incentivizes player development, which leads to "success on the pitch".