50+1
The 'German Model' Explained

Just what do people mean when they refer to the 'German Model'? In this extended case study, we outline the key regulatory and day-to-day principles that underpin the way football in Germany is structured.

For more information, please see the 'Mein Verein - Perfekter Verein?' handbook, produced by Unsere Kurve as part of the 'Improving Football Governance through Supporter Involvement and Community Ownership' project, which was coordinated by Supporters Direct (SD) Europe. To access the handbook, click on the image below. 

UK_Handbuch.1

Although the focus of this article will be football, it is important to recognise the wider cultural norms that have led to the establishment of what can broadly be referred to as the 'German model.' In the post-war period, Germany has been characterised as a society that values cooperation and consensus, something that extends to its typical system of corporate governance. The concept of a supervisory and a management board (which exist independently of one another) is a cornerstone of the German corporation, whether it is a private limited liability company (GmbH), a public limited company (AG), or a limited partnership with one general partner that is liable without limitation (KGaA).

However, as well as conventional businesses, Germany also has a strong tradition of members' associations, based on community and social values. These are known as eingetragener Verein (e.V), and around 550,000 exist in Germany today.

'50 + 1'

This tradition of cooperation has exerted a powerful influence on the development of German football. Prior to 1998, all football clubs were structured as e.Vs, owned by their members and managed by democratically elected representatives. Any revenue generated by e.Vs has to, by law, be invested back into the organisation (in this case, the club). As well as a tradition of cooperation, many German football teams were established as 'sections' of multi-sport clubs, as is the case in many European countries. In the 2014/15 Bundesliga, six clubs (Augsburg, Freiburg, Mainz, Paderborn, Schalke 04 and Stuttgart) were structured as e.Vs.

Since 1998, clubs have been permitted to incorporate their professional football sections into external limited companies, separated from the 'parent club'. The League Association (DFL, of which all 36 professional clubs in the Bundesliga and 2. Bundesliga are members) decided to permit this with both commercial and competitive reasons in mind.

However, this does not mean that the twelve other clubs competing in the Bundesliga this season are not in the control of private investors - thanks to the rule which has become known as '50 + 1'. Under German Football Association (DFB) statutes, the parent club (i.e. the members' association) must retain the majority shareholding of the separated limited company, which means the majority of votes - 50% plus one. The rule has two main intentions: to safeguard the influence of the parent club in the decision-making process; and to prevent a distortion of sporting competition.

There are two exceptions to this rule: Bayer Leverkusen, and VFL Wolfsburg. In both cases, the clubs are 100% subsidiaries of industrial groups (Bayer, a chemical corporation, and Volkswagen, a car manufacturer). In 2011 it was ruled that sponsors with over 20 years' involvement in a club could take majority shareholdings - though only with the consent of the members, of course. This was in response to the Chairman of Hannover 96, Martin Kind, who submitted a motion to abolish '50 + 1' - he was unsuccessful. Thus, democratic supporter ownership or at the very least supporter control remains enshrined in the regulatory fabric of German football.

Licensing: dealing with the day-to-day

The fundamental aim of the licensing system is to safeguard the operations of all league members during the season and to ensure stability, integrity and continuity of the competition(s). '50 + 1' is the bedrock of the system, but there are also a number of specific criteria, which address the competence of the management team and, crucially, the financial state of the club. The licensing system also sets out guidelines for transparent corporate governance.

Scrutiny of economic data is vital to the licensing system, and aims to reduce overspending (sadly an ever-present threat in football) by forcing all clubs to follow a set planning procedure, and to apply for a license before every season commences. Essentially, clubs must be financially accountable. A series of documents have to be produced, covering a number of areas: assets; receivables; cash and bank balances; liabilities and provisions; current overdraft facilities; loan commitments, projected and current profit/loss statements; cash inflows and outflows.

The submitted documents are assessed by the DFL,  which then produces an economic viability rating for the club, which in turn informs the decision by the Licensing Committee whether or not to approve the application.

Financial performance is also monitored during the season, and should problems arise, clubs are obliged to call upon business plans developed either solely by the clubs themselves or in cooperation with the DFL. There is also an additional 'safety net' of a DFL trust account, which every club is obliged to pay into. The funds are called upon in the event of financial difficulty - though no Bundesliga club has experienced an insolvency event since the league's creation in 1963.

Results

2009/10 2010/11 2011/12 2012/13 2013/14
Revenue € 1,77 Μ 1,94 M 2,08 M 2,17 M 2,45 M
Revenue Growth 3.2% 9.6% 7.2% 4.3% 12.9%
Operating Profit € -77.9 M 52.5 M 55.1 M 62.6 M 38.8 M
Attendance avg 41,802 42,101 44,293 41,914 42,609
Expenditure on players and staff 47,7% 45,0% 43,1% 44,9% 43,5%
Average ticket cost € TBC TBC 22.4 26.7 23.0

Of course, no examination of football in Germany would be complete without reference to the diverse, vibrant and well-established fan culture present in the country. Indeed, fan culture provides the backbone on which German football rests. This reflected in both a regulatory and day-to-day sense.

Corporate Governance

As discussed in part one, the presence of the '50 + 1' rule in DFB and DFL statutes means that member control is enshrined in German football. This is supporter involvement at its most clear-cut: the opportunity for meaningful involvement in every aspect of the club - from electing board members to organising community projects - is guaranteed. A simplified diagram of how '50 + 1' works is below (click to expand):

50+1

 

That's what the statutes say - what about day-to-day affairs? Since SD Europe began our work in 2007, it has been made clear to us time and again that supporter involvement at German clubs has no single model - as is the case across the rest of Europe, each club is different, and much depends on the organisational abilities of supporters' groups.

The image above should highlight the role of the members (ie the supporters) in electing representatives - they are central to the entire process. Indeed, the members' meeting is defined under most club statutes as the highest institution of the clubs. Its responsibilities cover four main areas: the election of the supervisory board; the ability to dismiss the supervisory and management boards; approving changes to the statutes; and the power to close the club, in extreme circumstances.

As is the case at supporter-owned clubs in the UK, a range of skills (finance, sponsorship, marketing, etc) is desirable when it comes to board composition, but when it comes down to it the members are always entitled to choose, and then to a level of scrutiny via the supervisory board.

In the stands

Of course, not every German football fan has a desire to stand for election - some would rather enjoy themselves in the stands. With an average ticket price (as of February 2012) of €22.43 - or £18.29 if you prefer - top level football remains a widely accessible pastime across the country. This is reflected not only in a Europe-high average attendance of 45,114 in 2011/12, but also the massive uptake of season tickets.

Unsurprisingly given the sheer number of people that make their way to stadiums every weekend, fan culture in Germany is rich in variety, with five main pillars described below: independent supporters' clubs, Fanabteilungen (fan departments of clubs), fan initiatives, Ultra groups and national supporters' groups.

Independent supporters' clubs

These are umbrella groups of various fan clubs that exist to represent their members. They have a range of aims and objectives, and are often structured as members' associations (e.Vs). They avoid any structural inclusion and have kept themselves deliberately independent of the clubs they support. But that does not result in dialogue being cast aside. The Schalke Fan-Club Verband have in the past worked with the club on statute reform, and have had representation on the supervisory and management boards.

Fanabteilungen

Unlike independent supporters' clubs, Fanabteilungen (Fan Departments) are, as the name suggests, integrated into the governing structure of their clubs. The aim of most is to create a more supportive environment which that allows fans to be actively involved in the club's decision-making process. Essentially, they make sure the statutes are enacted. They are included in the club in such a way that no key decisions can be made without their consent.

Fan Initiatives

These occur when supporters come together to lobby for a particular cause, generally at individual clubs, but sometimes on a national level too. Their aims can range from providing sponsorship and financial support, to the preservation of kick-off times (this cause was taken up by Pro 15.30 - now known as ProFans - some years ago).

Ultra groups

Attempting to characterise the presence and nature of Ultra groups in any country is a futile exercise. Some German groups are represented in their clubs' governing structures, some aren't. All are committed to creating the kind of atmosphere that is the envy of many worldwide.

National Supporters' Groups

Germany has the highest number of nationally organised supporters' groups in Europe. Three of them: Alliance of Active Football Fans (BAFF), Unsere Kurve, and ProFans are recognised by the DFB and DFL, and have regular formal and informal contact with the football authorities.

Unsere Kurve is a joint venture of German football fans, bridging the club-related divide for the benefit of their common overall interests. Officially founded in 2005, Unsere Kurve came into being when delegations of supporters of Borussia Dortmund, Eintracht Frankfurt and Hamburg SV met to discuss fan-related subjects and found out that the problems they face are very much the same.

As well as these five pillars, both the DFB and DFL show an interest in supporter-related issues, and have established Fan Managers, who act as points of contacts for groups and individuals. They are in regular contact with single, regional and national organisations. The authorities also actively support the professionalisation of supporter liaison officers at clubs, a theme that has been taken up in recent years by UEFA. To find out more about supporter liaison on the European level, you can click here.

The Future

As the recent challenge to '50 + 1' showed, it is vital that supporters remain vigilant - there are those who would see their influence reduced in favour of a more free-market approach. Issues surrounding governance, dialogue and the preservation of fan culture remain on the agenda, particularly for the three national organisations listed above. As Unsere Kurve's website states, "we seek dialogue with other clubs, the German Football League, the Ger­man Football Association and political decision-makers to bring the ordinary fans' goals and wishes into focus."

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