The Real Fight Begins for German Soccer Clubs

It is inconceivable to think of Germany without a top flight soccer league, producing teams of quality on par with the best in Europe and the rest of the world.

But it is a nightmare scenario that is being spoken of in whispered tones that bear a heavy hint of possibility.

Since the collapse of the KirchMedia empire, which cost the Bundesliga over €70 million ($82.8 million) in lost television revenue last season and could total a staggering €200 million for this season, there have been muttered concerns about the financial health of the German league.

Revenues from television rights were already out of control, rocketing from the equivalent of €84.36 million in the 1995-1996 season to €383.47 million for the 2000-2001 campaign. The large amounts encouraged free spending among Bundesliga clubs until the rights-holders filed for insolvency last year with huge losses.

Now things have become even more serious as warnings of a gloomy future begin to emanate from the Bundesliga's ruling power, the German Football League Association (DFL).

Nearly €600m in debt

A recent study commissioned by the DFL concludes that the Bundesliga clubs as a financial collective have debts totaling €599 million, an average of €14.7 million per club. The DFL has said that the only way for the league to survive and for clubs to save themselves is to reduce their costs by 20 percent for next season, meaning some will have to sell their best players to escape bankruptcy. It has been widely reported that up to 100 players may face unemployment as clubs begin bailing to avoid sinking into the icy depths of financial ruin.

Four-time German champions and this season's German Cup finalists Kaiserslautern are reported to be more than €30 million in debt and have had to sell their stadium, as well as the transfer rights for striker and World Cup star Miroslav Klose, just to stay afloat.

"It will not help to save €4000 on sandwiches and by telling the guys to bring their own toilet paper and making sure we turn the lights off at 5 o'clock as long as the number 28 in our squad still earns €1 million," club chairman Rene Jäggi told Reuters in an interview earlier this month.

No huge transfers this summer

It's not only the clubs that annually fight for top-flight status who are in trouble. Newly crowned champions Bayern Munich have been told by their creditors that there will be little money for plundering the transfer market as they prepare to do battle against the continent's elite in the European Champions League next season.

"There's only one area in which you can really save money and that's the salaries," Bayern commercial manager Uli Hoeness said. "You can forget about the rest."

Unable to attract top drawer players to the Bundesliga, the cycle of dwindling funds may get worse with clubs from the more affluent leagues such as Spain's La Liga, the Italian Serie A and the English Premiership vying for the world's talent. With a core of international clubs securing the signatures of the world's best players, in effect speculating to accumulate, the money-spinning competitions and lucrative sponsorship deals that go along with that success will be dominated by those who can assemble the most glittering talent.

As the past season has shown, failure to make an impact in the Champions League severely tightens the purse strings. For the first time since the 1956-57 season, there was no German representative in the last eight of any European competition.

Threat of license withdrawal

Back on the domestic front, if the message wasn't clear enough, the DFL has employed shock tactics to alert the league clubs to the bleak scenario of a possible Bundesliga collapse. The governing body has warned 24 of the 36 professional clubs that it will not renew their licenses to take part in the league until they have sorted out their finances.

The television situation is also likely to worsen with Infront, the Swiss marketing agency which currently owns the rights, trying to sell its concern to free television companies. Infront has its own financial problems and may not be able to pay its way in future seasons.

The central marketing deal, which ensures that all clubs benefit from the television money, is also causing problems. Bayern Munich have threatened to tear up the solidarity pact that benefits all clubs by striking television deals on their own from next year. If the champions succeed, the deal could collapse leading to the financial death of less attractive clubs.