Bad football proves to be good for Bayern's business

tracylynn

11-27-2007
Bad football proves to be good for Bayern's business

Bayern Munich have shown how bad performances on the football pitch do not necessarily impact on a club's commercial success - as long as the cash registers keep pinging and the fans buy the shirts.

The German giants have posted record sales figures for the previous financial year - despite their supporters suffering the agony of their worst season, in terms of results, for ten years.

Simply put, the days when football's economics were simple are long gone.

Up until roughly ten years ago, if a team won their games, they picked up trophies, more fans came to watch, gate receipts went up and there was more money to buy players and improve facilities.

But these days clubs are regarded as 'brands' with a marketing value as the explosion of football interest in the lucrative markets of Asia has shown.

Sales of replica jerseys for the world's top sides have multiplied globally.

You are now just as likely to see a Bayern shirt in Bangkok as you will on Munich's streets.

But the progress of the German giants in the Bundesliga no longer gives the full financial picture.

For the 2006-07 season, Bayern, by their own high standards, were dreadful.

In the Bundesliga, they limped to fourth place and were well off the pace at the end of the season as VfB Stuttgart were crowned German champions.

Fourth place meant they missed out on a Champions League place for this season - the first time that has happened since the 1995-96 season.

The failure sent alarm-bells ringing in Munich and an aggressive summer recruitment drive brought in French midfielder Franck Ribery, Italian World Cup winner Luca Toni and hot-shot striker Miroslav Klose.

A total of 69 million euros was spent and Bayern reaped the rewards by leading the Bundesliga from the opening weekend with Toni and Klose joint top goal-scorers.

But the previous year's failure on the field had no impact off it, as Bayern set new records for profit and turnover in the 2006-7 fiscal year.

Between July 1 2006 to June 30 2007, Germany's most successful football club made a profit of 53.5 million euros.

That compares favourably to 27m the previous year on a turnover of 225.8 million, compared to 204.7m and a generating profit after tax of 18.9 million, compared to 4.8m.

'Although we failed to win a trophy last season and finished a disappointing fourth in the league, we can be more than satisfied with our financial results,' said Bayern chairman Karl-Heinz Rummenigge.

The figures don't lie - the club's major revenue streams were match operations (83.6m) followed by sponsorship and marketing (62.8m).

Far and away the largest item of expenditure was personnel at 106.1m.

Income from merchandising showed brought in 32.3m, a 10 percent increase on the previous year.

'We're setting new records year after year in this area,' said Rummenigge.

The rate of increase in the first four months of the current business year is an impressive 37 percent, largely driven by replica shirt sales bearing the names of Ribery, Toni and Klose.

Frighteningly for their Bundesliga rivals, Bayern had cash reserves of 91.4 million euros before their summer spending dented the figure.

The club continues to maintain a substantial war chest, which the board intends to use in pursuit of more big names, including Brazilian defender Breno who is expected to arrive during the winter break.

'We'll never pursue a risky business strategy, but we will continue to sign high-quality players. We'll invest in quality, not quantity. I too enjoy watching Ribery more than many players we've brought in for less money in the past,' Rummenigge commented.

And even a lack of success could not keep the fans away.

The number of registered members rose from 121,119 to 135,752, and the number of official fan clubs from 2,290 to 2,329.

But with Bayern still on top of the league, Bayern's bosses expect silverware to come from their huge summer spending spree.

'We've been top of the league for 14 matches now,' said Rummenigge.

'There's no reason why that shouldn't be the case after 34 matches.