{"id":3422,"date":"2015-12-08T19:24:13","date_gmt":"2015-12-09T00:24:13","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/fc-bayern-munich-achieving-unparalleled-sporting-and-financial-success-in-the-world-of-soccer\/"},"modified":"2015-12-08T19:24:13","modified_gmt":"2015-12-09T00:24:13","slug":"fc-bayern-munich-achieving-unparalleled-sporting-and-financial-success-in-the-world-of-soccer","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/fc-bayern-munich-achieving-unparalleled-sporting-and-financial-success-in-the-world-of-soccer\/","title":{"rendered":"FC Bayern Munich \u2013 achieving unparalleled sporting and financial success in the world of soccer"},"content":{"rendered":"

On June 1st<\/sup> 2013, Bayern Munich (FCB) came to dominate world soccer. After defeating Stuttgart (3-2) in a dramatic match, Bayern took home the German cup and thereby sealed its first treble win \u2013 a historic achievement attained by only seven clubs before.<\/p>\n

Bayern, or FC Bayern M\u00fcnchen e.V. as its full name reads, is a soccer powerhouse located in the south of Germany. It is consistently ranked among the top three soccer clubs – on the pitch as well as financially.<\/p>\n

Bayern\u2019s sporting accomplishments become even more impressive when paired with its unparalleled economic success. It is the only top club that has managed to be profitable for over 20 years.<\/p>\n

Stellar financial performance <\/em><\/strong><\/p>\n

Year over year, Bayern reports new record financial results, as in 2015 when FCB managed to gross \u20ac 524MM (doubling revenue from 2005) and earn \u20ac 111MM (EBITDA). This puts Bayern third in Deloitte\u2019s global soccer money report.<\/p>\n

However, these numbers appear even more extraordinary, when one realises that Bayern has neither crushing amounts of debt on its balance sheet nor an ultrahigh-net-worth individual financier as most of its international competitors do. \u00a0While Bayern, upholding a $2.3 BN enterprise value, is virtually debt-free, Manchester United, the second most valuable club in the world, derives 20% of its valuation from debt \u2013 a whopping $569 MM in 2014. Meanwhile, other European top clubs such as FC Chelsea or Manchester City are said to be profiting from multibillion dollar cash outlays of their private owners \u2013 individuals from Russia respectively the Emirates.<\/p>\n

Naturally, the question arises as to how Bayern has managed to remain internationally competitive at the highest level, while simultaneously be (sustainably) profitable.<\/p>\n

Bayern has intimately aligned its operating and business model to serve the dual purpose of improving sporting and financial performance. \u00a0<\/strong>Four key strategies are central to this alignment: i) own your home turf, ii) diversify revenue streams, iii) scout and develop talent internally and iv) put fans first.<\/p>\n

Own your home turf<\/em><\/strong><\/p>\n

Exerting domestic dominance has been central to Bayern since its rise to the Bundesliga. Bayern has won 24 league titles \u2013 more than the next six\u00a0clubs combined. It does so by prioritising winning the Bundesliga championship as the most important goal of the season. Moreover, in years when domestic rivals seem to catch up, Bayern deviates from its \u2018scout and build talent\u2019 <\/em>strategy and poaches star players at a premium from these sides. This ensures Bayern\u2019s long term dominance in the Bundesliga. As a result, Bayern\u2019s stable performance in Germany provides a solid basis even when things turn out not so well internationally.<\/p>\n

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Diversify revenue streams and ramp\u00a0up commercial activites<\/em><\/strong><\/p>\n

While on average top clubs derive 42% of their revenue from broadcasting fees, Bayern has sought to reduce its dependence on this performance-volatile income stream \u2013 broadcasting revenues are tied to clubs\u2019 performance. Furthermore, Bayern has focused on commercial revenue growth by driving sponsorship, advertising and merchandise sales. It topped list for highest commercial revenue among soccer clubs with \u20ac201.6 MM in 2012.<\/p>\n

Selected commercial sponsorship deals:<\/p>\n