Can money buy success? – A financial analysis of the Champions League semifinalists

So now it’s on, my predicted battle between Spain and Germany in the semi finals of this year’s Champions League campaign. Those of you who read my first article on ProvenQuality about the German Renaissance might think, well this guy doesn’t seem to be totally clueless about the beautiful game and his predictions of a German Renaissance. But even if you haven’t read about some of the underlying reasons for Dortmund and Munich’s success, this new article might be of interest for you.

Although it’s often said that football players and/or fans are not, lets say, the smartest people out there and they particularly don’t like maths, I wanted to take the time to dig a bit deeper into the financials behind the four last remaining contenders for Champions League glory. Therefore I have split my analysis on whether money can buy success into two parts. This first one will summarise some general financial figures of each of the semifinalists who are battling to win the prestigious silver trophy, and the second part will specifically compare the transfer investments on which their path of success was built.

The healthiest club in Europe?

Now, if we look at the net transfer profit, or rather loss (the amount which is left after settling the total annual transfer expenses with the transfer incomes) which each of Borussia Dortmund, Bayern Munich, FC Barcelona and Real Madrid have accumulated over the past five years, it hardly surprises anyone that the two German sides have been working on a more economically healthy level than their Spanish counter parts. Yet even these two accumulated transfer losses over the monitored time period, although Dortmund’s margin of €810,000 is hardly worth to be called a loss – particularly when all their semi final counter parts, have built transfer losses of more than €150,000,000 (all figures in this article will be in € and based on stats from Transfer Markt or my own calculations).

Real Madrid is the Croesus with a net transfer loss of €312,800,000, followed by Barca with €194,410,000 and then Bayern in third spot with €157,150,000. These figures don’t include player salaries, nor payments to coaches – but even if we were to include salaries; the story would hardly change, would it? Please don’t hunt me down and say this focus is subjective and leaves additional objective points like youth investment or marketing profit out of these players disregarded, but for the purpose of this article only the actual transfer amounts are being considered.

Foto: Uli Hoeneß, Financial Mastermind behind Bayern Munich’s success

Uli Hoeneß, Financial Mastermind behind Bayern Munich’s success

Before jumping into the second part of this article I want to dive even deeper into the world of financials, but given my German background I only feel competent to fairly comment on the two German sides. Even though Bayern Munich has accumulated a massive net transfer loss, everyone who follows German football knows that they are probably the financially healthiest club in Europe. To give you a simple example we quickly look at their 2011/12 season. Even though the transfer loss had accumulated to just over €39m, they finished the financial year with a net profit of €11,1m and an accumulated equity of €278.3m (November 2012). For this financial healthiness we all have to take our cap off to former Bayern Munich manager and current president Uli Hoeneß, who has incarnated a flamboyant but healthy club and financial structure.

What makes these figures even more impressive is the fact that Bayern, unlike not only their German counterparts from Dortmund, but also and particularly the likes of FC Barcelona and Real Madrid, have no debts on the dark side of their books. Nonetheless, Dortmund’s figures with a net profit of €34m (August 2012) are similarly remarkable, particularly considering the fact that in 2005 Borussia almost collapsed financially. The remaining debts of €11m have consistently been melting down from €180m.

Dortmund’s Champions League victory in 1996/97 had caused a spending mentality, which almost equalled Madrid’s realities (of course on a smaller, German scale). However, Dortmund’s climax of debts still doesn’t compete with Barca’s current net debts of €364m (2011) or Real’s net debts of €244.6m (2011). Please also be aware of the fact that Real Madrid has sold the rights of their training grounds, otherwise their figures would even be more shocking.

Of course there is always another part to the story and most fans will rate the success of their favourite club based on the collected trophies in the clubroom. Therefore the second part of this article will assess how many trophies the four contenders have won over the past five years and again put these against their financial outputs in the transfer market.

FC Bayern Munich vs FC Barcelona

It always surprises me how many of the so called international experts and football fans still underrate the real strength of the 22 times German champion Bayern Munich. Even Gianluigi Buffon, whose unbeaten Italian champion of last season’s Seria A had just been dismantled over two legs against the Germans, admitted that he hadn’t thought the Bavarians were “this strong”. He further confessed that although his side had “played to the best of its possibilities”, Bayern had been “technically and physically superior”.

This superiority has led Munich to three Champions League semi final appearances in four years, something the club hasn’t done since the mid-‘70s side of Franz Beckenbauer, Gerd Müller and Co, or more recently the turn-of-the-millennium outfit led by Stefan Effenberg and Oliver Kahn. What (still) separates the current Bayern Munich side in comparison to both mentioned winning squads is that the former were able to convert their superiority into international silver ware. Something which the current outfit around Bastian Scheinsteiger and Phillip Lahm are yet to achieve. The two recent final defeats against Mourinho’s Inter Milan in 2010 and of course the devastating penalty loss against Di Matteo’s Chelsea in their own backyard last year still sting.

Foto: Will Schweinsteiger and Co finally celebrate their first international title this season?

Will Schweinsteiger and Co finally celebrate their first international title this season?

But perhaps these painful memories have particularly made the German players like Bastian Schweinsteiger, Phillip Lahm and Thomas Müller even stronger and they have learned from these unpleasant experiences and they can still achieve their first international title glory this season. To fulfil this unwritten prophecy Bayern has done well to strengthen their squad where it was necessary. Here also read the latest ProvenQuality post of Chris Duncan, who agrees that Brazilian centre back Dante, Spanish holding midfielder Javi Martínez and of course the Croatian strike force Mario Mandžukić have all done well in both local and international competitions.

But what many international football fans and experts might not know, is that the standard set in Munich is high and anything less than Champions League victory this season would be a disappointment for club president Uli Hoeneß and his board. They invested €206.1m into their team over the past 5 years, which is a massive amount for German realities. Even though these expenses are build on healthy club structures as explained in the first part of this article the two subsequent titles (1 German Bundesliga victory, 1 German FA Cup) are by far not enough to call the time of the likes of Schweinsteiger, Ribery, Robben and Lahm a successful era.

However, this all could be changed by the end of this season. With six game weeks still to go, the Bundesliga title has already been reconquered from their noisy neighbours in black and yellow, who had taken it away in the last two seasons. The record-breaking manner, in which Jupp Heynckes’s team is easing through the league, makes it even for outsiders very impressive. Yet, the likes of Gianluigi Buffon are still surprised by Bayern’s never endangered progress to the semifinals this year. Never endangered? A few Arsenal fans might get confused now, but the Gunners 2:0 victory at the Allianz Arena was only possible because Bayern played the second leg with a 90 percent attitude allowing Arsenal to almost kick them out.

Including this season’s transfers, but excluding this season’s title glories (Bayern can also still win the German FA Cup), Munich has spend €103m per trophy in five years. In the latter stage of this article the €11.6m which they have spend per player fielded (including subs) in the Champions League quarter-final against Juventus, will become even more interesting. But, let’s have a look at their Spanish opponents first.

Easily and unsurprisingly everybody can see that Barca’s seven titles (3 Spanish La Liga wins, 2 Spanish FA Cups and the 2 Champions League titles) under Pep Guardiola result in a much better transfer-trophy-ratio. Although unarguably the best European team over the past five years, this season they have been less solid and when they have had to play without Lionel Messi have looked even more shaky. Barcelona have spent €374.5m over this 5 year time period and their transfer-trophy-ratio comes out at €53.5m per title, which is half the amount of Munich. Comparing the investment of €12.7m per player fielded against Paris Saint-Germain we can agree that Barca and Bayern are almost even on this front. Let’s have a look at the second semifinal…

Borussia Dortmund vs Real Madrid

Yes there is no doubt that Borussia Dortmund, who also have the youngest average age (24,6 years) of the remaining four contenders, have reached the semi final in slightly fortuitous fashion with two goals in injury time against Malaga CF. But every neutral football fan/expert surely will agree that over the two legs they were the better side and deserved to go through. In fact, if it hadn’t been for Malaga’s goalkeeper Willy Caballero, who made various magnificent saves over the two legs, Dortmund’s two late goals wouldn’t have been needed.

Their progress to the semis keeps Borussia Dortmund the only unbeaten side in this year’s Champions League competition. The late fairy tale against Malaga was also built on that special belief to not give up, even though heavily disadvantaged by a refereeing mistake when Eliseu’s proven offside goal appeared to be the game decider. However, the two late goals by Marco Reus and Felipe Santana make Dortmund the only team, which has ever changed a Champions League quarter-final around within the last 5 minutes of play. This special belief is infused into the young Dortmund squad by its coach Jürgen Klopp and almost equals Manchester United’s invincible belief from the 1999 final.

Foto: Jürgen Klopp and his passionate outlet inject winning mentality into his young players

Jürgen Klopp and his passionate outlet inject winning mentality into his young players

When we now again compare the financial realities behind Dortmund’s success story and on the other side Real Madrid, the fairy tale in black and yellow is even more respectable. Over the past five years, Dortmund’s bosses have done an outstanding job to rebuild the squad after they almost broke down in 2005.

Since Jürgen Klopp joined Borussia in 2008 they have spent only €22.6m per trophy in the past five years, where they accumulated two Bundesliga titles and one German FA Cup victory. Their investment in the team which was fielded against Malaga work out as an amazingly paltry €2.8m per player. In fact, the squad which dramatically beat the Spaniards was built of two youth graduates, three free transfers and six players who cost a combined total of €37.1m. For example their polish star striker Robert Lewandowski, who has caused a lot of international interest recently, joined Borussia two and a half years ago for only €4.75m. In fact, besides Marco Reus who Dortmund had to buy for €17.1m to win this transfer battle over Bayern Munich, none of their players has cost more than €6m.

On the other side we have Real Madrid, a side who has along with Manchester City been Europe’s big spender over the past few years. The players fielded to overcome Galatasary Istanbul, probably the easiest opponent in the quarter-finals, had a player average investment of €24.4m, which is almost nine times the amount Dortmund has invested and doubles Barca and Munich’s spendings. For their two titles in the past five years (1 Spanish La Liga title, 1 Spanish FA Cup) Real Madrid has spent an amazing €521.1m, or a converted transfer-trophy-ratio of €260.5m. This high amount mainly arises from expenses under club president Florentino Perez, who tried to rebuild a comparable side to his Galacticos around Zinedine Zidane and David Beckham.

The €229m he spent in the first year of his second presidency didn’t bring the expected success and José Mourinho was appointed. Under Mourinho both their La Liga titles came as well as three consecutive Champions League semi final appearances for Real. However, the Special One is yet to prove his Champions League title consistency after victories with Porto (2004) and Inter (2010). In fact, in both the previous campaigns the semifinal was also the final station for his side.

Conclusion

A lot of financials and figures have been discussed in this article and of course none of them are bullet proof either for or against the success for one of the four remaining contenders in the ongoing Champions League campaign. Whether money bought the success or not, personally I feel, and this opinion is based on their performances rather than the financial background, the four semifinalists truly deserve their progress throughout the competition. Whoever will take the title in the end will edge the other three by small margins on the field.

However, we now know that the financial background stories behind their success are completely different and it amazes me that Dortmund proves what you can build with belief, passion, determination and great scouting. Perhaps other European big spenders should question their costly transfer policies and look to build on stability and team spirit like Dortmund, when they appointed Jürgen Klopp.

Dortmund may now be the dark horse in the last four and it may not be enough for the final this season, but they truly made the competition richer through their young players and enthusiastic performances. Personally I predict Real’s experienced players will unfortunately still have the edge over Borussia. In the other leg I think Bayern’s title hunger plus Jupp Heynckes and Pep Guardiola’s Spanish inside knowledge will punish a Barcelona side lacking overall superiority, and that the Germans will go on to Wembley to find the title which they lost in their own back yard last year.

But in football you never know…

By
David Kappel, 28, is a German international whose path has been leading to South Africa. He is a student at the Nelson Mandela Metropolitan University in Port Elizabeth. He’s studying a Sport Management certificate, which is endorsed by FIFA, in order to find his roots in the professional Sport (Football) business world. As a player he once almost scored a €100.000 goal. He is a supporter of Bayer 04 Leverkusen and Manchester United as well as the German national team. Twitter handle: @kappilinho
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