Maintaining economic growth: The internationalization of Germany’s professional football

Sebastian Uhrich,
Ph.D., Professor of Sport Business Administration,
German Sport University Cologne,
Germany

Since the foundation of Germany’s premier league (the Bundesliga) in 1963, professional football has continuously evolved as a business and is a notable factor in the country’s economy today. In the 2018/19 season, the contribution of professional football to the German economy amounted to an added value of €11 billion. In the same period, the football business secured the full-time employment of 127,000 people and generated an estimated €3.7 billion in taxes and duties. The Bundesliga’s economic development over the past two decades has been characterized by remarkable growth rates. The major drivers of this development have been the constant increase in revenue from national media and the sale of sponsorship rights. However, the question is not if, but when these growth rates slow down or even disappear, because the domestic media and advertising markets are close to the point of market saturation.

Against this background, the Bundesliga increasingly seeks to develop new markets in foreign countries. The international extension of commercial activities appears to be a key opportunity for significant, further economic development. A vivid example of the large potential of foreign markets, compared to the domestic German market, is the following: the Bundesliga club, Bayern Munich has almost 150 million fans in China and, thus, their Chinese fan base is almost twice as big as Germany’s total population. To drive the internationalization of professional German football, DFL Deutsche Fußball Liga, the governing body for the Bundesliga, founded a subsidiary, the Bundesliga International. The company operates regional offices in New York (for the Americas), in Singapore (for the Asia-Pacific region) and in Beijing (for China). These locations indicate that North America and highly populated countries in Asia (particularly China and India) represent geographical priorities for international marketing activities. Bundesliga International is responsible for marketing the audiovisual and sponsorship rights, as well as branding and digital licenses in foreign markets. It aims to increase the visibility and attractiveness of the Bundesliga brand and, thus, sets the foundation for developing global commercial activities into a significant new source of economic growth.

While international markets promise tremendous economic potential, the Bundesliga faces fierce competition, not only from other highly popular sports leagues, but also non-sport players in the global entertainment industry. Football is by far the most popular sport in Germany and the Bundesliga is one of the leading entertainment products in the domestic market. However, although the Bundesliga is broadcast in over 200 countries, its standing in the global entertainment market is considerably lower. For example, in terms of annual revenues from international media rights sales, the Bundesliga (€250 million) only ranks fourth among Europe’s top football leagues, lagging significantly behind the English Premier League (€1.6 billion), the Spanish La Liga (€897 million) and the Italian Serie A (€371 million). Beside media rights, merchandising sales are an important aspect of the revenue mix, generated by commercial activities abroad. The Bundesliga currently generates an estimated 25% of its total merchandising sales revenues (approximately €180 million) in foreign countries.

In addition to the Bundesliga’s collective commercial activities, individual clubs increasingly engage in their own international marketing efforts. This is not limited, but applies in particular, to the top clubs Bayern Munich and Borussia Dortmund, whose financial resources enable them to reach out to international fans and develop their brands in foreign markets. Six Bundesliga clubs operate their own offices abroad. All of these clubs have offices in China, while two clubs also operate an office in the United States and one in Singapore. Apart from foreign offices, the majority of the Bundesliga clubs engage in selective international marketing activities, such as pre-season friendly matches and promotional tours in foreign target markets, the signing of sponsorship deals with foreign partners and the opening of overseas football academies. It is estimated that several clubs generate revenue from international commercial activities in excess of €10 million. However, as is true for revenue from national markets, there is a substantial difference across the clubs.

To summarize, Germany’s Bundesliga is increasingly targeting foreign markets to explore new sources of revenue and optimize existing ones. This strategy aims to maintain professional football’s economic growth rates. The Bundesliga is renowned for great stadium atmospheres, clubs rich in tradition and a lively fan culture. These aspects appeal to domestic supporters as well as to many consumers in foreign countries. However, the internationalization of the Bundesliga is still in its infancy, and represents more commercial potential than actual exploitation of additional revenue streams, to date. Should the exploitation of this commercial potential gain traction, the internationalization can become the major driver of continuous economic growth and further increase the Bundesliga’s important role in Germany’s economy.

Email: s.uhrich@dshs-koeln.de

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