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Sports

UEFA's Financial Fair Play rules to affect Bundesliga's big business

The start of the Bundesliga season brings a smile to the faces of football fans and city treasurers: Football is big business in Germany, but now UEFA is set to impose restrictions in the name of "Financial Fair Play."

Blick in das Olympiastadion in Berlin in der Abenddämmerung, aufgenommen am 07.09.2007. Foto: Arno Burgi/dpa (zu dpa 0892 vom 23.05.2013) +++(c) dpa - Bildfunk+++ pixel

Berliner Olympiastadion

A home match of a Bundesliga club has a dramatic effect on life in its city: The motorways surrounding it are packed as are the roads within, trams and busses are overcrowded and the city centers are flooded by fans en route to or from the stadium. All of them spend money on match day: they buy souvenirs, public transport tickets, bratwurst and beer, tickets to the match; some stay the night in a hotel and take a taxi.

In Leverkusen every single match day sees football fans spend an average of 730,000 euros ($970,000) - and there are 17 home games per season. Subtract the 25,000 euros the city has to spend on the increase in public transport and cleaning services on such a day - and you still end up with a very, very interesting profit margin.

These are the findings of the Sports, Business and Society Institute of the European School of Business (ESB) which has done research on how much German cities profit from Bundesliga football. What is expensive is the increased police presence on such match days, but with the police force being the responsibility of the states, it's the states which have to foot the bill for the heightened security at any big events, including football games. "So that doesn't cost city governments," says ESB researcher Sascha Schmidt.

At the end of the 2011/2012 season Leverkusen had made a sizeable 4.6 million euro profit from Bundesliga football.

Bayern Fans in the stadiumCopyright: imago/Ulmer FUSSBALL CHAMPIONS LEAGUE SAISON 2012/2013

Big Champions League matches mean big money for cities like Munich

But it is not just the home games that bring a smile to the face of the city treasurer. Bundesliga clubs are more than just sports clubs. According to Jörn Quitzau of the Berenberg Bank, "They are big enterprises, marketing their product, which is football." And such enterprises pay taxes and employ locals: vendors of merchandise, security guards, guides and caterers, who in turn pay taxes and spend the money they earn.

A successful Bundesliga club also boosts a city's image and that pays off in terms of marketing. Sascha Schmidt estimates that the publicity which Leverkusen gets through the club's performance in international tournaments such as the Champions League was worth 2.5 million euros. That would have been what the town would have had to invest in international TV commercials to get the same level of name recognition.

And Leverkusen has qualified once more for the Champions League in the 2013/2014 season, where it will face the likes of Real Madrid, Manchester United and Barcelona in high-profile fixtures.

But some European Clubs have seen an end to their sporting hopes because of financial mismanagement. One prominent example is the Spanish side Malaga, which reached the Champions League quarterfinals last season - before they were kicked out of the tournament by Borussia Dortmund. This season the club has been banned from the competition, because it was found to have violated the financial fair play stipulations of the Union of European Football Associations (UEFA).

Michel Platini AFP PHOTO / FABRICE COFFRINI (Photo credit should read FABRICE COFFRINI/AFP/Getty Images)

UEFA boss Michel Platini wants to impose tough Financial Fair Play rules

So far UEFA has only sanctioned clubs for overdue debts, such as outstanding taxes or fees for player transfers. But the full extent of the Financial Fair Play regulations have yet to kick in. UEFA stipulates that clubs must operate economically and may not continuously spend more than they earn. The goal is to ensure fairness and equality amongst clubs across Europe.

Critics of the new regulations argue that this will not work. "We have not had equal opportunities in European football for many years, and I don't believe that Financial Fair Play regulations will restore them," says Dirk Mazurkiewicz, an economics professor at Koblenz University.

On the contrary, he believes that the new regulations will cement the status quo, where "clubs like Manchester, Real, Barcelona or Bayern Munich already have considerable financial clout," while others like Malaga, will find that the new regulations will make it even harder for them to find the money they need to kick-start an ambitious campaign like going for the Champions League title.

Banker Jörn Quitzau from the Berenberg Bank argues that ways will be sought - and found - to circumvent the Financial Fair Play stipulations. UEFA will have to decide what limits there should be for sponsoring: "Should a club now turn away a Russian oligarch or Arab Sheikh who may generously offer to buy a star-studded squad for them or a brand new stadium?"

Dirk Mazurkiewicz believes that UEFA is taking a bit of a risk: it could be seen to be meddling in the affairs of private entrepreneurs, and that may even be in violation of EU regulations that safeguard commercial freedom.

Still, he welcomes UEFA's efforts as a promising "first step in the right direction," and a signal that even the big clubs, many of which have high levels of debt, may not be able to forever just wheel and deal as they please.

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