The German 50+1 Rule for Football Club Ownership and What the Rest of Europe Could Learn
Introduction
In April of 2021, the plans for a European Super League spread around European football and globally. It was widely opposed by fans who feared for the integrity of meaningful competition in football and for their own clubs. Some of the biggest footballing giants from Manchester United and Arsenal to Madrid and Barcelona to the Milans and Juventus had agreed to become a part of the breakaway league and leave behind their national association leagues. It was a treacherous time for European football that upset a great volume of adoring, sceptical fans.
Noticeably, the German giants, Bayern Munich, Borussia Dortmund and RB Leipzig were absent from the list of clubs that had agreed to the European Super League. They each spoke out to confirm that it was not something their clubs would be associated with. This begs the question as to why, when the rest of Europe’s biggest clubs immediately demonstrated enthusiasm and support for the concept, were the German clubs the distinct anomaly? Although the ESL never materialised, the clubs that were listed were originally committed to the idea whereas German clubs, from the beginning, were never involved.
This blog will explore the 50+1 club voting ownership rule that is implemented under the Deutscher Fußball-Bund (DFB; the German Football Association) and applies to all professional German football clubs. This is the predominant reason as to why none of the German clubs were ever a part of the ESL plans. I will also analyse whether or not this rule could be applied in and benefit other football National Associations and clubs across Europe and globally. There are legal complications and other complexities that the rule and governing bodies must consider but it has widespread support in Germany and is attributed with being an integral part of the admirable traditional fan engagement and adoration that clubs in the country attract, but is it supported for the right reasons?
50+1 in Practice
In German tradition, Vereins (associations) have existed as clubs or societies that dedicate themselves to a specific entity or activity. To form an official Verein, the group must consist of more than seven people and must maintain a non-profit status. Their role is to represent an audience or fan-base and give a voice to those who believe they are entitled to having a meaningful opinion within their particular environment.
Vereins, as well as almost anything, are involved in German football clubs including all those in the Bundesliga. These are made up of between 267 and, in Bayern Munich’s case, 290,000 people who take on varying responsibilities at the clubs. The role of the Vereins can extend as far as maintaining budgets, organising club events and other opportunities beyond just football. The leadership of the Vereins is democratically elected and provided a voice for the devoted fan-base.
In 1998, the DFB offered a solution to the inflation that was being seen in football that challenged the non-profit approach of Vereins with German football clubs. Transfer fees, player wages and commercial finances were all rising exponentially and for German football to keep up, it seemed unfeasible for clubs and Vereins to continue to operate purely as non-profitable organisations. The rules were adapted for German football that allowed for German clubs to involve profit-seeking corporations as part of their ownership structure. The one condition stipulated by the DFB was that the clubs must allow their Verein to maintain majority control of the voting rights in the club. Hence, the 50+1 rule was born:
50+1 Rule:
50% of a German football club’s voting rights plus an additional 1 share
must be possessed by the Verein. This applies solely to voting rights rather than financial shares of the entity. Put simply, the fan-base of the club must have more control of a club than the corporate owners.
What Can Other National Associations Learn and Benefit From?
In the face of foreign ownership, the 50+1 rule can be seen as the greatest solution to giving a voice to the previously voiceless fan-base. Take the examples of Newcastle and Mike Ashley which was recently resolved or the ongoing situation at Manchester United. The fall out between the Glazers, United’s owners, and the fans has not been good. Fans have protested relentlessly and pleaded for change of the club’s ownership from an American family blamed largely for the recent failings of a global giant. In this instance, were the fans entitled to a majority of the voting rights there would be a chance for them to remove the Glazers from power and reinstall an ownership structure that they believed wanted the best for the club rather than one that took dividends and profits from their shares during the club’s darkest times.
This was the case for Hannover in 2019 when 2,100 of the Verein voted to remove the then Club President, Martin Kind. They pointed towards his excessive power and dictatorial approach to owning the club as the reason and the 50+1 rule allowed the fans to express their concerns and reach a solution that suited them. Although Kind has recently been victorious in court after expressing his distain at his dismissal; it was eventually decided that he can be reinstated within the club and that his dismissal was unjust. Nevertheless, the broad foundation principle of the 50+1 rule is simple; that football is for the fans and is impossible without them, hence they should have a proportionate level of power that reflects this.
The 50+1 rule could have benefits across football globally by its enhancement of fan engagement for any club. A fan is more likely to dedicate themselves to a club at which they have a custodial role and responsibility. The 50+1 rule allows for fans to cultivate and maintain a system that suits them. For example, in German football, season tickets and matchday tickets are incredibly cheap, as voted for by the fans, and often includes public transport to and from the matches. The comparison can be seen in the graph below which shows the average matchday ticket price for the biggest clubs in Europe and quite clearly demonstrates how far below Premier League prices the Bundesliga giants are (source: Statista):
Season tickets are much the same. At Bayern Munich, one of the biggest clubs in the world, fans can purchase a season ticket from less than €150 whilst a club like Manchester United charges at least £530 and Tottenham Hotspur top-end season ticket fees peak at over £2,000! Elsewhere across Europe the prices remain higher with Barcelona charging a minimum of €250, Juventus is at least €650 and to watch PSG across the season you would have to spend at least €490. The 50+1 rule can be extended as far as voting for cheaper food or drink at games as well as official team merchandise and preventing a club from engaging in discussions for the European Super League. This is only possible due to the power that fans are given to maintain these low ticket brackets and improves the overall fan experience of their beloved club.
The outcome of enhancing fan engagement is of course protecting the emotional and unbreakable connection between the fan and the club. It could be greatly advocated that owners should establish and integrate fan clubs or bodies into their ownership structure even without the 50+1 rule in place. This style of relationship allows for fans to feel as though they are not voiceless and they can reclaim some level of control over their club. By giving fans this ‘nominal seat’ within the decision makers of a club fosters a healthy environment for fan engagement and could produce an overall more sustainable and attractive football club. The 50+1 rule does not have to be officially regulated or a law within the national association for clubs across Europe and globally to learn from and reproduce at least some of its benefits.
The further benefit that the 50+1 rule, or at least the principles behind it, may produce is a more balanced and competitive league. If clubs are not reliant upon, nor allow, ‘budgetless’ approaches by billionaire owners bringing in the best players from around the world, the likelihood is that the advantage of the richer clubs is reduced. Fan bases or Vereins are likely to advocate for financial fair play and consequently, the leagues will become more competitive. However, this is a debatable presumption as I will now go onto explore the loopholes within the 50+1 system and the problems that arise.
A Flawless System?
So far it may seem that the 50+1 rule is the perfect solution to the lack of control and power that fans across Europe, other than Germany are positioned as having. However, the system is far from flawless and some German clubs have found areas of the legislation which can be exploited to find ways around it. Some of these were unavoidable whilst others clearly identified methods which could be adopted that expose the loopholes of the 50+1 rule.
There are two major exemptions, known as lex specialis, under the 50+1 rule in the Bundesliga; Bayer Leverkusen and Wolfsburg. These clubs were originally founded as clubs for workers of corporations. Bayer Leverkusen was founded by employees of the Pharmaceutical company, Bayer, whilst Wolfsburg was formed by car manufacturer, Volkswagen employees. As these clubs were already majority owned by corporate companies, they are considered an exception to the 50+1 rule and are far harder to regulate. The level of fan power and control within these clubs cannot be judged as factually as in other clubs which have corporate ownership and shares whilst giving at least 50+1 voting rights to their fans.
Two other clubs have also found ways in which they can adhere to the use of Vereins for 50+1 of voting shares in the club without sacrificing the possibility of substantial investment. Firstly, Hoffenheim, which began as a village club with a population of 3,000 people, revealed a flaw in the DFB’s ‘20 years of investment’ rule. A member of the Hoffenheim Verein, Ditmar Hopp, has been investing into the Hoffenheim club for far more than 20 years. Since he surpassed this length of time he became exempt to the financial fair play clauses that are a part of the 50+1 rule and was able to gain significant power and investment capacity over the club.
Fortunately, having been a longstanding member of the Hoffenheim Verein, and a devoted fan, this was of enormous benefit to the club. Hopp invested a valuable proportion of his billionaire status into the club which saw them rise from an amateur village club to an all-time-high of third in the Bundesliga in 2018. Whilst this was brilliant for Hoffenheim and its loyal following, other clubs in the Bundesliga and German football fans cited an unfair competitive advantage that they had gained from having such a powerful figure as part of the Hoffenheim Verein.
A similar advantage has been gained by RB Leipzig. The club, sponsored by Red Bull, is associated with the RassennBall Sport Verein (As they officially can’t call themselves Red Bull, this translates as ‘Pitch Ball’) which is limited to just 21 people but has 50% plus one share of the voting rights at the club. This ‘fan-base’ consists solely of employees of Red Bull, mostly those that are very high up in status within the company and hence they are likely to favour the decisions made by the club’s ownership and support them by also contributing significant investment. Therefore, by proxy, Red Bull have majority control over the club and it seems as though the ‘real fans’ are excluded. Once again, this has been heavily criticised as unfair and seems to negate the desired benefits of the 50+1 rule.
Other Potential Problems
One of the first considerations that must be made for the 50+1 rule if there was potential for it to spread beyond Germany is the legal implications. Despite it being granted as legally acceptable in Germany, fundamentally, the 50+1 rule undermines wider European competition and trade laws as it prohibits investment and free trade. The German court of law adjudged that the rule is acceptable as it is deemed as unproblematic; its primary objectives are for good and desirable sports policy. The 50+1 rule aims to achieve social and ethical objectives and has a positive impact on the sport. However, it is unlikely to be able to withstand scrutiny in a European court which would make it difficult to implement outside of Germany.
Another concern is whether the rule makes it far more difficult for clubs to compete with other clubs that are in national associations that do not use the rule. In other words, clubs that give the majority voting power to fans are likely to deter major investors into the club at the risk that they could be removed if they upset the fan-base.
An individual or group with business acumen would wisely choose not to invest if they don’t actually get to make the rules and the major decisions at the club.
The problem that arises then is whether German clubs, or others in the future that are under the 50+1 Rule, are disadvantaged whilst lacking this level of investment that equals other European clubs. Perhaps Borussia Dortmund and Bayern Munich, who regularly compete with the best clubs in Europe in the latter stages of the UEFA Champions League, are proof that the rule does not prohibit or restrict the success of clubs adhering to it. Clubs like RB Leipzig, Schalke and the 2022 Europa League winners, Eintracht Frankfurt act as additional evidence to this theory.
The detrimental effect of the 50+1 rule is more clearly seen at a league level. Bayern Munich have won the Bundesliga every year since 2012. The uncompetitive and one-sided nature of the competition seems to imply there is a fault in the system that is not functioning as it should. The 50+1 rule is supposed to put all clubs on a level playing field but it seems in this case that it unbalances competition and creates a problem. This would be a worry for other national associations that are considering implementing the rule. For example, the Premier League is already known as the most competitive football competition in the world, why would they consider adopting a rule that has removed the element of unknown and intense competition in the country in which it already applies?
Perhaps a solution that allows clubs to exercise their own judgement as to whether or not to welcome foreign and lucrative investment may succeed in overcoming this. Without the 50+1 rule in place, some clubs would attract large investments and be able to rejuvenate the Bundesliga, with previously low performing sides competing against the German giants.
If clubs were to choose for themselves, there should be several conditions and new rules attached. For example, stricter club ownership laws such as an owner not selling the club for a minimum of 10 years. This would translate into a better quality of ownership and avoid issues or poor ownership. There must also be greater scrutiny around where the investment money comes from in order to further protect the club. Next week’s blog will investigate club ownership and its trials, tribulations and flaws and what can be done to overcome these. This blog will be relevant to this week’s and an extension of the solution and compromise to the 50+1 rule.
Conclusion
Following the European Super League debacle, the 50+1 rule, on the face of it, provides an attractive and sustainable solution for football fans around the globe. Many believe that if the club was to adopt such a rule, they would feel as though they would be granted the control and voice that they deserve within their beloved club. Football is made by the fans and a system that enhances their experience of the game, their club and the connection and the relationships they have, seems to be only positive.
I have identified within this blog that the system is, however, fundamentally unfair. Many. Clubs can find loopholes in the flawed system and the integral competitive nature of the sport could be undermined. Nevertheless, I believe that the 50+1 rule is something that could be moulded, adjusted and adapted to perfection and help fans re-engage meaningfully with their clubs whilst upholding the principles of competition and fairness.
A solution to the current unfairness of the 50+1 rule could be to leave the judgement for implementation of the law to the individual clubs to decide. At the moment there is a possibility that the rule is being supported by some of the biggest clubs in order to maintain the current status quo, undermining fair competition. Furthermore, there are so many clubs that find ways around the system, it has become obsolete and instead should be amended to be based upon the independent decision of the club.
It is a complex consideration as to whether or not there is a possibility for clubs to self-regulate. The 50+1 rule itself could be abandoned in legislation but instead could be individually adopted as the norm within clubs. I believe that it should be the role of the clubs themselves as well as the national associations to fairly manage financial fair play and club ownership and investment. Whilst this is optimistic, perhaps in the future clubs and associations will give a respected voice and opportunity to their fans without it having to be stipulated by law and attract good, proper investment that doesn’t threaten the club or football.
Really interesting read, thanks for putting together. Looking forward to next weeks blog as club ownership is something I’m looking into at the moment