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German philosophy reaping rewards on all fronts

FIVE major football countries are represented among the seven opponents Celtic can draw in the Champions League last 16 later this week and there isn't any doubt that one looms larger than the rest.

A laser show just adds to the matchday experience at the  Allianz Arena. Picture: EPA Tomorrow Nick Rodger
A laser show just adds to the matchday experience at the Allianz Arena. Picture: EPA Tomorrow Nick Rodger

While England, Spain, Italy and France all have one club which could be paired with the Scottish champions, Germany has three.

If that's the way it turns out, and Celtic are drawn against Bayern Munich, Borussia Dortmund or Schalke 04 on Thursday, everyone in Scottish football should sit up and pay attention. German clubs have won the Champions League only once in the last 15 years, but the way they run their football is second to none.

Being drawn against a German team would guarantee plenty of sermonising about how that country's model is the one to which all other countries – and above all the poor souls in the Scottish Premier League – should aspire. Even Henry McLeish tapped into this when publishing his report on Scottish football two years ago, claiming that Germany led the way and vaguely suggesting that we do something along the same lines. If only it was as simple as that.

The perception of German football has become enormously seductive. Their clubs play to packed grounds in which supporters pay low ticket prices, get free public transport on matchdays, and sometimes even have the fun of safe standing areas. That, coupled with a vibrant domestic scene and young, dynamic national side, gives the impression that the Bundesliga is utopia. It pretty much is, and German clubs follow a financial model which ought to make them even more powerful once Uefa's Financial Fair Play really get to grips with the spending by England, Spanish and Italian clubs.

For Scotland, though, German football is more a matter for admiration than aspiration. The argument that Scottish clubs should dramatically lower ticket prices because it works spectacularly well in Germany regrettably misses the point.

Yes, German clubs reward their fans and recognise the huge significance of games being played in front of large crowds. But their ticket prices are low because they can afford them to be.

Their reliance on gate revenues is nowhere near as significant as it is for Scottish clubs because they annually take in tens of millions of pounds by aggressively pursuing major commercial deals. They have a population (and therefore a market) of 82 million. Scotland has five million.

The big earner for the leading German clubs isn't television, it is sponsorship and commercial partnerships. It's all about the big deals. Take Borussia Dortmund. In 2011-12, they made £25m from matchday income, £48m from television but a staggering £78m from commercial deals.

Their strategy is to land major sponsorship agreements which are long and lucrative: they have shirt sponsor Evonik pumping in £10m-per-year until 2016, Puma as kit supplier paying £5.5m-per-year until 2020, and Signal Iduna as their stadium naming rights partner giving £4m-per-year until 2021. In addition to those, they have a string of companies as "secondary sponsors", collectively piling in millions more.

Bayern Munich's revenue – last recorded at £261m – is by far the highest in Germany. They are in long sponsorship deals worth £23m-per-year for shirt sponsorship by Deutsche Telekom and £22m per year with Adidas for kit manufacturing. Among their "Premium Partners" are Audi, Coca-Cola, Samsung and Lufthansa. They also make £4m-per-year from naming rights for their Allianz Arena.

Schalke have taken in £13m- per-year since 2006 in a shirt sponsorship with Russian oil company Gazprom, a deal recently extended and improved until 2017. Deals with Adidas and a sports rights agency, among many others, mean they generated almost £65m in commercial revenue alone in a single year.

Unlike the leading English clubs, those in the Bundesliga are not unhealthily reliant on rich individuals and television money. Next season the German clubs will begin to benefit from a new £570m, four-season deal which is more lucrative than those in Spain and France but lower than Serie A and worth only one-third of the next Barclays Premier League deal.

Wolves, who finished bottom of the league, received more television money than Borussia Dortmund last season. German sponsors actually like the fact that many matches are shown on terrestrial channels, because it means more viewers will see their company name.

What is so admirable about the German philosophy is that instead of simply making more money by milking the supporters at the turnstiles, they reward them by making prices affordable, and are rewarded in turn by vast crowds.

Dortmund averaged 80,500 last season, the highest in Europe, and next in Germany came Bayern with 69,000 and Schalke with 61,200. Germany has the highest average attendance of any football league in the world, 44,293 last season.

Some Dortmund standing tickets cost only around £10. Their clubs see full grounds as being absolutely essential to the football experience. And they want them there to make noise, not money.

Just about everything about German football is impressive. Dortmund's wage bill is roughly the same size as Fulham's, yet they are fourth-favourites to win the Champions League [Bayern are third behind Barcelona and Real Madrid]. The average wages-to-turnover ratio of Bundesliga clubs is a healthy 50% and overall debt levels are less than a third of English clubs'. Collectively, Germany's top-flight clubs posted a £43m profit after tax last year.

There is generosity of spirit, too. When Dortmund faced bankruptcy in 2003, they were given a £1.6m loan by . . . Bayern Munich. That, and sadly so much else, underlines the fact that Scottish and German football exist in different worlds.

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