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MONEY MATTERS

The German football tax

March 18, 2009

How about this for a populist idea; top flight Bundesliga football available in every home in Germany for the same price as half a beer a month?

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Uli Hoeness enjoys a beer during the last Oktoberfest

The idea is the brainchild of Bayern Munich general manager, Uli Hoeness, and would, he contends, reap such financial rewards for Bundesliga clubs that their television income would be comparable with the Premier League's colossal deals and would rejuvenate German football's European standing.

Hoeness has suggested that Germany's 37.5m households pay an extra two euro-a-month on top of their annual 200 euro television licence fee.

For the public this 24 euros per-household charge would make free-to-air television the home for live football, while for the clubs it would mean annual income leaping from 412m-euro-a-year under their current deal to 900m-euro-a-year.

As a result not only would top-flight football be available live to everyone at a very modest cost, but Bundesliga clubs would be provided with the wherewithal to compete with mega-rich clubs in England, Italy and Spain, up to 40% of which would be bankrupt if run according to the strict rules adhered to in Germany.

Serendipitously, under the scheme not only would TV rights revenue increase but clubs and broadcasters could also expect exponential increases in advertising and sponsorship values as a consequence of the Bundesliga being available live in 37.5m homes, rather than the estimated 2.4m homes that currently subscribe to pay-TV broadcaster Premiere's live coverage.

Counting against Hoeness' plan is the fact that, strange as it may seem to some, not everyone likes football and many would surely object to being forced to pay for something they have no interest in. It would effectively equate to a tax nationalising football.

While recent surveys have found that 55% of Germans claim to be soccer fans it would be a brave government who introduced a compulsory new tax for something 45% of the country didn't want.

Then there's the technical and logistical problem of trying to match current coverage. In Germany, every Bundesliga game is available to watch (if you have the right subscription) and with many games kicking off simultaneously free-to-air simply would not be able to provide the space to show all matches. That's before the added production costs are considered.

Other sports would suffer, too. Who is to say that football, rather than other popular sports in Germany, handball for example, should benefit from such an advantageous public funding arrangement?

One observer familiar with the German television market and the intricacies of Bundesliga television rights suggested to Soccernet that, viewed at its worst, Hoeness' idea amounted to "a draconian intervention in the free market".

While others will doubtless agree with that view, Hoeness argues that a TV licence fee subsidy would help redress European football's financial imbalance, something the German game has been largely insulated from as result of the rules which govern it.

The Bayern general manager contends that because German clubs must be 51% owned by normal members they have not benefited from attentions of billionaire investors or been allowed to rack up immense debts, factors which have seen English clubs establish their current dominance in the Champions League.

Without being exposed to the potentially ruinous trend of debt financing or becoming over-reliant on the whim of a single benefactor, German football might be able to call itself more stable, but it's also become less competitive, with no side progressing beyond the Champions League quarter-finals since 2002.

Hoeness argues that for the price of a small beer in a Bavarian beer house German football's flagging fortunes could be revived.

At face value the idea is simple in its brilliance, but in reality it would ultimately prove to be unworkable. Even though it will most likely never come to fruition you have to admit there is a certain charm to the idea.


Just when Bjorgolfur Gudmundsson thought it was all over, that he could sell West Ham United and draw a line under what has been the most turbulent episode in the club's history, Neil Warnock and 20 past and present Sheffield United players appear ready to drag the Carlos Tevez affair out yet further.

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Well-heeled West Ham boss Bjorgolfur Gudmundsson was all smiles last summer.

While most people have switched off from the whole debacle, understandably jaded by its seemingly interminable false finales, this latest twist threatens to scupper what West Ham hoped would finally allow the club to look to the future.

The club have effectively been looking for a buyer since last October when Icelandic bank Landsbanki, an institution in which Gudmundsson was the majority shareholder, collapsed and fell into the hands of the government.

Earlier this month, West Ham won an extension of a moratorium ensuring that Gudmundsson would not be forced to sell the club before the end of the season, with the proceeds being used to pay creditors in Iceland.

With West Ham uncertain as to whether they would have to pay Sheffield United as much as £45m, as was mooted, no buyer would ever commit to a takeover.

The out-of-court settlement, put at between £15m and £25m, therefore concluded the Tevez saga and allowed progress to be made in West Ham's sale. Or so it seemed.

Over the weekend the club, flush with the knowledge that a deal with Sheffield United was imminent, spoke boldly about up to 10 consortiums taking an interest in bidding for control at Upton Park, with one group apparently ready to spend £100m on the club.

Now all hopes of a deal must surely be once again on hold. With Warnock and the players - as well as the threat of action from Leeds United chairman Ken Bates - taking legal advice before launching what is expected to be a claim for lost earnings and bonus payments, West Ham could soon be facing a potential payout of anything from £2m to £15m.

The figures may not seem like deal-breaking sums, but while there is uncertainty over any further financial penalties, or yet more legal claims and counter claims, would it be responsible to invest? Why buy into uncertainty and controversy?

An exacerbated West Ham are now warning that if Warnock and the 20 players pursue legal cases anarchy will follow, with potentially endless claims and rebuttals threatening to stymie the game.

While you have to admire the tenacity of Sheffield United for fighting for what they believe in, we now find ourselves in a position that, taken to the extreme, could end in further farce.




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