IN THE GAME

Recently a request for information on the economic situation of  German Basketball Bundesliga was posted on Interbasket forums. In the game would like to present you with an in depth review of the clubs’ situation written by German basketball blogger Gruebler. About a year ago, he wrote a longer post about multiple issues in German top-flight basketball in Interbasket’s League Evaluation thread. Since then, things have changed, hence an update on the economical situation in German basketball in times of economical crisis should offer interesting new facts. Gruebler has an excellent blog in German at gruebelei.de.

General economic parameters

The German Bundesliga of course is affected by the worldwide economic crisis. Sponsorship income is likely to decrease as in every other country. The league’s CEO Jan Pommer said to the media he expects a decrease in clubs’ budgets by an average 10 %. Compared to the international developments that’s a moderate decrease. But there’s still some doubt to it as the German GDP will likely drop by 6 % in 2009 and cuts in sponsorship engagement usually are affected heavily in times of crisis.

The German Bundesliga’s CEO Jan Pommer was quoted in FIVE basketball magazine that the gross budget of all BBL clubs 2008-2009 sums up to something around 50 million €. With a league of 18 clubs the average budget should be something just on the better side of 2.5 million €. But the spread is huge with ALBA Berlin being the sole leader with a budget of 7.5 million € and some clubs struggeling to reach the league’s minimum budget of 1.0 million €.

A reliable income out of ticket sales
A relative stability is due to the fact that sources of income in the German league are different from other european leagues and/or top clubs.

German clubs create quite a significant part of their budgets out of ticket sales, both single and season tickets. The German Bundesliga features the third highest attendance numbers in Europe [Ballineurope]. Just a bit more than 1.4 million spectators were in the arenas this season. If you only assume 15 € per ticket sold, it becomes clear that 40 % or more of the clubs earnings are generated in ticket sales. Of course this might be affected by the crisis as can be seen in the NBA already. But the ticket prices in Germany are still moderate with starting prices as low as 10 € and courtside tickets for only 55 € (e.g. at ALBA Berlin).

Players’ salaries
Multimillion-Dollar-contracts are unheard of, the very top inside players are rumored to have landed rare contracts for something around USD 500.000 but it’s way more likely that a Bundesliga allstar player is good for 200k or 300k € at the top. Usually German NT-Players are on the expensive side as there are few who are able to compete in the league and even less clubs willing to sign them for decent salaries.

Managers often refer to a lottery phenomenon in the league: Who’s the team that signs most surprises, i.e. overperforming rookies out of college. The rumored salary for those players is as low as 2000 USD net per month. It sounds resonable considering the low budgets of some clubs. A prominent starter like Derek Raivio earned something just short of 100k USD in his rookie seasons with Cologne 99ers who had a serious 2-3 million € budget at that time.

The licencing process 2009/2010
The German Bundesliga has a quite rigid licencing process. Clubs have to show a minimum gross budget of 1m € and an arena for at least 3000, plus some more things like a certain number of professional management staff, a certain minimum capital etc.

The licencing process showed that some teams struggle to meet these criteria. Only seven teams got the licence without any conditions. Eight teams got a licence only with a resolutive condition. They have to fulfill certain economic benchmarks during the upcoming weeks or their licence is voided.

Due to these standards the teams supposed to move up from the 2nd Bundesliga often choose to waive their right to play Bundesliga. Due to the financial crisis even some established teams think about leaving the Bundesliga and moving down to lower divisions. Last season’s newcomer Giants Nördlingen is the first team to have declared not to play Bundesliga next season. To fill up the 18 teams, the Bundesliga may hand out wildcards to any team that is interested and meets the economic criteria. The Bundesliga already called for candidates. But it is also rumored that there are some major clubs who are interested in using the current situation for reducing the number of teams of the Bundesliga to 16.

The big clubs don’t face major budget cuts
There are no real economic problems at the big clubs at the moment. Mostly they won’t be able to increase their budgets but won’t have to suffer major cutbacks either. They are known for paying their players on time and are able to sign dropouts from minor EL-teams, midlevel EuroCup-teams and the occasional NBA-dropout/D-League borderliner even midseason. Salaries possible will rather decrease a bit. ALBA GM Marco Baldi told the media that clubs are hesitant to sign, as they expect the prices to drop due to the overall economic situation.

ALBA Berlin GM Marco Baldi stated that they won’t be able to increase their club budget next season. They planned to move on to 10 million € gross budget but now it seams as if they are stuck with “only” 7.5 to 8 million €. Reliable sources close to the club write in the German forums that the players net salaries amounted to a total of 2.5 million € this season.

Some big sponsors might have to stop their engagement due to the crisis [e.g. financially stressed bank WestLB] the major sponsor ALBA Group, a recycling company suffers a great deal from the economic crisis, too. But it is not expected that they’ll have to face any real problems as other major sponsors like sports brand Adidas just extended their contract and new sponsors were signed during the season. Their ticket sales increased by close to 40% this season and they might very well be one of the most professional teams in Europe regarding professional ticket sales and marketing. ALBA is known for some understatement in their public relations strategy. It’s a safe bet that they’ll stay No. 1 in Germany economically and won’t suffer from the crisis too much.

Brose Baskets Bamberg was the only top club directly experiencing a problem due to the financial crisis: Their arena [Jako arena, seating 6800] was privately held by the club’s owner Sabine Günther and she had to sell it this year. After a long struggle to find an investor, regional developer Klappan stepped up and bought the arena. Facility management will be provided for by Hochtief Facility Management AG. So no fear there. All the major sponsors will stay on board and might even slightly increase their sponsorship efforts. Bamberg GM Wolfgang Heyder will probably have a gross budget similar to the past seasons of something close to 6 million €.

EWE Basket Oldenburg is the dark horse in the economic race. They were constantly underrated. They have money but nobody got any reliable numbers. But if you take a close look at their ability to sign borderline NBA-Players like Paulding and the German league’s MVP Gardner for multi-season contracts you must get the impression that there’s some million € contributed by sponsors. Media says that they only have something between 3 and 4 Million € gross. The magazine Sponsors puts them at 3,6 million € gross. Rumors in the market politely laugh about these supposedly way to low numbers. The club is backed by financially stable regional sponsors, no major trouble there. Ticket earnings are limited due to their small [3.200] arena.

Telekom Baskets Bonn heavily pays for their club owned new arena. It is rumored that out of their estimated 3 million € gross budget 800.000 € go into debt service for their arena. But they have a long-term sponsorship contract with Germany’s leading telecommunications provider Deutsche Telekom which is supposed to pay more according to their sportive success. They should get a bit more money if they play EuroCup or Euroleague next season. But unless a second major sponsor suddenly appears, they won’t be able to show a very competitive budget compared with other teams in the major European competitions.

Deutsche Bank Skyliners Frankfurt features Germany’s leading private bank as main sponsor. The contract should last for at least another year and Frankfurt GM Gunnar Wöbke is known for doing a great job putting together the club’s finances. Rumors are that their budget is well above 3m €. Perhaps they’ll have to struggle a bit regarding higher priced ticket sales as Frankfurt [Germany's city of banks and other players on the financial markets] is crise ridden in a time where bonusses are cut back.

Artland Dragons Quakenbrück probably is the only German club mostly financed by a single person. They are rumored to have a solid budget just on the better side of three million Euro and constantly play in front of sell-out crowds of 3000.

Mid level teams
There’s quite a bunch of mid level teams. By mid level we refer to teams ranging between 1.7 and just below 3 million € gross budget. Those teams are nothing special budget wise but mostly don’t have to fear economic problems. They pay their players on time but won’t be able to compete for really high salaries. In some cases they might even be able to pinch a good BBL player from the teams mentioned before. They are the typical teams for the German BBL featuring College rookies and few German players without any NT-experience.

Quite a lot of those teams have modern arenas and solid budgets.

EnBW Ludwigsburg is rumored to be somewhere between 2 and 3m € depending on the sources. They move to a new arena seating 5000 next year and despite showing poor performances during the last two seasons are a financially sound club and usually a promising playoff candidate.

NewYorker Phantoms Braunschweig range just above 2 million €. They got a modern arena seating 6600 but are struggeling with ticket sales. Just recently they extended all major sponsorship deals for another two years. Stability and perhaps even potential for a surprise ride into the playoffs under new headcoach Machowski. It’s a team constantly underperforming concerning their budget in the last years.

Düsseldorf Giants supposedly have a budget of 2.2m €. They had a significant deficit of 600k midseason but the City of Dusseldorf stepped in and just paid it up somehow. Although there is a minor tradition of Bundesliga teams to be financed directly or indirectly by the cities, an engagement with such an significant amount is rather unusual. By no means public funding plays a important role in Bundesliga as it does in French LNB or some Spanish clubs.

Eisbären Bremerhaven, relegated this season but in the market for a wildcard spot, are the only other team of the Bundesliga where it is known that communal money plays a major role. It might become less in times of crisis but if they play Bundesliga, you can expect them to have a budget well over 2m €.

Quarterfinalist Ratiopharm Ulm is one of the „poorer“ midlevel teams. Their goal for the 2009-2010 season is to increase their budget to 1.7-1.8 million. They are economically sound and only do what they can afford. The major sponsor rationpahrm stayed on board.

Same goes for TBB Trier. With a modern arena seating 5000 they did solid work this year, as they only got to play Bundesliga due to earning a wildcard last season. Nothing spectacular there but club that does a decent job with limited money. No economic troubles.

Quarterfinalist MEG Göttingen just recently signed a sponsorship deal with MEG, a company selling insurances and financial products. I’m not sure whether you could count them as a mid-level budget team as headcoach Patrick just recently stated that they have a rather small budget. Numbers in the media differ greatly. Just today Ulm was able to sign Göttingens star player Rocky Trice.

Small budget clubs

As small budget clubs I count all those clubs where it is known that they only have a budget just above the Bundesliga’s minimum budget or where there are still some doubts in the licencing process for 2009/2010.

Gießen 46ers were relegated and had major financial troubles the last three years. But as the licencing process showed, they stabilized economically and are in the race for a wildcard spot in the 2009/2010 section.

Walter Tigers Tübingen surprised many as they only got their licence under a resolutive condition. It was generally known that they played with a small budget, but that they were not able to show 40 % of their sponsorship contracts by end of May came as a surprise. Additionally coach Öngören was released just after the end of the season. A newspaper wrote that the club was not willing or able to fulfill his requests for a more professional structure.

Quarterfinalist Paderborn Baskets cried out for financial help since the beginning of the year. Player salaries were paid late or partially at some point in time although the club stated that this happened by mutual agreement. Fans raised money. But now some public funds were promised to the club and the plan to form a public limited company and sell shares to supporters to raise fresh capital was announced. They got a licence only with resolutive condition. Last week they started selling season tickets for next year’s Bundesliga.

Cologne 99ers, the team who filed for insolvency protection in the 2007-2008 season, again called for help in spring. They had a significant deficit which luckily was paid for by the club oweners and a major sponsor. They got a licence only with resolutive condition.

Potential newcomer Phoenix Hagen had to fight hard to obtain a licence due to the fact that they could not feature a sufficient arena. They will be able to match the minimum budget and are now in the process to convert an old factory building into an arena for 2009/2010 while their orginal homecourt is extended with public funds (out of one of the state’s investment programs to tackle the crisis).

The other potential newcomer Mitteldeutscher BC (MBC) postponed its decision to play Bundesliga until end of June. They told the media that they managed to get together the minimum budget but won’t play if they were not able to meet a budget of 1.5m €.