This weekend, Bayern Munich and Borussia Dortmund will play in the final of Europe’s most prestigious soccer competition, and for the first time it’s an all-German affair. There’s something a little too apt about Germany’s domination of Europe’s favorite sport this year. As goes football, so goes the European economy? Bear with me. There could be something to it.
This weekend’s match, the 58th UEFA Champions League soccer final, marks the culmination of the steady rise of the German football league in recent seasons. The finalists underlined the point by each eliminating clubs recently seen as the game’s most glittering stars: Barcelona and Real Madrid. German engineering prevails over Spanish flair. The success of German clubs against more glamorous counterparts, not just in Spain but also in Italy and the U.K., seems to say something about backbone and strength in depth.
But that’s not all. Dortmund and Munich are two very different sorts of club. Dortmund represents Germany’s old industrial heartland. Munich, the capital of Bavaria, is the modern center of a remarkably prosperous region. Germany’s economic resilience owes a lot to the diffusion of its strength across a strikingly diverse range of big cities. This is uncommon in the rest of Europe. In addition to well-known economic hubs such as Munich, Stuttgart and many others, Germany has cities like Hamburg -- once written off in the same way many northern English cities have been, it is now a booming economic center, thanks to Germany’s success as an exporter to the big emerging-market economies, China in particular.
Fiscal rectitude, as you might guess, comes into it as well. German football has built its success this year on the biggest match-day attendances of the top European leagues, even moving ahead of the British Premier League -- solid revenue. Its clubs, which by the way have to be majority-owned by Germans, operate under tight restrictions on the use of debt for acquisitions -- prudent finance. By global industry standards, wages consume a small share of receipts -- cost control.
By contrast, look at the news from some of the gaudier leagues. Strength in depth? Madrid and Barcelona dominate the Spanish game so completely that La Liga almost resembles the Scottish league these days, with about the same degree of boredom over which club might upset the standings. As for fiscal control, I used to joke that you would know the euro crisis was serious once Spanish banks stopped doling out cash so readily to the country’s football clubs. Actually, that moment has arrived.
Once-almighty Italian football isn’t remotely what it was. Concerning the English Premiership, where to begin? It has enjoyed stunning revenue growth thanks to a global following -- but the money disappears into outlandish pay for far too many ordinary players. Where’s the discipline? The percentage of revenue spent on wages is far higher in the English Premiership than in Germany’s Bundesliga -- and in many clubs it exceeds 100 percent.
Not unlike their finance-sector equivalents, English football regulators prefer a light touch: They are open to all comers in the market for clubs, irrespective of financial standing or commitment to the local community. Strategy seems lacking. Foreign players predominate at the top of the English game, so the talent pool for the national team grows ever smaller. Despite having a lot of foreign players, Germany has a national team that remains one of the world’s best. Somehow, Germany is better at developing its national assets.
An English soccer star of the 1980s, Gary Lineker, once defined the sport in a way that still makes sense to Englishmen. Football: a simple game in which 22 men chase a ball for 90 minutes and at the end the Germans win. Must we accept the corollary? European monetary union: a currency system in which 17 countries strive to stay competitive and at the end the Germans win.
We will see, though the latest data suggest that the German economy isn’t quite as unstoppable as its footballers. Exports to Germany’s struggling neighbors are depressed. China’s growth is slowing as well, shrinking another market vital to German success. With domestic demand, as usual, weaker than it might be -- the ethic of austerity prevails in Berlin and in households across the land -- the German economy has been faltering of late. People forget, but the term “eurosclerosis” was applied to Germany and its inability to adapt in the 1990s. Things move in cycles, so who knows?
Unconvinced? I will leave you with another consoling thought that is going around before the big game. This one you can take to the bank. It’s certain that the loser this weekend will be a team from Germany.
(Jim O’Neill, the outgoing chairman of Goldman Sachs Asset Management, is a Bloomberg View columnist. The opinions expressed are his own.)
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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