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Bayern Munich masters the COVID-19 economic chaos

Timing is everything — plus announcing a new Bavarian Financial Works regular feature

Annual General Meeting FC Bayern Munich Photo by Matthias Balk/picture alliance via Getty Images

While the COVID-19 pandemic has imperilled financially unstable football clubs around the world, Bayern Munich’s structure and longstanding fiscal conservatism have left the club in a far better position than its rivals. By not carrying long-term debt they are less troubled than other clubs by the reduction in revenue, and potential changes in the cost of carrying that debt (looking at you FC Barcelona and Manchester United). But the bright minds at Bayern do not seem content to just ride out the financial storm in relative safety, rather it seems they have adjusted their transfer policy to take advantage of the chaos being wrought on other teams.

While fans express their preference for early transfer deals, rather than what some call late “panic” buys, it seems more likely that the team is operating in a steady programmed manner trying to take advantage of the opportunities that the economic maelstrom offers it.

We know that Bayern are always tracking its “shadow team” of potential additions and replacements, and that every first division club in Europe maintains massive files of data on player performance and pricing all year round. So, in the current pandemic what factors may be influencing Bayern to buy late in the last window, but get business done early for the summer 2021 window?

Before we look at this timing issue using Mark Roca and Dayot Upamecano as examples (one could choose Bouna Sarr, or Eric Maxim Choupo-Moting, or Omar Richards just as well) I need to make a little detour and share a business lesson I learned as a youngin’.

Negotiating with Mennonites

My mother grew up in Austria in the 30s and 40s and thus is completely comfortable negotiating price on just about anything. When I was young, we used to have a cottage and on the drive up we would pass through a large and beautiful Mennonite community that got together Thursdays to Saturdays for a huge bake sale, primarily targeted at selling to people commuting to their cottages.

Their baking was simply awesome (the pies in particular), but there were some disadvantages in running this business for the Mennonites. Firstly, they didn’t have refrigeration, or enough storage space to keep the pies they didn’t sell. If they didn’t sell by Saturday afternoon a lot of those pies would not earn them a nickel. They also faced significant risk of bad weather. If it rained, or the weather was poor a lot less people would bother stopping or even make the trip to their cottage shrinking their potential customer base in a big bad way.

It doesn’t take a PhD in economics to figure exactly what my mother did. On early and late season weekends when there were less cottagers around, she would be out there mid-Saturday afternoon buying up the remaining pies at great prices and then freezing them for later use. We didn’t always get the exact flavour we wanted, but our freezer was always full of fine Mennonite pie. Also, even on a long weekend when traffic would be expected to be heavy, if there was a storm coming in on Thursday afternoon or a bad weather forecast for the next couple of days, she’d be out there early Thursday playing up the fears of bad weather and once again hammering the Mennonites at the negotiating table. I ate a lot of pie as a kid.

This kind of reasoning is likely why we waited so late to sign Marc Roca last season. Espanyol were like those Mennonites on a Saturday afternoon in a pissing rainstorm. They were being relegated, which was going to create a large revenue reduction, and on top of that they were looking at a season without gate receipts that would hit a second division side even harder than a first division club. The pressure was building on them day-by-day to find funds to stabilize their situation for the coming season, and each day that went by the vice was getting a little tighter on them, they would be getting just a little more desperate. Bayern likely waited as long as they did to allow Espanyol to get quite weak before stepping up with their stable accounts to get a good deal on the player. Sure, there was a risk of missing out on the asset, but instead of putting a Roca pie in the freezer you can be pretty sure they would have found another flavour available by simply moving down their shopping list. Based on Bayern’s business history, this is a more likely explanation than a “panic” buy.

How does this apply to Upamecano situation? Prior to Upamecano signing with Bayern Munich, a lot of people want a big piece of tasty Upamecano pie, but they were not sure if it is going to rain or not, and thus not sure if they should go get it. Bayern has their financial rain gear on and negotiated a firm deal with a healthy salary and without uncertainty around just how they are going to pay for it, or what their overall financial picture looks like.

As vaccinations continue and eventually dates are set for the return of fans to stadiums, and world markets settle (this is important because some of Upa’s suitors carried large debt in secondary and tertiary markets which can vary significantly over time compared to say bank rates — but that is an article for another time) the sky is going to clear. The chaos will settle and other teams will be in better positions to negotiate for his services. But until those dates and outcomes become fixed and certain, they have to be cautious in how they deploy their financial resources. Bayern, with money in the bank, no significant debt, and a clear plan can simply pay Upamecano a salary he is happy with no matter what happens with COVID-19. That is the advantage of negotiating from a position of financial certainty when others are uncertain.

To be fair, a great deal of this is speculation. There are undoubtedly other factors in our success in signing RB Leipzig’s center-back stud. We don’t get invited to those meetings, but what Bavarian Financial Works will attempt to do is see the patterns in the evidence of Bayern’s actions and fit them to what we know about the current world football economic situation in the context of our club’s history and longstanding practices.

For instance, this theory started to develop when we announced Upa, and only got stronger when we signed Omar Richards. If we sign another player before the summer window opens, say Florian Neuhaus, this simply makes the theory look better. We hope to offer some insight on why Bayern acts the way it does, rather than just talking about the who, what, when and where (which are equally cool, by the way).

New Bavarian Financial Works series

I am pleased to announce, with the blessing of the boss, we will be rolling out a new series of articles around the financial and legal issues in the sport we love. If all goes well, we will be running it every second week in the offseason (or maybe sooner). We will talk about, and debate, all of the business matters that influence the game with a Bayern focus.

We’ll talk FFP, contracts, lawsuits, transfer fees, salaries, inflation, the impact of debt maintenance with regard to on-field performance, and a bunch of other topics. With the help of my crack research team, we hope to bring you some really interesting insights. I have arranged access to sports agents, sports lawyers, a former top-level club owner, and people working in the field right now to bring you the best possible information. While I don’t have them all on speed dial, with a little patience they are all willing to share their view on the business side of the game.

More importantly we want your input. If there is a question or issue you want us to talk about, please feel free to drop us a line at and we will try to cover the topics you want to hear about.

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