Soccer success mirrors Germany’s secret strengths

For the first time ever, both teams in Europe’s biggest championship were German. In 2000, the country was the sick man of the pitch. The sport’s resurgence, like the economic renaissance, relied on the social market economy and the ability to push through structural reforms.

In 2000, Germany was the sick man of Europe. Not only was the economy stumbling, but the national football team was knocked out of the European Championship without winning a single game. That failure was reflected in UEFA’s Champions League, a grouping of leading European sides. From 2002 to 2009, no German club made it past the quarter-finals.

Fortunes have changed. Not only has Germany regained a reputation for economic uber-efficiency, but the German national team has reached at least the semi-final in every international tournament since 2006. And the Champions League’s final last Saturday was be the first ever all-German match: In a staggering game, Bayern Munich beat  Borussia Dortmund 2:1.

The sport resurgence and the economic renaissance have a lot in common.

Start with the social market economy. When it works, this heavily trammelled capitalism – fair competition and long-term thinking mixed with social responsibility – can lead to very strong results. Fans have majority control of all German football clubs, so glamour-seeking oligarchs and sheiks are kept out. TV revenue is distributed relatively evenly and debts are limited. Solidarity rules. Bayern Munich secretly lent money to Borussia Dortmund in 2005, when the latter side faced bankruptcy.

Restrained competition has its downsides. At the end of the 1990s, both the German economy and its soccer league were all too willing to tolerate underperformance, and to lose competitiveness against foreign rivals.

The dual turnarounds highlight another national strength: a remarkable ability to respond to shocks and fix problems. Germany’s structural reforms, which kicked off in 2003, are today seen as a role model for ailing economies. The soccer reforms were launched three years earlier. Fearing humiliation in the 2006 World Cup, to be held in Germany, the Football Association completely reformed the youth system.

Each club in the top three leagues now has to have a youth academy. In addition, the Football Association runs more than 300 “youth bases”, scouting for talented footballers as young as 11 years old. The result is a steady supply of world-class young players. Some of them were on display on Saturday night.

This article was initially  published as a Reuters Breakingviews comment on 24 May 2013.

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  1. Really interesting. And here’s a footnote.

    When Alex Ferguson became manager of Aberdeen in the late 1970s, the board of directors were very impressed with the set up at Borussia Mönchengladbach. (The two clubs had met in European competition.) They transferred some ideas back to Aberdeen. Now I know that “cultural borrowing” doesn’t always work – but the element they chose to imitate was the wage structure. Wages reflected loyalty to the club. And so, if a good player stayed for a few years (a) he was very well paid, and (b) it was unlikely that a rival – whether Celtic, Rangers or an English club – would be able to match his wages.

    As a result, Ferguson knew that he could depend on Gordon Strachan, Willie Miller, Alex McLeish, Peter Weir, Mark McGhee and other being in this first-team squad season after season.

    Of course, this predates the excessive wealth of television and foreign owners – but it was an important part (and one that is often overlooked) in Aberdeen’s success in winning Scottish championships and cups and, of course, the Cup-Winners’ Cup in 1983 (beating Real Madrid in the final, having beating Bayern Munich in the quarter-final).