Follow The Money: Why Germany's top players are leaving the league

Many of Germany's top players have been fleeing the country after shining in the easyCredit BBL. This is deep dive into the financial situation in the country and compare it to other countries.

If you look around the basketball globe and talk to observers of the game, many of them will say Germany has emerged as a major player in European hoops - maybe an awaken rising giant or even worldwide superpower in the works.

Think about Germany qualifying for the 2020 Tokyo Olympics; taking third place at the FIBA EuroBasket 2022; and then opening eyes around the world by famously winning the title at the FIBA Basketball World Cup 2023.

The easyCredit BBL is considered a strong league with great fan support, fiscal responsibility and reliable payments made to players. German clubs are also nearing the pinnacle of the continent’s competitions.

FC Bayern Munich twice came up just short of the Turkish Airlines EuroLeague Final Four: losing to Armani Exchange Milan and No. 1 seed FC Barcelona in five games in the 2020-21 and 2021-22 playoffs, respectively.

ALBA Berlin reached the EuroCup Finals in 2018-19, losing in a series 2-1 to Valencia Basket a season after Bayern reached the EuroCup Semi-Finals.

Telekom Baskets Bonn won the Basketball Champions League (BCL) last season to become the first German club to win a pan-European title since Fraport Skyliners Frankfurt in 2015-16 with the FIBA Europe Cup.

RIESEN Ludwigsburg had come close twice in the BCL, finishing fourth in 2017-18 and third in 2021-22. And Bamberg Baskets were fourth in the BCL in 2018-19.

German clubs have been close in the FIBA Europe Cup since Frankfurt’s title as well. Würzburg Baskets reached the Final in 2018-19 and Bonn and Bayreuth both advanced to the Semi-Finals in 2016-17 and 2019-20, respectively.

GERMANY’S TOP PLAYERS ARE LEAVING

Despite all that, German clubs regularly have seen their top players leave with many of the league’s top stars heading elsewhere in Europe.

Over the last four seasons, 21 of the 40 players selected for the All-BBL First or Second Teams have left the league the following offseason - including the last two Most Valuable Players.

The 2022-23 season MVP TJ Shorts fled Germany to France’s emerging power Paris Basketball - along with half the Bonn roster plus head coach Tuomas Iisalo. And the 2021-22 MVP Parker Jackson-Cartwright also left Bonn and Germany to head to the EuroLeague team LDLC ASVEL Villeurbanne.

The masterful Brazilian duo of Yago dos Santos and Bruno Caboclo both helped ratiopharm ulm to the title last season and earned spots on the First Team … and then went abroad. Just like last season Second-Team members Brandon Paul, Stanley Whittaker, Eric Washington and Selom Mawugbe.

Joining Jackson-Cartwright in the exodus following the 2021-22 season was the rest of the First-Team: Maodo Lo, Jaron Blossomgame, Deshaun Thomas and Maik Kotsar as well as Javontae Hawkins from the Second Team.

The 2020-21 First Team members leaving Germany were Trae Bell-Haynes and Jalen Reynolds along with Jayson Granger and Simone Fontecchio from the Second Team.

Four players from the top 10 in the 2019-20 season also left the country after the season. Khadeen Carrington and Marcus Knight were First Team members who decided for another country and Second Teamers Scott Eatherton and Martin Hermannsson left.

The German BBL has long been considered a stepping stone league, but how can this be you might be wondering?

It’s easy. As the saying goes: just follow the money.

And that is exactly what the players are doing as they are leaving Germany for greener pastures - meaning more money going into their bank accounts.

When all is said and done, German clubs have to spend more money than their counterparts abroad to reach the same amount of money that players will receive.

NO EASY TASK

Looking in depth into the economic situation in Germany and comparing it to other countries in terms of basketball spending is no easy task. Getting the information to accurately compare the leagues is like cracking a safe or asking for state secrets.

Many leagues have refused upon inquiry to release important information needed for a solid comparison. The main data needed to build a fully accurate picture of the situation would be total league revenue, total gross spending of the clubs for players’ salaries and total net spending of the clubs for players’ salaries.

Some leagues have been willing to provide more information than others with France being one of the most transparent ones on the continent.

GERMANY

Here is a look at the situation in Germany.

For an unmarried player with no children, a net salary of 60,000 euros needs a gross salary of 133,500 euros, according to the German league. A net salary of 120,000 euros costs a club a gross salary of 244,500 euros.

Individuals in Germany are taxed between 14 and 42 percent for taxable income ranging from 11,600 and 66,700 euros. The tax rate is 42 percent up for until 277,000 euros and then is 45 percent for more than that.

The German Bundesliga generated 127.5 million euros in sales revenue in 2022-23 - up 16 percent from 109.6 million euros in 2021-22 and surpassed the pre-Covid level for the first time.

According to league numbers, all 18 clubs met the BBL minimum budget of 3 million euros. Two clubs had more than 10 million euros in revenue, five were between 5.5 and 10 million, seven clubs had 4 to 5.5 million euros and four were 4 million euros or below in revenue.

League numbers showed that its clubs in 2022-23 spent 48.3 million euros in legal fees, social expenses, payroll taxes, income taxes as well as social security. That was up from 37.4 million in 2021-22.

The clubs also dished out 8.3 million euros - an average of about 460,000 euros per club - to the Employers Liability Insurance Association (Verwaltungs-Berufsgenossenschaft), which is a statutory accident insurance institution for temporary employment agencies, security companies, banks, insurance companies and almost 100 other sectors in Germany. That is an increase of more than 20 percent from 6.9 million euros from 2021-22 - or more than 380,000 per club. The other 52 million euros of expenses were either total assets.

The two biggest incomes for the league were sponsoring at a total of 84.3 million euros and tickets, which jumped from 13.7 million in 2021-22 to 25.6 million in 2022-23.

Speaking of tickets, Germans definitely have been interested in the easyCredit BBL with 1,403,712 fans attending games in 2022-23. That represented 84 percent of the arenas’ capacities. The attendance numbers rose dramatically over 2021-22 though the figure of 764,286 must be qualified since some games were still played under Covid restrictions.

A leading official with a BBL club said teams receive between 300,000 and 355,000 euros per season from the league’s new broadcast deal with DYN.

The 2022-23 season is really the first one which can be compared elsewhere since Europe and the rest of the world had gotten through the pandemic and game operations returned to pre-Covid levels.

SPAIN

That being said, attempts to find salary-relevant economic figures in Spain for the ACB were met with comments such as: “We have all the information, we do financial control for all our clubs activities and budgets, but it is not public information.” Of course it must also be said that it is up to each of the clubs to decide how much of their details they want to make public.

The league did say that the average attendance for the 2022-23 regular season was 6,059 fans per game from a maximum of 8,516, meaning 71.1 percent capacity. As of February 11 this season, average was 6,183 of 8.371 per game for 74 percent capacity.

The league also committed to saying 15.9 million euros in TV/broadcasting revenue was shared by the 18 ACB teams, varying slightly in distribution depending on the standings.

Spain’s tax situation is a bit different than Germany - though the top rates are actually higher depending on region. The usual rate ranges from 45 to 54 percent with Madrid at 45 percent, Barcelona at 52 percent and Valencia at 54 percent.

The tax rate in the northern Spanish area Basque Country, however, is only 20-22 percent with the major clubs there being Baskonia and Bilbao.

One major difference in Spain is if you are a non-resident, meaning you are in the country for 182 days or fewer. Then you are only taxed at 24 percent. If a player stays in the country a second season, they then fall under the higher rates.

But a player can stay in Spain for one season at 24 percent and then leave the country for a season and return and they are once again taxed at 24 percent - but just for that first season back.

Some of the clubs lower in the ACB standings definitely take advantage of this rule.

One of the main teams doing this is Rio Breogan in the city of Lugo in northwestern Spain. The club was promoted to the ACB in 2021 and immediately brought in a number of players debuting in the Spanish top flight: Dzanan Musa, Rasid Mahalbasic, Tyler Kalinoski and Nikola Jankovic.

None of them were back in 2022-23 and instead the club brought in new Spanish debutants such as Justus Hollatz from Veolia Towers Hamburg, Nemanja Nenandic, Toni Nakic, Stefan Momirov, Ethan Happ and Luka Brajkovic.

And after retaining Nakic and Momirov, Rio Breogan for this season brought in Hollatz’s former Hamburg teammate Anthony Polite as well as former Bayreuth big man Martynas Sajus, ex-FC Bayern Munich talent Matej Rudan as well as Ben McLemore, Mouhamet Diouf, Matas Jogela and Rob Gray - all of them playing in Spain for the first time.

There are some big name players who have benefited from the other half of that rule - that they are taxed at the lower rate after a season abroad. Dylan Ennis is one after leaving Andorra and returning to Zaragoza. Janis Timma last played in Baskonia in 2017-18 and is back with Obradoiro. Augusta Lima played at Real Madrid in 2016 and returned in 2018 with Murcia.

Another phenomena in Spain is the image rights - where a club pays an image company to manage the image rights of the player. The companies are not obligated to do anything for the money, but that payment is taxed at a lower rate of 9 percent. One source said clubs can have an image rights payment up to 15 percent of a player’s salary.

ITALY

The clubs from every league are funded in two primary categories: sponsors and tickets. And Italy’s basketball leaders have not pushed the envelop in terms of new arenas. Italy’s minimum capacity of 3,500 spectators for its venues has been in place since 1974.

Italians have this season come out more for games. The average attendance for Serie A games in 2022-23 was 3,570 or 63 percent. In the first half of 2023-24, those numbers have jumped to 3,968 fans or 73 percent.

The Italian league in July 2022 signed a three-year television contract worth 10 million euros, an increase of 54 percent compared to the previous deal.

According to the Melandri Law - Italy’s regulations to govern sporting event rights - Italian clubs receive 60 percent of the TV revenue in equal share. Another 20 percent is divided up considering the standings and the final 20 percent is distributed considering the user base of the clubs - 15 percent according to the number of fans and 5 percent corresponding to the population of the province where the club is located.

The league did not share revenue figures for the league or clubs but Italy’s most important economic newspaper Il Sole 24 ore reported that the total turnover of the clubs in 2019-20 was 120 million euros.

An agency with players in Italy said a contract of 100,000 euros net costs the club 240,000 euros. Lower level contracts of 16,000-20,000 euros cost the club only double.

That being said, Italian clubs - like their Spanish counterparts - also have the ability to use these image rights companies to lower their salary costs with the image rights money declared as a company expense and taxed at a lower rate. If clubs declare a salary of 50,000 and 50,000 goes to an image company that pays the player, then the club total cost is: 50,000 x 2.4 = 120,000, plus the 50,000 to the image company for a total of 170,000. That is a savings of 70,000 euros.

Apparently all clubs except Virtus Bologna and Reyer Venice use the image rights exemption - as those local governments do not allow it. Otherwise there is nothing prohibiting the clubs from utilizing it. And one agency said image rights are used for anywhere from 15 to 40 percent of player salaries.

Similar to the Training Fund in the German BBL, Italy also has a program to help incentivize clubs to play Italians they developed. Clubs pay 15,000 euros to register a player in the Serie A - Italian or foreigner - and that happens each season. If a club has only two young players from their academy among their 12 players, that would mean 150,000 euros. And that money goes to the clubs that developed the player between ages of 14 and 20.

GREECE

While things are quite even in the standings in Italy, Greece has clearly been dominated for some time by Olympiacos Piraeus and Panathinaikos Athens. And those two teams drive the Greek Basket League.

According to a league spokesman, the 12-team GBL is expected to generate 50 million euros in revenue this year. The spokesman said gross salaries for players for this year are estimated at 35-40 million euros with net salaries at 25-30 million euros.

Those numbers were a big jump up from last season predominantly because Panathinaikos’ budget increased from 12 to 20 million euros, according to the league source.

The Olympiacos and Panathinaikos importance can also be seen in the league’s TV money distribution. Both clubs receive 1.5 million euros of the total 7.5 million euro deal with the remaining 4.5 million being distributed to the rest of the league progressively according to the standings.

The tax rate in Greece is 22 percent, which changed more than 4 years ago after the country’s financial collapse. It had been 40-45 percent up to 100,000 euros and then up to 55 percent for up to 1 million euros. There was a luxury tax for more than that. For example, when Vasilis Spanoulis signed with Olympiacos in 2010 the club paid 5.1 million euros for his 2.4 million euro net salary.

One other financial source for the Greek clubs comes from the government. There is a gambling tax in Greece and from the monies that are collected, the state gives money to all the sports. Basketball receives 5 millions euros with the money divided up equally among the 12 teams.

FRANCE

Perhaps the most transparent league is France with the Direction Nationale du Conseil et du Contrôle de Gestion des Clubs Professionnels (National Directorate of Consulting and Management Control of Professional Clubs) (DNCCGCP) acting as an advising group to support the league and clubs to help assure the economic regulation and financial balance of the league as well as assess the current and future financial health of the clubs.

The DNCCGCP publishes an annual report and it provides a pretty clear picture of the situation in the country.

The Betclic Élite’s total operating income for 2022-23 was 111.5 million euros - up 19 percent from the 93.6 million euros in 2021-22. About 45 percent of that money (50.2 million euros) came from sponsoring - down from 48 percent (44.5 million) in 2021-22. And it was a significantly wide range of club usage of sponsoring in their earnings. Nanterre 92 for example had 65 percent of their money come from sponsors while Metropolitans 92 only had 11 percent.

The league received 18.0 million euros in subsidies in 2022-23, which was actually 12 percent lower than the 20.5 million in 2021-22. The report pointed out that should not be interpreted as a disengagement of local authorities but rather a decrease in state aid paid to the clubs in 2021-22.

On the other hand, the league saw gross salaries of players and coaches rise 13 percent from 39.5 million euros in 2021-22 to 44.7 million last season. All told, the Betclic Élite had total operating expenses of 140.2 million euros - up 19 percent from 118.1 million in 2021-22.

Take the 111.5 million euros income and the operating expenses of 140.2 millions, and the total is a loss of 28.7 million euros. Yet the league actually had a cumulative net loss of 5.4 million euros in 2022-23. That is because 23.1 million euros in what are called “Resultat exceptionnel” - the result of exceptional earning minus exceptional loss, exceptional meaning the money does not come from “traditional” earnings like merchandising and ticketing.

That is made up of exceptional prize money - such as after winning a Leaders Cup - or if a club owner decides to invest more money in the team. The latter was the case with with Monaco, who got almost 16 million euros from Alexey Fedorychev; and with Paris, who received more than 5.5 million euros from Eric Schwartz.

There was discussion in France about commitment to financial fair play regulations but instead a luxury tax was instituted. If the accumaled salaries of your players and staff exceed more than 40% of your budget, the club must pay a tax.

Speaking of Monaco, the club won its first French league crown in 2023 and certainly has the bill for it. Despite doubling its operating income from 3.9 million euros to 7.9 million in 2022-23, the club from the principality logged total operating expenses in 23.7 million euros, including 11.3 million euros in gross sports salaries. Those numbers jumped from 15.9 million and 7.1 million euros respectively. That equates to the one single club making up for 55 percent of the league’s losses.

Add Monaco to LDLC ASVEL Villeurbanne and Paris Basketball, and that trio represents nearly 24 million euros of the 28.7 million in total league losses.

ASVEL’s operating income went up from 10.5 million in 2021-22 to 15.0 million last season. Their operating expenses also rose, from 14.0 million to 17.6 million euros. That included gross sports salaries of 4.2 million euros, which were actually down 6 percent from 4.4 million in 2021-22.

Paris meanwhile increased its operating income last season 125 percent from 2.3 million to 3.8 million euros. That did not cover however a 230 percent increase in expenses from 5.5 million in 2021-22 to 9.3 million last season. The spending also included 2.6 million in gross sports salaries 2.6 million - up 67 percent from 1.7 million in 2021-22.

One of the most important notes about the 2022-23 season in France that needs to be observed is what can only be described as the Wembanyama Effect. Victor Wembanyama was the talk of the league playing for Metropolitans 92 as the future No. 1 pick in the 2023 NBA Draft.

Metropolitans postponed a league game early in the season to take a trip to Las Vegas to play two games against the G-League Ignite team to get more attention for Wembanyama.

The engaging teenager was covered from world media and everybody wanted to get a glimpse of the future superstar.

Metropolitans saw their tickets sales jump 305 percent from 750,000 tickets in 2021-22 to 3.2 million last season. That helped the club’s operating income increase 114 percent from 4.6 million to 9.9 million last season.

What’s impressive about those increases is that unlike EuroLeague sides Monaco and ASVEL and eventual EuroCup quarter-finalists Paris, Metropolitans only played domestically and did not compete in any European cup.

Metropolitans’ total expenses went up 43 percent from 7.5 million euros in 2021-22 to 10.8 million. And the gross sports salaries jumped slightly from 2.8 million to 3.1 million euros last season.

One budget line in the DNCCGCP report was called “Other expenses”, and it listed 556,000 euros - up from just 13,000 in 2021-22. It does not describe what those expenses are but the trip to Las Vegas could be one of the largest items.

One of the items in the income section for Metropolitans was called “Other products”, and it was 2.7 million euros last season after only 180,000 euros in 2021-22. The DNCCGCP report states that money is the compensation received by the club as part of the NBA draft selection of both Wembanyama and his fellow first round pick Bilal Coulibaly, who played with Metropolitans last season as well.

Thanks to the Wembanyama Effect, the Betclic Élite set a new record in attendance with nearly 1.2 million spectators. The average attendance at the end of the regular season was 3,910 with SLUC Nancy Basket setting a new league average attendance record with 5,829 spectators per game. The 87 percent capacity also eclipsed the previous league best of 83 percent in the 2017-18 season.

POSSIBLE CHANGES

Again, without detailed information from all the leagues across the continent and the intricacies of the financial landscapes in the countries, it is impossible to give an accurate comparison of the situation.

But instead of just complaining and pointing out all the problems, why not try to offer up some possible solutions.

It seems the number one issue in German basketball is the VBG - the accident insurance institution. The clubs’ yearly contributions to the organization will continue to grow as they earn more money. One BBL team functionary expects the VBG bill to eclipse the 500,000 euro mark for the pay period.

Any kind of relief for the clubs in accordance with the VBG - which is not in the hands of the league - would be a huge step in German teams being able to compete financially with other countries.

One head of a European agency said Germany’s extra costs “suffocate” teams’ chances of competing and “cripple” them in keeping high level talent.

German politicians could also listen to the calls of labor experts and industry advisors and try to make it easier to attract higher quality employees in all fields: researchers, developers and better basketball players.

A way this would be possible is to lower the tax rate for those individuals for the first year they are in the country - similar to the model in Spain.

Denmark also has a special tax scheme for researchers as well as certain employee benefits for a maximum of seven years. They are taxed at a rate of 32.8 percent instead of the usual rate of up to 52 percent.

Another possibility a club official came up with was the league mandating clubs to pay into a savings fund with money from various areas designated for future investments. For example, take 200,000 of the 300,000 euros from the TV/advertising deal for the video rights and put it into an escrow account. Once there is enough money in the account, the club can for example then build a 24/7 practice facility like the Orange Campus in Ulm.

That would give German clubs a competitive edge to attract players, who might be able to earn more money in another country but they would get the best practice facilities in Europe.

Another possible push for basketball in Germany could be more of the top football clubs in the country following the lead of Bayern Munich and start up a basketball program. More football clubs using their financial clout would push the entirety of the league - just like the promotion of Bayern to the Bundesliga in 2011 did for the league.

The actual full implementation and observance of the financial fair play rules in European basketball would also benefit German teams since they act very fiscally responsible compared to others across the continent.

FORWARD-THINKING LEAGUE

It would be one thing if the easyCredit BBL did not really push the envelop and try to increase the total level of the league. But that is not the case at all.

Way back in May 2011, the BBL famously put out the “Vision: 2020 the best national league in Europe”. The league - spurred on by CEO Jan Pommer - set long-term goals based on improvements in attendance figures, television ratings and revenues and better sporting results among the clubs.

Clubs were required to have a minimum budget of 1 million euros as well as an arena with at least 3,000 capacity. The league also instituted youth talent promotion guidelines for the U16 JBBL and U19 NBBL leagues to statutes for all BBL teams.

The BBL in 2010-11 had just achieved a new attendance record 10 years in a row, eclipsing the 4,000 mark for the first time in 2010-11. And the clubs went into the 2011-12 season with a total budget of 61 million euros.

The BBL in 2012 instituted the 6+6 rule by which clubs must have six players with German passports on a 12-player game roster. At the end of the 2011-12 season, Germans played 22.39 percent of the minutes of the 2011-12 season. That has jumped to 33.3 percent in 2022-23 - topped by Braunschweig’s 63.3 percent. Rostock had the lowest percentage at 19.7 percent while 11 clubs had Germans play at least 35 percent of their minutes last season.

While some considered the Vision 2020 a failure, it achieved many of the things the league had hoped for - especially in terms of economics and organization.

In 2015, Stefan Holz took over from Pommer as league CEO and his stated mission was: “We need faces, we need German faces. We need full arenas and major TV reach.”

The league in November 2022 came up with its next strategy for the future, calling it Triple-Double.

By the start of the 2032-33 season, the minimum budget will be increased from 3 million to 6 million euros. The minimum will increase by 500,000 euros every two years. In addition, the minimum arena capacity will jump from 3,000 spectators to at least 4,500 by the 2032-33 season. But it will be a higher minimum in many cities. A minimum capacity of 1 percent based on the next 100,000 inhabitants is then required. A club in a city with 650,000 inhabitants must have a hall with at least 7,000 seats.

The league also wants to double the league’s reach in terms of TV, traditional digital (websites and apps) and social media and increase the teams’ success in international competitions.

NEXT NEW FACES NEEDED

Germany’s league and its clubs are trying all they can to really take the next step in the continent. But the financial infrastructure in the country is not really allowing it.

If nothing changes, then the German clubs will need to continue one aspect where they are truly elite on the continent - finding new talents.

According to one of the leading figures of one of the top agencies in Europe, German clubs have the best scouts in all of Europe. And they need the great scouting personnel in order to find the quality to compete on the European stages.

Just look at some of the players who are debuting in the BBL this season: Trevion Williams from Ulm, Jeff Garrett and Wesley van Beck at Chemnitz, Hamburg’s Aljami Durham and VJ King, Chevez Goodwin from Rostock, Elijah Childs at Heidelberg (after starting the season at Ludwigsburg), Oldenburg’s Chaundee Brown and Jhivvan Jackson from Tübingen.

There are also some stars who are in their second season in Germany and excelling, including Vechta’s Tommy Kuhse, Otis Livingston and Zac Seljaas at Würzburg and Rostock’s Derrick Alston.

Would it be a surprise if nearly all of those players get rewarded for their great seasons in 2023-24 and leave Germany for more money elsewhere for 2024-25?

As difficult as it is for German BBL fans to admit … no.

And once more and more of those players do leave the country, then it will be up to the clubs to give fans the next new faces to fall in love with - before they too follow the money.

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