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Fifty plus one of a Kind - Part I

Last week, something extraordinary and, frankly, puzzling happened in German football. However, the coverage was meagre, with even kicker magazine devoting less than a half a page to the event. One reason may be that the matter is quite complicated; another that it is still far from resolved; a third is that the incident took place behind closed doors.

What happened was that, on Monday of last week, Hannover 96's managing director Martin Kind addressed German football's Permanent Court of Arbitration to expound the suit he'd filed in January of 2010 against what is known as the '50+1' rule.

This non-public hearing was supposed to be the second step in Kind's endeavour to topple said regulation. The first step had been a general meeting of Germany's 36 professional teams in November 2009, during which Kind put forward a motion to change the rule. He was soundly defeated - only Hannover 96 voted yes - and thus took the next step, to take his case before the Court of Arbitration.

Since most people, probably including Kind himself, assumed that this court would be hesitant to rule in favour of one club against the expressed wish of all others, the hearing seemed but a formality before step three: calling in the European Commissioner for Competition or bringing the matter before the European Court of Justice. But that's not what happened.

Before we come to this, however, I have to explain what the quarrel is all about, as there seems to be some confusion in foreign countries about the German club structure and the 50+1 rule.

I have seen some reports, for instance, in which Kind was referred to as the "owner" of Hannover 96, another one in which he was called the "president", a third that called him the "CEO". He isn't and has never been the first; he used to be but no longer is the second; while the third is not entirely correct either though it comes close enough for comfort.

On the other hand, I also sometimes see articles that state German clubs have no private owners, which is why neither Kind nor the more famous Dietmar Hopp of Hoffenheim should be called thus, because they are owned by their members or fans. The first part of that statement is correct, the second not entirely so. Our clubs are owned by nobody, not even by their members, in much the same way in which nobody owns the Red Cross, the Labour Party or the All England Lawn Tennis and Croquet Club.

This may seem like a hair-splitting distinction, but it is not. A club which has owners, no matter who they are, can be sold or moved from, say, Brooklyn to Los Angeles. A club that has no owners may be dissolved, but it can't be sold or transferred. (Which could explain why The Championships are still contested in Wimbledon and not in, to use an entirely arbitrary place name, Milton Keynes.)

Traditionally, all our sports clubs are such owner-less organisations. Like the Red Cross, they are non-profit associations that exist for the common good. (Which, incidentally, gives them considerable tax benefits.) Like the Labour Party, anyone can join them for a modest annual fee. And like the All England Lawn Tennis and Croquet Club, they have been set up so that the members can enjoy athletic activities, from football to swimming to cycling to whatever catches their fancy, and have access to the necessary facilities.

Every club member of legal age has the right to elect club representatives such as the president and vote on club matters during the general annual assembly. Members may add items to the agenda and can, provided their number is large enough, even call in an extraordinary meeting.

This is, of course, a crucial difference to the various membership schemes in England, which have nothing whatsoever to do with proper membership of a real club as understood in Germany. It also explains why there are some clubs in Germany that are not actively trying to win new members: the more you have, the harder it is to control them.

(You may want to search YouTube for "Hauptversammlung Eintracht 1988". You'll find footage from a legendary Eintracht Frankfurt assembly in 1988, during which a total of 2,000 beer bottles were emptied and one speaker flattened a steward who was trying to remove him from the lectern. The steward who never saw the right hook coming happened to be the coach of Eintracht's women's boxing team.)

This - public, non-profit, multi-sports, for the common good, binges and fisticuffs and warts and all - was how German football worked well into the 1990s, quite simply because the game's governing body, the German FA (DFB), did not allow any other type of club to field teams in its leagues.

The big clubs, however, were unhappy with the situation, because it severely limited their means of revenue. While many foreign clubs were bankrolled by powerful investors or rich private owners, the German model only knew benevolent patrons who sank money into their hometown club because of local pride or vanity. In 1997, then-Dortmund president Gerd Niebaum said: "The PLC will soon come to the Bundesliga, it's a question of competing in Europe. If we stick to the old club structures, there will be an economic imbalance to our disadvantage."

While the pressure on the DFB was mounting, a tradition-laden club by the name of Hannover 96 was facing severe problems. They had been relegated to the third division for the first time in their history, most players had left, the fans were staying away in droves, debts were crippling and the board were in habitual turmoil. (Soon there would be death threats against the president, who was forced to attend games flanked by bodyguards.)

In this situation, the club began looking for successful and respectable businessmen from the region who could help, for instance by attracting new sponsors or by running the club in a less ruinous manner, and who would be unencumbered by years of in-fighting. In other words: the club needed an outsider.

The man they found had no particular interest in football - he was neither the athletic nor the emotional type - and he had never intended to run a club. But he was appalled at the state proud Hannover 96 was in and agreed to help. In September 1997, the club members elected Martin Kind their new president.

Kind was born in 1944 in Walsrode, a town some 40 miles north of Hanover. (Which, as you may know, is spelled with a double "n" in German.) When he was eight years old, his parents (stumbling over a niche market if there ever was one) opened a store for the sale and distribution of hearing aids. In 1970, Kind became this small company's CEO and expanded dramatically. He opened stores all over Germany and various European countries, added a production line and even branched out into the apparel industry and the hotel trade.

Thirteen months after Kind had been elected 96's president, in October 1998, the DFB's Supreme Committee convened in Wiesbaden near Frankfurt for a historic meeting. Generally speaking, the 256 delegates decided to allow the DFB's member clubs to turn their professional football teams into corporate enterprises. Put differently, the DFB at last allowed companies to compete in the upper divisions of its league pyramid - provided they met certain conditions.

This is where the 50+1 rule comes in, because it defined the central condition: the DFB only accepted companies owned by the parent club. Meaning that, if such a company decided to issue shares, 50% of the voting shares plus one voting share had to remain in the possession of the club that had originally formed the company.

And so Bayern Munich, the club, created Bayern Munich Ltd, the football PLC, sold about 10% of this company to Adidas, another 10%, give or take, to Audi and, as we speak, owns the remaining 80%. And so Hasan Ismaik, a businessman from Jordan, recently saved 1860 Munich Ltd. from collapse by investing €18 million - but could buy only 49% of the voting shares for this sum.

The 50+1 rule was a clever move by the DFB, a way to have the cake and eat it. And it was, and is, highly popular with the vast majority of German football fans because it prevents hostile takeover scenarios and billionaires doing whatever they want to with teams traditionally rooted in a community. However, there was one annoying problem: Bayer Leverkusen.

• Read Part II of the story on Wednesday...


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