Schalke has huge debts, the team is on the verge of relegation from the second Bundesliga
The popular German club Schalke is going through difficult times after the departure of Gazprom, which sponsored the team from Gelsenkirchen until 2022. Schalke dropped out of the elite into the second Bundesliga, and is now at risk of leaving it too. At the end of the season, the team takes 13th place, being only three points from the relegation zone and two from the play-off zone. The club is in a very difficult financial situation, which calls its future into question. Details are in the Vedomosti material. Sport”.
How Schalke collaborated with Gazprom and spent a lot of money on transfers
Schalke is a seven-time German champion, although the club won its last title back in 1958. In addition, the team has won the German Cup five times (the last one in 2011). On the European stage, Schalke’s best achievement was winning the UEFA Cup in the 1996/97 season. Then the only goal in the two-legged final with Inter Milan was scored by the Belgian Marc Wilmots, who in January 2024 returned to Gelsenkirchen as sporting director to assemble a team in difficult conditions and help it save itself from relegation from the second Bundesliga.
In 2011, Schalke reached the semi-finals of the Champions League, and six years ago they competed in the group stage of the main European Cup after becoming vice-champion of Germany. Just recently, no one could have imagined that the club from Gelsenkirchen would be where it is now. But after a successful 2017/18 season, the team began to have problems.
Gazprom agreed on a partnership with Schalke in 2006, and a year later became the club’s title sponsor. The logo of the Russian multinational energy company was featured on Schalke’s playing jerseys. Until 2012, the club received 12.5 million euros per season from Gazprom, and then the parties entered into a new five-year agreement worth 80 million euros (an average of 16 million euros per season). Then, the head of Gazprom, Alexey Miller, and the chairman of the supervisory board of Schalke, Clemens Tennis, personally took part in the negotiations on the extension of the contract, which took place in Moscow.
Then the agreement was extended. According to Bild, Schalke had already received 30 million euros a year from Gazprom, but in February 2022, shortly after the start of a special military operation in Ukraine, the club decided to terminate cooperation with the Russian company. Even then, despite the help of Gazprom, Schalke was flying into a financial abyss. The departure of a strong partner worsened the situation for Schalke, which only a few months later found a new sponsor in the person of the leader of the German online sales market for new cars – MeinAuto.de.
At the end of the 2017/18 season, the team took second place and made it to the Champions League under the leadership of future Spartak coach Domenico Tedesco, but the next season was forced to fight for survival. In March 2019, with Schalke in 14th place in the Bundesliga, Tedesco was sacked despite reaching the knockout stages of the Champions League. The verdict for the coach was a 0:7 defeat from Manchester City in the 1/8 finals.
Then the coaches were changed like gloves. Over the next five years, the team was led by ten specialists, some joining the team twice. Now Schalke is headed by a compatriot of sporting director Wilmots, 42-year-old Belgian Karel Geeraerts, whose coaching experience before moving to Germany was limited to one season at the head of Union from Brussels.
In addition to breaking the contract with Gazprom, the financial situation at Schalke was complicated by a number of other circumstances. Firstly, the club spent more on the transfer market than it earned for several years. In the 2017/18 season, Schalke spent 49.3 million euros on newcomers in the summer and winter windows (according to Transfermarkt), and received only 7.1 million euros from the sale of their players. The following season, transfer spending rose to 62.2 million euros, while sales income was only 46.1 million euros. In the 2019/20 season, the club’s transfer costs amounted to 29.5 million euros, but sales revenue was only 19.4 million euros. The last few years have seen a start of change in the scenario.
In addition, Schalke lost several players with high transfer prices, with whom they were unable to agree on contract extensions. Joel Matip went to Liverpool for free, Sead Kolasinac to London’s Arsenal, Max Mayer to Crystal Palace, Leon Goretzka and Alexander Nübel to Bayern. By not selling these players on time, the club lost potential income.
Schalke also spent money on paying penalties to fired coaches, and for 100 million euros they built a new training center near their Veltins Arena stadium. Relegation from the first Bundesliga in the 2020/21 season after a protracted playing crisis also led to losses – Schalke took last place, winning only three victories in 34 matches. After relegation from the elite division, the club’s income decreased, including the size of the sponsorship contract with Gazprom, which dropped to 10 million euros. Then Schalke’s capabilities still allowed the team to return to the top division after a season.
Schalke has 165 million euros in debt, the club can sell the stadium
The financial situation was also affected by the coronavirus pandemic. Schalke was losing money playing in front of empty stands, and the club’s management decided to take out a loan of 35 million euros. And after relegation from the Bundesliga in 2021, it became known that the club had a gigantic debt of 183.5 million euros. As a result, the financial director was replaced – Christina Rühl-Hammers took this position.
“Many other clubs have made better decisions than Schalke in recent years,” Rühl-Hammers said after her appointment. “If we hadn’t made all these mistakes, we wouldn’t be in this situation.” Every game without fans costs us almost two million euros. In the last year alone, they lost 70 million euros due to coronavirus. We still have to pay 35 million euros on the loan and 12 million euros on transfer contracts.”
Rühl-Hammers introduced a regime of maximum savings, reducing the club’s payroll and organizing the issue of debt bonds, which brought Schalke 8.9 million euros, but overall the patient did not improve. In the 2021/22 season, the club from Gelsenkirchen won the second Bundesliga, but after returning to the elite, they lasted only a year in it. Last season, the team again performed unsuccessfully in the championship, finishing in penultimate 17th place, and returned to the second division.
Now the very fact of Schalke’s existence has been called into question. In case of relegation from the second division to the third, the club may not receive a license for the next season, since the debts are still very large. Before the start of the 2023/24 season, they amounted to 165.1 million euros.
This season, Schalke failed to sign a contract with a new title sponsor, Hydrogen Deutschland GmbH. The former sponsor MeinAuto.de, which replaced Gazprom, announced that it would not renew the agreement. Schalke itself stopped negotiations with Hydrogen Deutschland GmbH after it became known about the company’s possible ties with Russia. A three-year contract could bring Schalke 21 million euros.
In the current situation, the club’s management is considering extreme measures to save it. According to German media reports, the club may sell its base and ultra-modern stadium with a retractable lawn and a closing roof, which is used not only for football matches. Concerts and a Christmas biathlon race are held at the Veltins Arena. Meanwhile, Schalke transfers marketing rights to Sportfive and negotiates the sale of catering rights. The club is ready to reduce its staff.
ormer Schalke manager Clemens Tönnies (he resigned back in 2020) criticizes the current management for working with sponsors and other decisions, in particular the agreement with Sportfive.
“When I see what is happening with Schalke, my heart bleeds,” admitted the businessman, whose fortune is estimated by Forbes at $1.2 billion. “I offered help several times, but sometimes I received no answer at all. I do not wish to fan the flames further. Schalke needs to be pulled out of this predicament immediately.”
Even against the backdrop of all these problems, Schalke could have performed better this season. According to Transfermarkt, the Gelsenkirchen club’s roster is the sixth most valuable in the 2nd Bundesliga. It is valued at 33.5 million euros. For comparison, the squads of the tournament leaders Hertha and Hamburg cost 45 million euros. League outsiders Osnabrück and Eintracht Braunschweig have team costs significantly lower – 14 million euros and 15 million euros, respectively.
Schalke’s squad includes national team players – Kenan Karaman from Turkey, Darko Churlinov from North Macedonia and Blendi Idrizi representing Kosovo. Also in the squad are ex-Czech Republic national team player Tomas Kalash and several people called up to the German youth and youth national teams, such as 17-year-old Assanu Ouedraogo. It was reported that Bayern offered him a five-year contract, and the midfielder’s release clause is 15 million euros.
Despite good personnel potential, the team is shaking in the second Bundesliga. When Schalke slipped to 16th in the table last September, coach Thomas Rice was sacked. He was briefly replaced as acting by Matthias Kreuzer, and Geeraerts arrived in October. The Belgian’s relationship with the players leaves much to be desired. The other day, the WAZ website reported that Geraerts had a conflict with the leaders of Schalke, and tension between the coach and the team has existed throughout the season, since the specialist does not listen to the players who are dissatisfied with his tactics. The Belgian decided to remove 33-year-old midfielder Domenic Drexler from working with the team, who allowed himself to get too emotional in the locker room and threw a chocolate shake at the wall. The player apologized, but Geraerts did not forgive him.
After Schalke were relegated from the first Bundesliga in 2021, the team bus was attacked by its own fans. Then hundreds of fans gathered near the home stadium and the players had to flee. It is not difficult to imagine the reaction of fans if the club from Gelsenkirchen is now relegated from the second division.
