How Football Clubs Use Cooperatives to Raise Capital: The Cases of FC St. Pauli and Schalke 04

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Most football clubs in need of funds seek out external investors, who then inject money into the club in exchange for a stake in it. As the so-called 50+1 rule in Germany protects clubs from excessive external influence by investors, German clubs are not exactly popular with investors looking to invest in a club. That is why German clubs are constantly on the lookout for alternative financing options so as not to fall behind other clubs in the ever-growing international football finance market (but also within the Bundesliga). In this article, we explain the cooperative model using the examples of Schalke 04 and FC St. Pauli. These two clubs are attempting to generate funds for their clubs by setting up cooperatives, for various reasons.

What a Cooperative Is and How It Works in Football Finance

Before we look in more detail at the two examples of cooperatives – Schalke 04 and FC St. Pauli – let’s start with a general explanation of what a cooperative is, what it does and how it works. A support cooperative is, first and foremost, an association of individuals and businesses that come together to jointly pursue economic, social or cultural goals. In Germany, the so-called registered cooperative is actually a distinct legal form for setting up a business. Unlike a commercial enterprise, however, the purpose of a cooperative is not to maximise profits, but to support its members and their goals and interests. Furthermore, cooperatives feature an interesting form of co-determination. Although a member of the cooperative may purchase as many shares in it as they wish, each member has only one vote at the general meeting. A cooperative therefore operates as a kind of democratic organisation. In this respect, too, the cooperative differs from a typical company with a management board.

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FC St. Pauli’s Cooperative Model: Structure, Purpose and Financial Impact

FC St. Pauli has opted to establish a registered cooperative for the purpose of managing sports and event venues, as well as developing sport, particularly the professionalisation of men’s football. In short, this means that St. Pauli is using this cooperative to inject external capital into the club and its associated stadium company without having to relinquish any shares in the club itself. According to the club’s own statements, it has taken this decision to provide an alternative to the power of major investors and the sell-out of football. Furthermore, St. Pauli aims to become less dependent on banks through additional equity capital. The money that FC St. Pauli raised through the sale of shares was initially used to acquire a majority stake in the Millerntor Stadium. The cooperative now leases this to the club at a fair price, operates it and thus earns money, which can then be distributed to the shareholders of the cooperative shares or remain within the cooperative (this is decided collectively at the general meeting). This has two advantages for the parent club. It receives immediate capital from the sale of the stadium, thereby strengthening its own financial position and its standing when taking out loans from banks, and consequently secures loans at more favourable interest rates. It is also certain that the stadium rent will not rise sharply as a result of the sale to an external investor.

FC St. Pauli itself states that the additional funds are needed to secure the club’s sporting survival in the top two leagues and to professionalise the infrastructure of the stadium and the youth and first-team facilities. This becomes clear when looking at the equity of Bundesliga clubs for the 2024/25 season, where St. Pauli is ranked only 15th (you can find a detailed analysis of this here). One share costs €850, of which €68 is allocated to the cooperative’s reserves and €32 represents a one-off administration fee. There are no further costs thereafter, nor is there any so-called ‘call-up obligation’, whereby members of the cooperative are obliged to purchase further shares after a certain period or to make additional investments in existing shares. FC St. Pauli directed its offer to all members of the parent club as well as companies, which were also able to subscribe for shares following a review. In total, the club raised €29.2 million during the first subscription phase, which ran until spring 2025. During this period, 22,600 members subscribed for a total of 34,000 shares.

How Schalke 04 Uses Its Cooperative to Reduce Debt and Regain Stability

FC Schalke 04 has also set up a cooperative operating under the name “Auf Schalke eG”. As the name suggests, the cooperative aims to acquire shares in the stadium. To this end, the cooperative has first acquired shares in the parent club. These are intended to enable the club to redeem loans, thereby significantly reducing interest and repayment costs. In addition, the cooperative intends to acquire the remaining shares, which are currently held by the City of Gelsenkirchen and other individuals, so that it becomes the sole owner of the arena. Schalke’s high levels of debt are thus the main reason why the cooperative was founded. This is where S04 differs from St. Pauli. Due to their high debts and the associated licensing issues, the Royal Blues are forced to find alternative ways to raise additional funds, whilst FC St. Pauli aims to generate revenue from the cooperative in order to tackle infrastructure problems and invest on better terms.

FC Schalke 04 also allows club members and businesses to purchase shares. Furthermore, every cooperative member has one vote at the general meeting, regardless of the number of shares they hold. It is at this meeting that decisions are made regarding whether and how much interest is paid out to members. Whilst Schalke and St. Pauli are similar in this respect, they differ in other respects. In Schalke’s cooperative, companies and club members are not treated equally. A share costs €250 for everyone, but an additional ‘entry fee’ is charged. A member pays a further €75, whilst a company pays €500. Furthermore, a company must subscribe to at least 40 shares. St. Pauli has not adopted such rules for its cooperative.

The clubs differ in two further respects. Schalke 04 has established a support cooperative. This differs only marginally from a standard cooperative. Whilst a standard cooperative is designed to promote the economic interests and benefit of its active members, a support cooperative tends to focus on supporting a specific cause without promoting the interests of its members. In Schalke’s case, this objective is the full acquisition of the Veltins Arena. Another difference lies in the respective success of the cooperatives. Whilst St. Pauli, with around 50,000 club members, raised 29.2 million euros, Schalke managed to raise only 7.5 million euros, despite having 210,000 club members. This is presumably because FC St. Pauli has marketed its cooperative more effectively and this comes across as more authentic. The club’s political stance and the associated political stance of the fans make a cooperative model a much better fit. At Schalke, the cooperative seems more like a cost-effective alternative to fan bonds. Schalke also does not use the cooperative to finance the club for a better future, but rather to clear past debts. This, too, leads to less acceptance among club members and fans.

Future Outlook: Are Cooperatives a Scalable Model for the Bundesliga and Beyond?

The cooperative model is of particular interest to the Bundesliga. This is because the 50+1 rule restricts the involvement of investors. A cooperative can therefore be a good alternative for tapping into additional sources of income without neglecting the club members’ right to have a say. For clubs from other countries, this can also represent an alternative to traditional investors. The key point for clubs here is that the cooperative’s objectives must be clearly defined. Furthermore, a cooperative must be a good fit for the club and its overall ethos. Overall, FC St. Pauli in particular demonstrates what is possible with a cooperative and how a club can successfully compete using creative, alternative means, even without wealthy investors. A club such as Rayo Vallecano, for example, could establish a similar model to renovate its stadium, which is currently in a state of disrepair, and meet the required La Liga standards.