What's Gone Wrong with Schalke since 2018?

When Schalke finished 2017-18 second place in the Bundesliga, it seemed like things were going to be on the upswing and they would be back to consistently reaching the top of the table. That hope hasn’t come close to being realized. They successfully escaped the group stage of the Champions League in the following season, but then followed that up by being embarrassed by Manchester City. Meanwhile, they finished 14th in the Bundesliga in 2018-19 and finished this year in 12th. So, what’s gone wrong for a club that seems from the outside like it should be in its historical position of consistently competing for European positions?


In evaluating the changes in performance and future outlooks for a club in any major European league, one of the first things to understand has to be the financial position of the team. At face value, Schalke should be able to comfortably compete in that area – Forbes ranked them as the 14th most valuable soccer club in the world, with the 16th most revenue generated.

Despite that, Schalke is facing monumental financial challenges currently. The club was reportedly facing insolvency if the Bundesliga hadn’t been able to return and provide television rights payments to the teams. Even with that particular issue being resolved, Schalke is carrying debt of over $217M and still faced the potential to owe refunds to sponsors and ticket holders for the games that were not held with spectators. That debt has exploded in recent years; as recently as 2014, Schalke were reported to be carrying no debt.

Before examining further, it’s important to understand the unique structures of German clubs and how Schalke compares. While Bundesliga clubs have their roots in traditional sports clubs, the majority of the teams have spun their soccer clubs into separate privately owned companies. While the original clubs must own more than 50% of the stake in the new company, this still allows the potential for private investment and substantial increases in financial strength.

Thus far, Schalke’s members have resisted the urge to go down that path; indications seem to be that they’ll continue to do so. Schalke’s history and reputation allow them to bring in a number of sponsors, but refusing to take the step towards privatizing the soccer team makes it very unlikely the club will be able to consistently compete at the top of the Bundesliga. That’s especially true if the team isn’t extremely shrewd in the transfer market.

Even with the debt and those challenges, Schalke has continued to spend on transfers in recent years. While the outgoing transfer spend for 2018-19 and 2019-20 is in the middle of the pack for the Bundesliga, their net spend is the fourth highest in the league over that span.

Bundesliga Net Spend for 2018-19 and 2019-20

While this proves that Schalke is willing to spend, it raises other questions about the club and its finances. First, the timing of Schalke’s debt lends itself to thinking that the club is consistently budgeting with European football in mind – another year without that in 2020-21 will likely mean more debt and the need to sell of some of the remaining valuable players within the squad.

The second question the spending raises is how a team that’s been willing to spend has seen their results fall off dramatically. It’s vital that the money that’s spent on transfers is spent wisely; for all but the very richest teams, a run of poor transfers can be disastrous. Schalke’s transfers certainly haven’t pointed to money spent wisely – as we’ll explore further, very few transfers dating back to 2016 have provided a material boost to the club.


For any team, but especially those with financial concerns like Schalke’s, one of the biggest needs is to have a coherent strategy both short and long-term and to build transfer strategy around that. Schalke’s moves in recent years instead display either a lack of strategy or a struggle to evaluate talent. After finishing second in 2017-18, Schalke should have been looking to build additional depth within the squad to prepare for European competition – instead, they lost multiple key contributors that they’ve yet to replace. Starting with those key figures provides an opportunity to explore Schalke’s strategy over the past couple years.

Leon Goretzka

Goretzka is perhaps the best example of a player that Schalke has failed to replace from their 2017-18 squad. As I discussed previously, one of Schalke’s biggest shortcomings currently is the lack of an attacking threat in the central midfield. Goretzka was that player in their successful campaign, creating opportunities and generating the second most shots and free kicks earned on the team.

Halfway through the campaign, it was announced that Goretzka would be joining Bayern after the season. This represents a failure for Schalke on two fronts. First, they allowed likely their most valuable player to leave without being able to get a transfer fee. He was too important of a player to allow him to get to the point of leaving without a fee, and if a contract extension was unlikely, he should have been transferred earlier.

Secondly, Schalke has been unable to replace that attacking presence in the middle of the field in the following years. Suat Serder was brought in from Mainz, but hasn’t provided that threat and has seen his playing time decrease in 2019-20. The lack of an attacking option in the middle has been a primary shortcoming of Schalke’s, and that starts with the loss of Goretzka.

Thilo Kehrer and Naldo

I combined these two because they primarily played together as part of a back three during the 2017-18 season, though Kehrer also played on the right as part of a back four. That back three was a key reason that Schalke was successful in that season, conceding the third-fewest goals in the Bundesliga. They also contributed offensively, with Naldo and Kehrer combining for ten goals and two assists.

After the season, Kehrer was sold to PSG for $40.7M; that’s an amount that Schalke certainly can’t be blamed for taking. The issue is how he was replaced within the squad. Salif Sane and Sebastian Rudy were brought in after the season, with Rudy struggling to find a place within the squad and now being loaned to Hoffenheim. That wouldn’t have necessarily been an issue, with Sane stepping into Kehrer’s role and being capable even if he couldn’t meet the same standards.

However, Naldo also lost his spot in the squad as Domenico Tedesco worked to find a solution to their early struggles, despite being one of the best performers on the team in 2017-18. This resulted in Naldo getting a transfer to Monaco in the middle of 2018-19, and Schalke being left without three of their key contributors from their second-place performance.

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In addition to not replacing those losses, the rest of Schalke’s transfer performance has been baffling at best. Bree Embolo was bought for $29.15M, struggled to contribute, and then was sold for just $11M. He’s now been able to pitch in with seven goals for Gladbach this season. The lack of an attacking midfielder has forced Weston McKennie into a more attacking role that he isn’t best suited for, and the resulting lack of performance leaves him as one of the valuable players that may need to be sold.

Perhaps my favorite example is Bernard Tekpetey, even though it represents relatively small amounts of money. Tekpetey was sold to Paperdorn for $165K in July 2018. A year later, Schalke bought him back for $2.75M and then loaned him out days later. While neither of these transfers were unreasonable based on market value, they certainly raise red flags about Schalke’s ability to evaluate their own players.

None of these transfers and the strategy behind them provoke much confidence in Schalke’s current direction, an issue which must be fixed urgently. With another year without European football putting additional financial constrain on the club, a sound strategy and proper evaluation becomes urgent; the team must be able to start finding players in the transfer market who can return more than the investment. More productivity out of the youth development certainly wouldn’t hurt either. The coming off-season and next season will be vital to the future of Schalke – progress must be seen soon to avoid becoming a European giant whose financial wows send them into a spiral in the lower leagues.

#bundesliga #schalke #finance

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