The Bayern Dilemma

Bayern Munich are rightful European Champions. Their road to the final was far from easy on paper, though they breezily dismissed Tottenham, Chelsea, Barcelona and Lyon on their campaign to the final. PSG played well, targeting the vulnerabilities of a high-line with Mbappe and Co. breaking quickly. However, the French champions could not hold off the brutal hunting mentality of Bayern, and conceded an hour in. In the end, most neutrals will agree Bayern Munich were the better side and deserved the 1-0 victory.


We'll try not to rain on the parade of Bayern Munich by any stretch, but there are a couple of niggling problems that will sit in their minds going forward should they be looking to repeat this feat in coming years. With these in mind, are they a side that should be heavily invested in?




Ageing Stars


It's been a common issue in Bayern's squad over the last decade, though we must credit managements efforts to replace their older golden boys with electrifying talents in many parts of the pitch. Ribery and Robben out. Gnabry and Coman in. Lahm out, Kimmich in. Not bad at all.


The main two stars we're referring to as 'ageing' are Lewandowski and Neuer, though the likes of Muller certainly isn't getting any younger either.


Neuer, the captain, had an absolutely fantastic game against PSG. A clean sheet in the Champions League final is the supreme dream for keepers around Europe. Neuer exemplified why he's considered one of the greatest keepers of the last decade, and proved to many that he still has what it takes at the very top. However, he's 34 years old, and despite the usual longevity of Goalkeepers, you still have to think of their replacements once they're nearer to 40 than 30. They're looking to their youth as options to develop, but it's a massive gap to fill when Neuer steps down from his throne. Hopefully it won't be for a couple of seasons yet, meaning they still have opportunities in the coming season or two to continue their dominance. Failing that, one of their next big signings will have to be a top keeper. With Goalkeepers being given more interest on Football Index since the introduction of GK matchday dividends and TOTM, it'll be interesting to see how Neuer fares in the 'dividends won vs capital depreciation' battle over the coming season.


Lewandowski, meanwhile, has had the best season of his career. We're not taking anything away from that accomplishment, and it's hard to see the 32 year old drastically slowing down next season. That said, this season was perhaps the peak of his career, and it could be downhill from now on. Any injury would force a rotation that many would consider far less threatening. Bayern simply don't have a backup striker that is at the level of 'European Champion'. They have youth in Zirkzee and Arp, they have versatility in Muller or perhaps even their wings to form an attacking lineup. But they don't have an out-and-out striker on their bench that can realistically be a regular goal scorer in Europe - not that we've seen at least. We'd hate to see the Polish International on the sideline for any stretch, but the reliance on him raises the question: If Lewandowski was injured, would they have been anywhere near as successful? Though hypothetical, most successful teams in Europe historically have had a good option up tops to bring off the bench.


From a trader's perceptive, despite the Bayern side looking as dangerous as any in Europe, some big name's age puts many traders off investing. Capital depreciation is a worry. If injury were to keep them sidelined, there's no guarantee of a return to the top. Furthermore, if Bayern are turning to their youth to replace the older options, they'll need to be introduced into the squad over coming seasons and feature more regularly. Gabriel Jesus has done this at City, slowly transitioning into their preferred striker whilst phasing out Aguero. Will Lewandowski have to start reducing his game time in order for Bayern to give minutes to their youngsters?


The fundamental question traders must ask themselves is 'can I earn more in dividends than I lose in share value?'.

In the case of Lewandowski, he'll need to be repeating this season again without depreciating below the £2.00 mark to ensure he's close to breaking even. Over two years, he'll need to ensure he doesn't dip below £1.50 whilst producing similar numbers to even profit a few pence.

The table above demonstrates an example return of investment should a trader invest right now at market value. If Lewandowski can repeat this season's achievements and win a similar number of dividends over the coming two seasons, he'll provide a profit of £0.12 per share.


The following table takes into consideration a reduced playing time through injury or phasing out, or perhaps simply slower seasons in terms of form, resulting in fewer dividends won.

As you can see, if his dividends were to nearly half then nearly half again over the coming two seasons, Lewandowski would be approaching a loss of over £0.50 per share if his market value were to depreciate to £1.50 per share by the time he's 34. That's a heavy loss. On top of that, we've generously assumed that at 34 Lewandowski is worth £1.50. Compare this to say, Modric, who won the Ballon D'or in 2018 and is now 34 years old - he's £0.46 in share value.


The primary point here is that the main man up tops for the European Champions is not really investable for those wanting to avoid the obvious risks. He's a fantastic goalscorer and has won great PB dividends, but his age infers depreciation is on the cards whilst the expectations on him to repeat his outstanding season is perhaps unrealistic. Time will tell, but we'd conclude he's less likely to win such high dividends and highly likely to depreciate at a rate that eats into the profits made through dividends.



Stacked Wings


Too much talent is rarely considered a problem. It builds a competitive squad in training, adds depth and gives alternative options when required. The wings at Munich are of particular note this summer, with the arrival of Leroy Sane from Man City. Perisic is almost certainly on his way out, and Coutinho is likely to follow. Alphonso Davies is becoming more familiar with his role at left back rather than left wing, so there is space being made in the squad to accommodate for another true winger. But there's still the burning question of where Sané fits in and under what role?


Leroy Sané has joined Bayern Munich at a time where many would have considered him a starter. It's unclear if he was signed under that assumption, particularly given Kingsley Coman was only just returning from injury when Sane was signing the deal. Gnabry and Coman have been exceptional this season. Gnabry was a huge threat through the entire European campaign, so it's hard to see him moving down the pecking order. He's surely the starting right winger next season? At 25 years old, he'll be expecting to start most games and his price on FI is also under this assumption; £4.42 market value is not a bench-warmer price.


Kingsley Coman is a difficult one to digest for many Football Index Traders. He's faced a torturous sentence on the sidelines over the past few seasons, meaning he's been in and out of the squad regularly. There's plenty of reasons as to how his share value slipped down to its current £2.21. However, he scored the goal in the 1-0 victory over PSG. He was instrumental in their Champions League final victory. When fit, he's considered a starter in Bundesliga. His intrepid play is lethal against slower defences, and he's clinical when the opportunity presents itself. He's surely pushing at the role of starter on the left wing next season? You couldn't turn him to the bench after scoring the winner in the Champions League Final?!


Sané is priced as a starter on Football Index. He's been quality in flashes, though this season was a non-starter after he damaged knee ligaments in the 10th minute of the community shield back in August 2019. We'll assume he's as classy as he was prior to the injury.


Coman is priced as an expensive bench warmer.. But considering Coman's form when fit, it's perhaps a better option to be looking at the Frenchman to start on the wing rather than Sane - in which case, we could see Coman's price rise whilst Sane's falls.

The most obvious solution is for them to rotate next season. Both Sane and Coman have had injury issues in recent seasons. Both are 24 years old. Both are considered world class.

This solution is not welcomed by many FI traders though. Leroy Sane is a world class winger, priced as a starting elite winger. Halving his potential game time is the last thing you want to see for his dividend potential.


The story is the same for Coman. Sharing the game time means they have to share their PB opportunities. If this were the case, are either of them worth more than £2.50 per share in the current climate on FI? If one was an obvious starter, without injury issues, we could see a price similar to that of Gnabry should they find rhythm. But at this stage, it's incredibly difficult to understand how the three incredibly talented wingers will fit into two spots in the starting lineup.


Traders must be weary of how the squad will look, sometimes too much strength on one position means splitting the game time, finding less rhythm or traction on the index, and therefore making it harder to see capital appreciation or regular dividends.


Bayern will no doubt look a fantastic side again next season. The departures of some solid names is nothing to fear, given the strength on the bench. But the arrival of Sane may shift values of their wingers, and traders will need to realise that a squad strengthening does not mean an investment strengthening.


We could even diverge into the Kimmich debate on whether his role in central midfield is as strong on FI as his ability at right back, but we'll save that dilemma for another time. For now, it's worth considering who you see as the preferred starting XI and considering how this will change over the coming season - then re-evaluate the players values accordingly.

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