In 1997, German football was on top of the world. Borussia Dortmund and Schalke 04, the two powerhouses from the Ruhr area, had won the Champions League and UEFA Cup, respectively. A year earlier, Berti Vogts' Germany had triumphed in the Euro 1996 final against the Czechs.
Below the radar, however, something strange and disconcerting was happening: Germany was running out of decent players. The influx from GDR-trained professionals that was supposed to make "Germany unbeatable for years to come" (according to Franz Beckenbauer after winning the World Cup in 1990) had dried up along with the funding for the specialized sports schools where they had been drilled from a very young age. In the Bundesliga, newly rich clubs awash with TV money had gone on a spending spree, doubling the number of foreigners from 17 percent (1992) to 34 percent (1997) in five years.
Desperate for strikers in particular, national manager Vogts ensured that South-African born Sean Dundee, a Karlsruher FC player without any German background, was fast-tracked for German citizenship. Dundee received his passport in January 1997 but never played for Germany after picking up an injury before his first scheduled game, a friendly against Israel, and losing his form soon after.
Vogts' successor, Erich Ribbeck, equally desperate, approached another Bundesliga import, Brazilian forward Paulo Rink (Leverkusen). Rink, it turned out, had German grandparents and was quickly introduced to the national team. He picked up 13 caps from 1998 to 2000.
The cases of Rink and Dundee, both unprecedented in German football since the war, demonstrated that something was very wrong. The disappointing quarterfinal exit against Croatia at the 1998 World Cup then made it plain to see: not enough talent was coming through. In the Bundesliga, the percentage of foreigners had risen again, to 50 percent by the time the season kicked off in 2000.
The German FA realized that something had to be done. It looked at the French system and decided that something similar was needed. In May 1999, FA vice president Beckenbauer, first-team manager Ribbeck, Bayer Leverkusen general manager Reiner Calmund and FA Director of Youth Development Dietrich Weise presented a new concept for producing young German footballers. All across the country, 121 national talent centers would be built to help 10- to 17-year-olds with technical practice. Each center would employ two full-time coaches at a cost of $15.6 million over five years. The second key point was a new requirement for all 36 professional clubs in Bundesliga and Bundesliga 2 to build youth academies.
"If this concept works, we will see a lot of youngsters get into Bundesliga clubs in the coming years," Weise said.
Crucially, the FA's initiative coincided with the liberalization of the citizenship laws and a willingness to integrate young footballers with migratory background into the Germany setup. When Germany won the right to host the 2006 World Cup in July 2000, clubs and the FA pulled together even closer and redoubled their efforts to invest in youth development.
While structural reforms were getting off the ground at grassroots level, the lack of top German talent was becoming ever more pronounced. In 2002-03, the percentage of foreigners in the first division had reached 60 percent. But a financial meltdown was forcing a rethink. The Kirch TV conglomerate that had bankrolled the Bundesliga boom since the early '90s collapsed in 2002, leaving the clubs in severe financial difficulties. Faced with huge, unsustainable wage bills, they found that the easiest way to cope was to release all the well-paid but fairly mediocre foreigners on their books and replace them with young, much cheaper recruits from their own youth teams. Felix Magath's young VfB Stuttgart side of 2003-04 became trail blazers for this new trend when it beat Manchester United in the Champions League with a squad full of homegrown kids like Timo Hildebrandt, Kevin Kuranyi and Andreas Hinkel.
"The boys definitely benefited from the Kirch collapse," Thomas Albeck, Stuttgart's head of youth development, told SI.com. "The club was not in a position to buy any players for 18 months in 2001-02 and suddenly youngsters like Hinkel, Hildebrand and Kuranyi got a chance.
"Two years later, we were in the Champions League with them. You can also look at Dortmund and Hertha, who both struggled financially and had to play their youngsters. It's worked out well for them and more and more clubs woke up to the fact that they could create real assets by spending money on the kids."
The Bundesliga found that fostering talents was not only good for the balance sheet but also for the brand. Fans flocked to the stadiums to see homegrown players with whom they could identify.
By the time Stuttgart's "Young Wild Ones" were making waves in Germany and Europe, changes were afoot in the national team, too. After a disappointing Euro 2004, where Germany was knocked out in the group stage for the second time in a row, manager Rudi Völler resigned. Jürgen Klinsmann took over with the specific directive "to take the whole shop apart." He introduced a new, highly individualized fitness regime devised by American specialists, replaced old FA apparatchiks with trusted lieutenants and embarked on a radical repositioning of the tactical identity of the national team. Under Ribbeck and Völler, a lack of creative players had made the side progressively more negative, as well as overly reliant on individual heroics from midfielder Michael Ballack and keeper Oliver Kahn.
Klinsmann, the former Spurs and Bayern forward, had other ideas. He wanted Germany to play an (idealized) version of Premier League soccer; a 4-4-2 system with attacking wide players, overlapping fullbacks and only one holding midfielder behind box-to-box tyro Ballack. Opponents would be pressed and overwhelmed high up the pitch by players hunting in packs. It was a style that caught the imagination of the public but needed some modification to bring results: Ballack unselfishly persuaded Klinsmann to play him deeper alongside Torsten Frings in a more defensive role before the tournament started.
Klinsmann assistant Joachim"Jogi"Löw continued on this path after succeeding his boss but had to rethink his formation when Croatia beat Germany 2-1 at the 2008 Euros. His 4-4-2 was ill-equipped to deal with sides that had deep-lying shadow strikers or playmakers "between the lines" and also suffered from predictability. Doubling up on Germany's wide players would disrupt the supply to the forwards and reduce them to shots from distance.
Löw adopted a more fluid 4-2-3-1 system with Ballack behind sole striker Miroslav Klose to get to the final, but it was the emergence of Mesut Özil (Werder Bremen) that enabled this system to really blossom one year later. The 21-year-old started his first game for Germany as a No. 10 in a friendly against South Africa and instantly added another dimension. Löw also benefited from Louis van Gaal's success at Bayern. The Dutch manager transformed Bayern into a possession-based footballing side modeled on Barcelona, made Bastian Schweinsteiger into a great holding midfielder and helped Thomas Müller break through as a hard-to-define, all-around attacking player.
It's no coincidence that this is the youngest ever German team since 1934: Löw has had more good, young players to choose from than any other DFB-coach in the last two decades. The changes that were introduced 10 years ago have paid dividends: In the last two years, Germany won the European championship at U-17, U-19 and U-21 level.
"We have undoubtedly more talent than 10 years ago," said Albeck, who has a budget of about $5 million at his disposal every year. Last season alone, the 36 Bundesliga clubs spent a combined $100 million on youth development, a higher proportion of income than any other major league. Germany's footballing philosophy has also changed. Whereas youth coaches would traditionally stress stamina and physical endurance, the new crop of highly qualified coaches is more interested in developing technical ability.
"We start with the U-9s. They play four-a-side, on small pitches, to encourage individual skills," Albeck said. "We then add players every year, only the U-13s are playing with full teams."
Innovations at ground level combined with a strong financial and ideological commitment at the top (in the clubs and at the FA) have put German soccer in a position where it can look optimistically toward the future, regardless of the outcome against Argentina. Ten years ago, the debate was heavily tinged with nostalgia, with people wondering where the good old days had gone. Now Germany is going places again.