The "FC Hollywood" nickname was not intended in a good way, even if it came to chime with the glitz and glamour of Bayern Munich, the irresistible draw of Germany's No1 sporting institution. Spawned during Giovanni Trapattoni's chaotic first spell as manager in 1994-95, it was a reaction to the ego and the infighting, to the club's ability to drive soap-opera story lines, which were not always entirely related to the football.

Bayern have, at various times, felt like the gift that keeps giving to the nation's yellow press and a glance at six degrees of scandalous separation illustrates the point. When Trapattoni infamously lost his cool at a press conference in 1998, towards the end of his second spell in charge, two of his targets from an under-performing squad were Mario Basler and Thomas Strunz. The club was so concerned about the off-field antics of some of the players, particularly Basler, that they hired a private detective to monitor them, while Strunz would see his wife leave him for his Bayern team-mate, Steffen Effenberg.

This is the same Effenberg who was asked in an interview about his €5m salary. "Five-and-a-half million," he interjected, by way of correction. Effenberg loathed Lothar Matthäus, the Bayern midfielder, and Matthäus loathed him – their public battle was a feature of the 1990s – and then there was the goalkeeper Oliver Kahn, who caused uproar in 2003 when he walked out on his pregnant wife to take up with a nightclub hostess.

There has long been an element of the devil about Bayern. Uli Hoeness, who is now the president, has admitted that during the 1980s he would aim pre-match jibes at the opposition in order to drum up interest and help to fill the stadium; Bayern no longer have that problem. More recently, Franck Ribéry was charged with having sex with an underage prostitute and Philipp Lahm made headlines when he criticised Jürgen Klinsmann's managerial tenure in his autobiography.

Bayern swagger on and it is a swagger that supporters in Germany either love or hate. A little like Manchester United, there is no middle ground; theirs is the capacity to polarise. Meanwhile, the media glare remains intense and the creative tensions fizzle. Yet the FC Hollywood schtick is in the background these days and the club is enjoying a cyclical surge of praise. With their sound governance and an adherence to the principles of financial fair play, Bayern are being seen as a blue-chip German brand, rather than a relentless generator of outlandish entertainment.

English eyes are on them, as Arsenal prepare for the meeting between the clubs in the Champions League last 16. The Londoners have never tasted success against Bayern, exiting over two legs at the same stage of the 2004-05 competition, and losing and drawing at the second group phase in 2000-01. Fans in this country, though, have taken greater note of Bayern ever since mid-January, when the club made the announcement that they had signed Pep Guardiola to succeed Jupp Heynckes as the manager at the end of the season. The most coveted coach in Europe will add another layer of star quality and the supporters who wondered why he preferred the Bundesliga to the Premier League after his all-conquering tenure at Barcelona, betrayed more than a touch of arrogance.

There is the unmistakable feeling that many English fans do not fully comprehend the scale of Bayern. When the continental giants are considered, it is two from Spain and three from Italy that spring to mind before anyone from Germany. Yet Bayern is the club whose elite status is underlined by their four European Cups, their commercial pre-eminence and their massive fan base.

They ought to have had more titles at Europe's most rarified level. The romance that clings to United's last-gasp 1999 Champions League final victory over the Germans obscures the reality that it was a brutally unlucky result for Bayern, while the midfielder Bastian Schweinsteiger tells the story of how Chelsea were apologetic en route to beating them in the final last time out.

Chelsea had been second best in the final and they trailed 1-0 when they won their only corner in the 88th minute. "Now, goal," the defender, David Luiz, told Schweinsteiger, as he jogged upfield. After Didier Drogba had duly headed the equaliser, Schweinsteiger recalls how David Luiz ran back past him and, somewhat sheepishly, shrugged and said sorry. Bayern's defeat – their fifth in European Cup finals and the second in three seasons – is now one of their driving forces.

Off the field, Bayern are the fourth richest club in the world, according to Deloitte, and the leader in terms of commercial revenue. Their annual income of €177.7m in this area dwarfs the €114.5m of United, who are comfortably England's marketing leader. Bayern's kit deal with Adidas is worth 25m euros-a-year until 2020; they have extended their lucrative agreement with the premium sponsorship partner Audi and Hoeness says that they should be free of stadium debt in six years' time. The move to the Allianz Arena has seen consistent 69,000 sell-outs and a further boost to the club's maxim which, in the words of Hoeness, is "sporting success and financial prosperity". Bayern live in the black – not the red.

The club's hall of fame reads like a who's who of German football, from Franz Beckenbauer, Hoeness, Gerd Müller and Sepp Maier to Karl-Heinz Rummenigge, Matthäus, Effenberg and Kahn. They look after their own at Bayern, with former players given roles on the staff in order to perpetuate the club's ideals. They reach down to youth level, from where Thomas Müller and Holger Badstuber have graduated in recent years. Guardiola would have noted the developmental philosophy with approval.

Hoeness is akin to the head of a big family at the club, with Rummenigge the chairman of the executive board and Paul Breitner, another great, filling an advisory brief. Beckenbauer is the honorary president and there are other former club pros throughout the organisation. It adds up to a football brains trust that can inform strategy and decisions, although the presence of so many strong personalities can lead to friction and public criticism.

Bayern have always been obsessed by winning. Last season was considered a disaster, when the team finished as runners-up in the league, cup and Champions League and it speaks for the Bayern mentality that Hoeness has become consumed by making the club's recently formed basketball side the best in Germany.

When Arsenal were drawn to face Bayern, Arsène Wenger talked of the Bundesliga's impressive rise. He did not need to talk up Bayern. Lahm, Schweinsteiger and Ribéry will lead the first-leg offensive at the Emirates Stadium. A superpower has come to town.