European hoops can be confusing - it's not at all like the NBA. I don't claim to be an expert, but I try to at least be informed. There are the different national leagues, and then there's the EuroLeague and other interleague competitions. But it's often hard to tell the difference between the big time teams and some nothing team. (A problem exacerbated by the fact that the clubs maintain junior teams as well - so when you read that Korolev played for CSKA Moscow, you think that he might be pretty good. But then you realize it was the junior team - not good.)
The German league is not at the top of European basketball. It's clearly second tier as compared to the leagues in Spain and Italy. BUT, again just to confuse matters, in all of the leagues the top teams tend to be MUCH better than the bottom teams. It's the Yankees compared to the Royals, times a million. So a good German team is better than a bad Spanish team.
Having said all of that, Cologne is a serious team. They are competing this season in the ULEB Cup, the second most important interleague competition in European basketball after the EuroLeague. Last year they competed in the EuroLeague. They've also won the last three German Cups and were Champions of the German League two seasons ago, so they are among the best team's in Germany for sure. Their roster this season includes such familiar names as former UCLA Bruin and Phoenix Sun Toby Bailey, former Gonzaga Bulldog Derek Raivio, and 2007 second round pick Derrick Byars from Vanderbilt (originally projected by many into the late first round).
I don't know what happens next, but if I were an NBA GM for a struggling team, I think I might be on the phone to Byars' agent.