DFL considers partial sale of television rights to investor

Frankfurt, Munich The Bundesliga is looking for new sources of money and is also considering investing in an investor for the TV rights. According to financial sources, the German Football League (DFL), which organizes the league, is preparing an auction process in which bidders could acquire a minority stake in a sports rights marketing subsidiary.

The DFL could receive three to four billion euros in this way, and the company would be valued at 15 to 18 billion, as several people familiar with the matter said. Depending on the cut, the numbers may vary. Borrowing and a combination of debt and equity financing are also options.

“As already explained in May, the DFL has started a multi-stage process in which a working group of clubs and DFL appointed by the DFL Executive Committee analyzes future scenarios for the league and works out concrete options with a view to strategic growth areas in the interests of the 36 professional clubs,” said a DFL spokesman on request.

This process also includes analyzing the possibility of strategic partnerships. “We will of course first discuss the specific development options internally in the committees and with all clubs – without making any prior decisions. The aim is to give the clubs a well-founded overview of development options.” It is therefore still unclear whether there will actually be a partial sale of the TV rights.

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Should the clubs ultimately decide to sell part, possibly towards the end of the year, the DFL and football clubs could use the rain of money for future investments such as the internationalization of rights marketing, digitization and sustainability. The clubs would also get more money for their youth academies, new players and improvements to the stadiums. The DFL could not only benefit from the money, but also from the expertise of a financial investor experienced in sports rights.

The sale of rights is intended to ensure the competitiveness of the Bundesliga

The en bloc sale of rights is intended to ensure the competitiveness of German professional football. Large financial investors from the USA, Europe and the Gulf region have long since bought the most important clubs from England, France, Spain and Italy.

In Germany, on the other hand, club members must have the final say, and external investors are only allowed to take over the majority of the game operating companies in exceptional cases. The model for the new maneuver of the DFL is, for example, the sale of shares in the Spanish “La Liga” and the French Ligue 1 to the private equity company CVC.

The economic pressure on the 36 professional clubs in the Bundesliga is high two and a half years after the outbreak of the corona pandemic. They have lost hundreds of millions of euros in revenue since 2020. In order to remain competitive, even in the fight for the best players, something has to change, according to the DFL.

A working group was therefore set up in May to investigate how the Bundesliga can best bring in capital and expertise. The future team of five with DFL boss Donata Hopfen, Jan-Christian Dreesen (Bayern Munich), Oliver Leki (Freiburg), Rüdiger Fritsch (Darmstadt) and Axel Hellmann (Eintracht Frankfurt) definitely wants to avoid the mistakes that a similar transaction, called the “Competition” project, failed last year.

At that time, the DFL general meeting had decided to cancel an investor process for participation in the international marketing of the Bundesliga. As a result, the DFL lost up to 500 million euros.

Unlike last year, investors will not be offered a share in DLF itself this time, but in a new subsidiary. This would receive a long-term license for sports rights marketing, this time not only for the international marketing rights, but also for the German ones. The exact structure of the planned subsidiary in which the investor would participate has not yet been determined. It is unclear, for example, whether the sponsorship and e-sports activities would be part of the deal and how long the license would run.

Football TV rights: 20 percent for an investor

When it comes to the stake, a 20 percent block of shares is under discussion. The marketing joint venture could be valued at a total of 15 to 18 billion euros, it said. For comparison: When CVC acquired a 13 percent stake in the broadcasting rights of the French league, it was valued at 11.5 billion euros in March. Last year, CVC acquired an 11 percent stake in the television rights of the Spanish La Liga for the next 50 years – the valuation of the total rights: 24.5 billion.

In the possible DFL investor process, private equity companies in particular should again be addressed. CVC, KKR, Bridgepoint and Blackstone, which submitted the most attractive bids a year ago, are considered prospects. So far, however, the DFL has not held any talks with financial investors, it said. The investment banks Nomura and Barclays could accompany the project, but have not yet been officially mandated. The banks declined to comment.

There are still a few hurdles to be cleared before the transaction can even get off the ground. A new DFL executive committee is to be elected at a meeting in August, which should give the official starting signal for the project. Alexander Wehrle (VfB Stuttgart) is eliminated here, who will become the head of the supervisory board of the new DFB GmbH and will be replaced by Hellmann from Frankfurt.

However, the issue of investors at the DFL is not new. Financial investors had already approached the DFL before the pandemic. The then DFL Managing Director Christian Seifert then initiated the sales process in order to give the clubs a serious basis for decision-making. Seifert has now left the DFL and is preparing a sports streaming offer without football with Axel Springer.

The advocates of a deal see better chances today than in 2021 because the financial situation of some clubs has continued to deteriorate: “Some urgently need cash,” says a club manager. Rising interest rates put individual managers of heavily indebted clubs in a mood of alarm.

It is unclear how resilient the relationship between DFL boss Hopfen and her chairman of the supervisory board, Hans-Joachim Watzke, really is. Both would have to bring the project through the committees, where new elections are due in August in the DFL Presidium. Hopfen had replaced a number of managers in the past few weeks.

More: The new Bundesliga season is economically more challenging than ever

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