Opponents of the Bundesliga partial sale were surprisingly elected to the DFL supervisory board

A mood test shortly before the start of the sales process has now surprisingly strengthened the critics of the model. The clubs in the 1st and 2nd Bundesliga elected Christian Keller from 1. FC Köln to the supervisory board of the German Football League (DFL) on Friday.

Keller succeeds the retired Fredi Bobic. With 18 votes to 16 and two abstentions, he narrowly defeated Klaus Filbry from Werder Bremen. Filbry, who advocates the investor model, was considered the favorite. It was founded by an interest group of a few clubs with a large membership, including FC Schalke, Hertha BSC and Eintracht Frankfurt. Keller, on the other hand, rejects the proposed sale of shares. This could – at least – shake the schedule.

Billions for digital content – ​​to earn even more billions

The DFL, which organizes the game operations in the first two leagues, is hoping for an overall valuation of 15 to 18 billion euros for the media rights. This could give her 2.3 billion to 2.7 billion euros. The Negotiations start almost a year before the European Football Championship in Germany – a major global TV event that could increase the value of the package.

The proponents see it as an opportunity to catch up with the top international leagues. Compared to the English Premier League, the Bundesliga generates only a fraction of the annual income of EUR 200 million for international media rights. The British league calculates 5.7 billion euros for the period 2022 to 2025.

Already in 2021 attempts were made to sell part of the international media rights. This time it’s about a partial sale of the income from the entire media rights. The DFL wants to use the funds to advance digitization and open up new sources of revenue.

A “working group on future scenarios” headed by DFL interim bosses Axel Hellmann (Eintracht Frankfurt) and Oliver Leki (SC Freiburg) has already raved about a “further development of the business model” and a “strategic partnership” with a private equity company. According to estimates by the organization, revenue could double within ten years – to 2.8 billion euros. Without investors, the DFL expects a billion euros less.

Two thirds of the second division clubs vote for Keller

On the wish list, for example, is a paid streaming platform on which football fans around the world can watch all Bundesliga games. The targeted marketing of highlight videos of individual clubs and players is also an option.

In order for the deal to go through, two-thirds of the clubs would have to agree. Observers conclude from Friday’s voting results that the negotiations are now becoming more heated. Prior to this, Keller had been asked by some representatives of the first division not to run, as can be heard from those around the DFL. Only six of the first division clubs voted for the managing director of 1. FC Köln. This means that twelve second division teams must have voted for Keller.

Klaus Filbry

In the run-up to the election, the CEO of SV Werder Bremen was seen as the favorite to succeed Fredi Bobic’s seat on the DFL’s supervisory board.

(Photo: IMAGO/Nordphoto)

Actually, six selected private equity investors should receive an information package with current figures in mid-March. The DFL expects preliminary bids in the second half of April. At about the same time, the clubs are to formally vote at an extraordinary general meeting as to whether the sales plans should be pursued further.

The investors are offered to collect 15 percent of the proceeds from the exploitation of the broadcasting rights in Germany and abroad over a period of 25 years. For 2023, that would be around 210 million euros. Even in the event of stagnation, a buyer would earn around 5.2 billion euros in this period – if there were no deductions. The modalities are in flux, no preliminary decisions have been made, emphasize DFL officials.

According to current planning, binding offers from interested parties are due at the end of June, and a purchase contract could be signed in mid-July. The list of bidders reads like a Who’s Who of financial investors: According to financial circles, Advent, Blackstone, Bridgepoint, CVC, EQT and KKR are in the running. Some investors like Sixth Street are on hold and could speculate on a role as co-investor.

DFL retains sovereignty over match days

Talks are in full swing behind the scenes to convince enough clubs of the model. While the majority of the first division clubs are in favor of an investor deal, several second division clubs are still rejecting it, report those involved. This coincides with the indication given by the voting result.

One point of contention is what the clubs themselves will be able to offer their paying customers in the future in terms of moving images in addition to the DFL offer. A further equalization of seasons could also increase revenues, such as the introduction of a Saturday night game. This in turn could be met with rejection in fan circles. The DFL emphasizes that it would retain sovereignty over the game days in the investor model.

graphic

“Private equity investors are trusted to enforce the necessary decisions. They are supposed to raise the potential, similar to how they do with neglected subsidiaries of large corporations, which they often revamp and later sell for a profit,” says a person familiar with the process.

Critics like 1.FC Köln or FC St. Pauli are not convinced. They argue that the money needed for digitization and modernization can also be borrowed, which could be significantly cheaper. Hans-Joachim Watzke (Borussia Dortmund), as the DFL supervisory board chairman and spokesman for the executive committee, the strong man in the background, has already made it clear internally that there should be no extreme debt for the DFL with him.

Distribution of deal proceeds is seen as a point of contention

But that could be up for debate again. The critics of a deal warn that the competence of the financial investors in matters of technology and media marketing should not be overestimated. There are also voices that advocate some kind of financial supervision in the league.

graphic

Subject to coordination with the clubs, the DFL itself could get around a third of the money from the sale of shares. The clubs received a third – for the balance sheet restructuring after the pandemic years without spectators, promotion of young people, infrastructure, but also new players.

>> Read also: An alternative to money and short-term glamor – football is rediscovering its conscience

The rest would remain a financial buffer, payable over several years. Nevertheless, critics fear that the clubs will “eat away” the income and rob themselves of their prospects. “But there is no guarantee that the largest chunk will not end up with expensive players and their advisors,” notes a long-time official.

The regulation for a money distribution is considered a predetermined breaking point in further negotiations. The starting point would be the current television rights scheme: 53 percent of the income is distributed equally among all, with the first division currently receiving 25.8 million each and the second division 7.2 million each. 42 percent is spent on athletic performance and a total of five percent depends on the promotion of young talent and popularity with spectators.

Big city clubs with strong fan support and high media coverage want to get a higher share for themselves – at the expense of less popular clubs. Meanwhile, the clubs in the second division are to be made palatable for an increase in the share of the pot for sporting performance to 30 percent from the current 19 percent.

The sudden rain of money could turn the Bundesliga into a “closed shop”, with no chances for those promoted from the third division, warns former DFL managing director Andreas Rettig. A concern shared by several League insiders. A concept within the DFL therefore provides that the investors’ money is only distributed after three years in the first or second division.

More: British government wants to put a stop to financial excesses in investments in football clubs

source site-15