1. FC Köln has announced that it will vote against the DFL’s investor deal. After SC Freiburg, it is the second public “no” from the Bundesliga.
1. FC Cologne confirmed to the Sportschau its negative attitude towards the entry of a partner from the Private equity-Area in the DFL. The Süddeutsche Zeitung and the Frankfurter Allgemeine Zeitung also reported on the attitude of the people of Cologne. The SC Freiburg had previously announced a position against the participation of an investor in the currently presented model in a letter to its members “consequent” to represent.
“The DFL has significantly improved its investor proposal. But unfortunately it has still not been sufficiently examined as to whether there are more sensible alternatives to a private equity investor.”said Cologne Vice-President Eckhard Sauren in an interview with Sportschau. “German football, with its history and its roots in society, and the approach of a private equity company do not fit together culturally.” Private equity companies are private investment companies. They collect money from investors in order to invest – and usually have return expectations in the double-digit percentage range.
Eckhard Sauren, Vice President of 1. FC Köln
DFL hopes for a billion euros, but would have to give up income to do so
The vote among the 36 DFL clubs will take place on December 11th. The vote will then be on whether the two DFL managing directors Marc Lenz and Steffen Merkel are allowed to negotiate and conclude a “strategic marketing partnership” with an external donor under certain requirements of the DFL executive committee. The DFL is hoping to raise a billion euros. In return, the investor will receive eight percent of the DFL’s marketing revenue for 20 years.
The overwhelming majority of the 36 DFL clubs are of the opinion that further development of the DFL’s business model is necessary. Sauren also mentions the need “undisputed”. Competition from other sports and leisure activities is increasing, and young people use media differently. The Bundesliga should become more digital and international in the fight for attention in the future, for example with its own video platform and new formats – and this requires investments.
However, there is disagreement about whether the necessary measures should be financed and designed with the involvement of an investor.
Cologne sees other financing as a better solution
1. FC Cologne sees financing without an investor as the better solution. “While professional football should have a great interest in promoting German football culture with its connection to the grassroots, an investor will predominantly represent commercial interests,” Sauren said. “We continue to believe it is imperative that only the 36 professional clubs decide on the development of German professional football and that no private equity company sits at the table.”
When the investor entry failed in May, 1. FC Cologne was among the clubs that voted against the entry of an investor into the DFL. According to Cologne’s vice-president, alternative financing concepts have once again not been sufficiently examined, “First and foremost, possible internal financing”, he said. Taking out at least partial loans is also an option or a mixture of both.
Freiburg: Clubs should finance necessary DFL measures themselves
The SC Freiburg had previously also spoken out in favor of so-called internal financing, which was preferable to an investor. Internal financing means that the clubs should raise the money for the necessary measures themselves without having to give up future income over 20 years.
The DFL has set the expected investment amount that a potential donor should bring with it significantly lower in the new model. In the model in May, the investor was supposed to pay two billion euros for the investment. The DFL now only expects one billion euros, of which 600 million euros will be spent on digitalization and internationalization.
A sum that, with 36 clubs and a certain period of time, is small enough to manage without an investor, says SC Freiburg. “If investments can be made on our own, this is always preferable to involving a third party. We will consistently represent this position.”the Freiburg board and supervisory board wrote in a letter to the club’s members on Saturday (November 25, 2023).
Members of St. Pauli and Düsseldorf are calling for a rejection
There has so far been no further public opposition to the investor entry from club representatives in the Bundesliga and the 2nd Bundesliga. At Fortuna Düsseldorf and FC St. Pauli, urgent motions were voted on at general meetings, in which the majority of members spoke out against completing the deal.
In St. Pauli, 93.7 percent voted against an investor in the DFL, in Düsseldorf 75.9 percent. The club representatives are not bound to the vote of their members, but they would have to go against their will when voting on the entry of an investor.
DFL changed the concept in several places
After the vote in May when the investor deal collapsed, the clubs appeared divided and at odds. The DFL then changed several key points of the possible partnership with an investor in order to change critics’ minds:
- According to the new business model, hardly any money goes into the clubs’ day-to-day operations for players and advisors – a crucial point for many opponents.
- The current model comes from the desks of an appointed management team – and no longer from an interim board. Some clubs also criticized this.
- The entire process will be conducted more transparently.
- It is also emphasized that a partner cannot influence match dates, games abroad or the mode.
Will the DFL get an investor?
In the DFL, the proposals for internal financing and financing via credit – as discussed by Freiburg and Cologne – were largely ruled out. She has it “Advantages and disadvantages weighed up”said the DFL.
In domestic financing The answer is that the clubs will then directly lack money in their day-to-day business. The clubs currently pay a levy of 7.75 percent of their marketing revenue to the DFL. The counter-argument in the DFL: In order to pay for the desired measures, this levy would have to be increased, which would leave the clubs with less money. If an investor joins, however, 300 million euros should be used to compensate for at least four years the gap for the clubs that would arise from paying the eight percent to the investor.
When it comes to borrowed capitali.e. financing with loans, The DFL argues that mutualization of debts should be avoided – that is, that some clubs are liable for the debts of others. The DFL announced that the model with the investor was “grandchildrenable,” i.e. without debt. Rising interest rates are also a counterargument for loans.
Vote on December 11th: two-thirds majority required
The decision will be made on December 11th. In order for managing directors Lenz and Merkel to receive a mandate to conclude an investor entry, they need a two-thirds majority among the 36 clubs. In the last attempt on May 24th, the then interim management of Oliver Leki (SC Freiburg) and Axel Hellmann (Eintracht Frankfurt) missed the necessary majority among the 36 clubs. At that time, 20 clubs voted in favor, eleven against and five abstained. In May it was about a deal with a 12.5 percent profit share over 20 years. An investor should pay up to two billion euros for this – which shows that the conditions have deteriorated somewhat.
Marc Lenz (l.) and Steffen Merkel, the two managing directors of the DFL
One of the key supporters of an investor deal is Hans-Joachim Watzke, managing director of Borussia Dortmund and head of the DFL supervisory board. The investor issue will be finally settled if there is no approval this time, Watzke said at the BVB general meeting on Sunday (November 26th, 2023): “You can be sure of that.”
It is unclear what consequences a further rejection would have. An end to central marketing was set up in May as a threatening backdrop. A split of the Bundesliga from the 2nd Bundesliga was also discussed, but this would involve high legal hurdles.