A secret document from the DFL shows that the potential investor should be granted the right to veto “particularly important transactions”. In addition, the paper calculates what additional revenue the league expects from the deal.
An extraordinary general meeting of the German Football League (DFL) is scheduled for Wednesday (05/24/2023). In Frankfurt am Main, the 36 clubs in the Bundesliga and 2nd division should basically decide whether the league will bring an investor on board.
The DFL is hoping for around two billion euros from the deal. According to information from the sports show, the investor should not pay the money in one go, but rather spread it out in tranches over a period of five years.
“Reserve” an explosive point
The league wants to invest 750 million euros of the money in the coming years for the benefit of all clubs, above all in order to be better positioned digitally and to market itself better internationally. However, the sum includes a reserve of 175 million euros, which serves as a “reserve for stability and/or investments”.
This emerges from a document to which only a few people per club have access under strict security rules. The secret paper is available to the sports show. It contains a lot of information that is now public knowledge and has also been communicated by the DFL.
However, the document also contains explosive passages that should cause discussions among the already very critical fan scenes and also the skeptical clubs. This includes the “reserve”, because the fact that it could possibly flow into “stability” means that it would then be at the free disposal of the clubs, i.e. it could also be invested in players.
Another explosive point in the document can be found in the question of which rights should be granted to the potential investor. At one point it says vague “limited rights”Elsewhere it becomes clear that the investor should have a right of veto, namely at “particularly important business” a yet to be founded subsidiary of the DFL, which is at the center of the model. Above all, the media rights are to be sold via “MediaCo GmbH & KGaA”. The investor is to receive a 12.5 percent share of these proceeds over a period of 20 years.
On questions from the sports show, among other things, what under “particularly important business” is to be understood, there was no official answer from the DFL.
Lowest common denominator
As the secret document shows, the conditions are “12.5 percent over 20 years” the lowest common denominator that was found in the ongoing process. The “Targeted Target Corridor” is with a term of 25 and 30 years with a participation of up to 15 percent.
Axel Hellmann from Eintracht Frankfurt, one of the two managing directors of the DFL, would rather have had 30 years. Oliver Leki from SC Freiburg, the other managing director, is considered the highest-ranking supporter of the compromise found.
At a media round on May 4, Hellmann said that in ten years he expects the DFL to have annual sales of around 2.5 billion euros. This number is likely to come from the calculations made in the explosive paper “Central guidelines for financing further development” are to be found.
model calculations for the “base case” and case one investor entry
According to this, the DFL expects sales of 2.672 billion euros for the 2031/32 season. However, this applies to the “growth case”, i.e. the growth case. this one “growth case” calculated the DFL on the assumption that an investor is brought on board who provides the start-up financing and then through “Introduction of expertise and networks” ensures a significant increase in revenue.
The documented “base case” assumes that no investor will be added and that everything will continue as far as possible as it is currently running. In this case, the league expects sales of just 1.779 billion euros for the 2031/32 season. Compared to sales in the current season, which is stated at 1.392 billion euros, that would be a growth rate of 2.8 percent. In the “growth case” the rate is calculated at 7.5 percent.
As has been publicly known for some time, the league believes that it can grow particularly in the international marketing of media rights. In the secret paper she calculates on this field in the “growth case” with revenues of 482 million euros, in “base case” with 353 million. The league currently takes in 175 million euros through international marketing.
The income from the sale of media rights on the domestic market is far higher. They currently amount to 1.116 billion euros. In the “base case” only 1.285 billion are assumed for the 31/32 season, in “growth case” however 1.64 billion. According to the paper, the DFL sees the potential for growth, among other things, through the “Constitution of rights”. It is not known what that might look like in concrete terms.
St. Pauli wants to prevent voting
Because there are also many unanswered questions at clubs, FC St. Pauli would like to gain time. The second division club wants to submit an application on Wednesday with the aim of postponing the vote. He needs more time and wants experts to examine the planned deal, said St. Pauli President Oke Göttlich, who also sits on the DFL Presidium. He also needs more information from the league, which has so far been too sparse. Sticking points, for example: the aforementioned influence of the investor and the distribution of the money.
If the St. Pauli clubs reject the application and decide to continue the investor process with at least a two-thirds majority (24 votes), according to Axel Hellmann, it will be at least six weeks before another general meeting votes on which investor comes to the train. There are currently four applicants in the running, all of them private equity-Companies, i.e. holding companies.
Four applicants in the running
According to information from the sports show, there have not yet been any direct negotiations between the DFL and the candidates. These would only be included after a positive decision in principle. Some conditions are already in the secret paper, such as the “Accept a limited influence on purely commercial decisions” and: “Taking over/sharing the risk of a lack of positive business development of the DFL.”