On December 11th, the 36 clubs in the Bundesliga and 2nd Bundesliga will vote on whether the DFL should enter into a partnership with an investor. There are many arguments for and against – the vote will once again be an ordeal.
What does the DFL vote on?
The members of the German Football League (DFL), i.e. the 36 clubs of the Bundesliga and the 2nd Bundesliga, will meet on December 11th in Frankfurt am Main. There the clubs are supposed to vote on whether the two DFL managing directors Marc Lenz and Steffen Merkel have one “strategic marketing partnership” be allowed to negotiate with an investor. The DFL presidium is then expected to conclude the deal.
For an investor to join, a two-thirds majority of at least 24 yes votes among the 36 clubs is required.
What is different than the deal that fell through in May?
The DFL changed several key points in order to change critics’ minds after the deal fell through in May: According to the new model, hardly any money goes into the clubs’ day-to-day business for players and advisors. This was a crucial point for some opponents, as in May a large part of the money was to be distributed to the clubs in a similar way to the distribution key for television money, i.e. in favor of the big clubs. The current model also comes from an appointed management team and no longer from an interim board.
The general conditions compared to May are:
- About a billion euros should come from the investor (instead of two billion euros in May).
- Around eight percent In return, the income from the marketing rights of a subsidiary of the DFL to be founded called “MediaCo” will go to the investor (instead of 12.5 percent in May).
- The term of the cooperation and also the payments to the investor is 20 years – that was also planned in May.
What should happen to the investor’s money when a transaction closes?
If investors come in, the billion will be used as follows, according to information from Sportschau:
- 600 million euros are to be invested in digitalization, internationalization and marketing. According to information from Sportschau, 164 million are planned for the establishment and operation of our own video platform. The rest of the money will be used, for example, to make Netflix-style documentaries or to better market the league internationally.
- 100 million euros will be used to support clubs’ trips abroadto make the league better known abroad.
- 300 million euros are earmarked for compensation payments to the clubs over four years. Because the transfer of eight percent of the income would otherwise create a gap in the clubs’ income.
What is the discussion about?
Above all, the DFL wants to make itself more digital, youthful and international with its own video platform. There is a broad consensus among the clubs that this makes sense in order to keep the Bundesliga competitive.
The clubs and the DFL do not agree on the question of how the necessary investments should be paid for, which leads to the fundamental question: Investor – yes or no?
Why does the DFL want investors to get involved?
The managing directors of the DFL, Marc Lenz and Steffen Merkel, consider the entry of an investor to make economic sense. They emphasize that it is not a matter of selling shares, but rather of sharing in the income for a limited period of 20 years. The advantage from their point of view: the investor is also involved in risks such as falling income. A partner can bring knowledge and contacts with them when it comes to further developing marketing.
Marc Lenz (l.) and Steffen Merkel, the two managing directors of the DFL
The supporters’ hope is that, together with the investor, it will be possible to increase the DFL’s income from marketing in such a way that the investor and the DFL benefit together. Bayer Leverkusen’s managing director Fernando Carro publicly supported the proposal. The Bundesliga must “Face global competition, be present and innovative”said Carro in a club statement. “But this also requires funds, resources and more Know-how.” TSG Hoffenheim, Eintracht Frankfurt, Werder Bremen, Borussia Mönchengladbach, 1. FC Heidenheim and Borussia Dortmund also signaled their approval. The DFL is expected to put the media rights for the four seasons 2025/26 to 2028/29 out to tender in the second quarter of 2024 and wants to have concluded a deal with an investor beforehand.
For an investor: Leverkusen’s managing director Fernando Carro.
Why are there dissenting voices?
The investor should get out of the Private equityindustry come. Private equity companies are private investment companies. These collect money from investors in order to invest – and usually have return expectations in the double-digit percentage range. “German football, with its history and its roots in society, and the approach of a private equity company do not fit together culturally”said Eckhard Sauren, Vice President of 1. FC Köln, in an interview with Sportschau.
In addition to Cologne, SC Freiburg also positioned itself against the entry of an investor. Both clubs have economic arguments: Essentially, it’s about 600 million euros for financing the video platform and other measures for digitization and internationalization. Cologne and Freiburg say that this money could be generated without the clubs having to pledge eight percent of their income for 20 years.
Against an investor: Eckhard Sauren, vice president of 1. FC Köln
What alternatives to investors are there?
The first alternative is so-called internal financing: With this idea, the necessary measures should be paid for from the clubs’ own resources. “If investments can be made on our own, this is always preferable to involving a third party.”, wrote SC Freiburg to its members. Cologne also spoke out in favor of it. A calculation: 600 million euros spread over five years across 36 clubs would theoretically amount to an average of just over three million euros per season and club.
The problem: Even this amount would pose challenges for some clubs given their financial situation. The clubs are currently paying an increased tax on their TV income of 7.75 percent to the DFL, instead of the previous 6.25 percent. In order to pay for the new measures to the desired extent, this levy may have to be increased further, which would leave the clubs with less money. If investors join, there would be compensation payments at least in the first few years, argues the DFL. Eintracht Frankfurt CEO Axel Hellmann said in Kicker: “The so-called internal financing of investments is a myth.”
The second alternative would be borrowed capital, i.e. taking out loans: Proponents of debt capital say it’s cheaper than mortgaging earnings. The DFL, on the other hand, argues that mutualization of debts should be avoided – that is, that some clubs are liable for the debts of others. Rising interest rates are also a counterargument for loans.
According to Cologne’s Vice President Sauren, it is also conceivable that only part of the money will be obtained through loans. To do this, a hybrid of the two alternatives could be implemented in order to remain independent of an external donor. A sale of the league’s naming rights would also be possible, which according to estimates could bring in 30 to 50 million euros per season.
How big is the opposition?
So far, two of the 36 clubs from the Bundesliga and the 2nd Bundesliga, Freiburg and Cologne, have publicly rejected the deal. VfL Osnabrück, a second division team, also announced that it would abstain. Osnabrück criticized the DFL’s schedule “It virtually prevented extensive participation by members and fans”, which goes against VfL’s self-image. The club also pointed out that the larger clubs in particular would benefit from the hoped-for increase in foreign marketing, which could be at the expense of Osnabrück and many other small clubs. An abstention practically has the effect of a rejection in the vote, as the DFL needs 24 yes votes.
The Bremen Bridge, the stadium of VfL Osnabrück
At some clubs there were also general meetings at which appropriate votes were taken. At FC St. Pauli, Fortuna Düsseldorf and 1. FC Magdeburg, the majority of members spoke out against the DFL concluding a deal with an investor. The members’ vote is not binding for the club representatives, but at least it represents a mandate.
A prediction is hardly possible, both outcomes seem realistic. “The mood has changed among a number of clubs that voted against it at the time.”said DFL supervisory board chairman Hans-Joachim Watzke to the “Ruhr Nachrichten”. But there was also movement in the other direction, says Watzke. “I can not understand this.”
If he comes: What is the investor allowed to do and what is he not allowed to do?
The two DFL managing directors Lenz and Merkel repeatedly emphasize “red lines”: the investor should have no influence on the design of the game plan, he cannot move games abroad or introduce playoffs in the Bundesliga against the wishes of the clubs. All of this remains in the hands of the clubs and the DFL, says the management.
However, there would be some veto rights for the investor. For example, if the DFL wanted to unilaterally terminate the cooperation. In addition, the investor could demand the removal of the “commercially responsible person” if the DFL falls significantly short of revenue expectations. An investor would probably try to ensure as much influence as possible in the negotiations with the DFL. The Handelsblatt quoted the German head of a private equity firm that wants to take part in the auction. He therefore said: “The right to have a say is the be-all and end-all for financial investors.”
What do the organized fan scenes say?
As in May, the organized fan scenes are clearly criticizing progressive commercialization. Negative posters have been seen in many corners from the Bundesliga to the 3rd league in recent weeks.
“Future Professional Football”, an alliance of several fan organizations, describes the limitation of the investor’s co-determination rights emphasized by the DFL as unconvincing. The investor will “If growth is lacking, try to exert influence directly and indirectly. Private equity investors want growth at any price.” The “Fan Scenes of Germany” also write: “The mechanisms of investor entry will soon shift supposed ‘red lines’ without the investor needing a voting majority.”
The advocacy group “Our Curve” criticized the model for primarily strengthening the top third of clubs. “In connection with the already unfair distribution of TV money, small additional revenues ultimately lead to ever greater distortion of competition.”said chairman Jost Peter of the German Press Agency.
Bayern fans in Dortmund with the banner: “DFL & Investors: “We’re keeping an eye on you!”
What happens if the deal doesn’t go through?
When the deal collapsed in May, the association of 36 clubs appeared divided and at odds. The then DFL interim managing director Hellmann spoke of one “Defeat for central marketing”. DFL supervisory board chairman Hans-Joachim Watzke (Borussia Dortmund) said that the larger clubs “Now we’ll think about what happens next.”
The threat behind it: an end to central marketing or a separation of the Bundesliga from the 2nd Bundesliga. However, the last measure in particular would be associated with very high legal and organizational hurdles. But that can have an impact on the vote. Some club representatives say that they are working with fear of a split.