The German Football League DFL has submitted proposals to the Federal Cartel Office to make the 50+1 rule legally secure. However, it lacks ideas for solutions to central criticisms of the Bundeskartellamt.
Former DFL managing director Andreas Rettig has criticized the compromise proposals made by the league to secure the 50+1 rule as insufficient. Several points in the current rule criticized by the Federal Cartel Office were not taken into account by the DFL. “That’s why I’m very disappointed with this first proposal”said Rettig of the sports show.
Legacy protection for “factory clubs” under conditions
On Wednesday (March 8th, 2023), the DFL published its compromise proposal, which is intended to make the controversial 50+1 rule legally secure. Accordingly, the three clubs Bayer Leverkusen, VfL Wolfsburg and TSG 1899 Hoffenheim, which are exempt from the rule. To do this, however, they must submit to certain conditions. There should be no more exceptions.
In 2021, the Bundeskartellamt had classified the 50+1 rule as fundamentally harmless in a preliminary assessment, but criticized, among other things, the applicable exemptions for the three clubs. However, the compromise proposal now made by the DFL does not address all of the criticisms made by the Federal Cartel Office.
50+1 rule
The 50+1 rule states that the majority of the shares in a club should always be in the hands of the members. The influence of investors is thus limited. However, an exception allows sponsors, investors or patrons who have continuously and significantly promoted the club’s football sport – in this case at least 20 years – to take over in full. This has happened so far at Bayer 04 Leverkusen, VfL Wolfsburg and TSG Hoffenheim. The majority shareholder of TSG, Dietmar Hopp, has announced that he intends to return his majority voting right to the parent club TSG 1899 Hoffenheim eV without compensation. The club would then be a regular 50+1 club again.
In 2021, the Bundeskartellamt had classified the 50+1 rule as fundamentally harmless in a preliminary assessment, but criticized, among other things, the applicable exemptions for the three clubs. However, the compromise proposal now made by the DFL does not address all of the criticisms made by the Federal Cartel Office.
DFL does not mention construct RB Leipzig
For example, the special construct RB Leipzig is not even discussed by the DFL. Only a little more than 20 selected members who are also close to the owner Red Bull are entitled to vote there. The club itself determines who can become a member with voting rights. The Cartel Office saw this as a circumvention. “Of course you also have to ask the question of whether that is congruent with what is being practiced in Leipzig through a resourceful interpretation of club law. In my opinion, that should now be discussed.”said the President of the Cartel Office, Andreas Mundt, in the Süddeutsche Zeitung at the time.
In this case, the DFL missed a great opportunity, says former DFL Managing Director Rettig. “In terms of integrity and equal opportunities in competition, I would have wished that such circumventions were no longer possible,” he said.
Rettig initially refused the license for the 2nd Bundesliga in 2014 in his position as DFL Managing Director of Rasenballsport Leipzig. The DFL licensing committee finally granted the license. This was preceded by a compromise that said that anyone can become a supporting member of RB Leipzig. However, without any voting rights. The “right of final determination” of the members forms the core of the 50+1 rule.
A permanent club representative in the committees
Rettig also does not see the big hit in the proposals made by the DFL in relation to the exemption for Leverkusen, Wolfsburg and Hoffenheim. The cartel office had criticized that the influence of the parent association could be reduced to “zero” in the “factory associations”. In addition, these clubs would have different economic options than the rest due to the exemption.
In its letter to the Federal Cartel Office, which is available to Sportschau, the DFL now proposes new rules for the three clubs mentioned. At least one representative of the parent club should sit there on the committees of the corporations spun off for professional football. This should be equipped with a veto right in relation to “identity-forming features” of a club such as name, club colors or logo.
Complicated calculation of a “luxury tax”
A central compromise proposed by the DFL is the introduction of a compensation payment if the dominant sponsor of a “works club” should compensate for losses in the professional department. So far there have been so-called profit and loss transfer agreements between the VW groups and VfL Wolfsburg and Bayer in Leverkusen. If the football clubs suffer an economic loss, the corporations are obliged to compensate for this.
The compensatory payments now proposed by the DFL are based on a complicated calculation model with which a kind of “luxury tax” is to be determined. 7.5 percent of the club’s total turnover is considered an exempt amount. With a turnover of 200 million euros, that would be 15 million euros. The “luxury tax” only becomes due when the corporations make compensation payments in excess of this allowance.
This is calculated using the respective 12-month Euribor interest rate plus one percentage point. If the interest rate is 2.5 percent, a 3.5 percent “luxury tax” is due. If the group pays one million euros more than the allowance, the compensation payment would be 35,000 euros. The “luxury tax” should then be deducted from the media revenues of the “factory clubs” and, according to the DFL proposal, benefit youth football, among other things.
Rettig: “Competitive advantages are in no way balanced”
Leverkusen’s club boss Fernando Carro called the proposals a viable solution because there had been intensive discussions about the rule in German professional football in recent months. “For that reason alone we agreed to the compromise that was found, which is sometimes painful for us.”, he explained. Even these suggestions do not go far enough: “So far, that has in no way compensated for the competitive advantages of the exceptional clubs.”
The parties summoned to the Federal Cartel Office can now respond to the DFL’s proposed solutions with their own statements until March 20th. In addition to three exceptional clubs, these include 1. FSV Mainz 05, Borussia Dortmund, FC St. Pauli, Hannover 96, and TSV Munich von 1860 eV and its investor HAM International Ltd.. Also the German Football Association (DFB) and lawn ball sports Leipzig are among them. Only when their feedback has been received does the supreme competition authority determine how to proceed in this regard.