2023-04-20 20:01:03
Not only the Bundesliga season is in its hot phase; Two points separate FC Bayern Munich and pursuers Borussia Dortmund before the 29th matchday. The “Power” project is also becoming concrete: Interested financial investors should submit offers by Monday to buy marketing rights from the Bundesliga umbrella organization DFL.
According to FAZ information, the American Sixth Street has brought itself back into play in addition to the six preselected investment companies. She submitted an indicative offer and was being advised by former UBS Germany board member Stefan Winter. Winter’s new job for the house is confirmed by his profile on the LinkedIn network, where he has stated that he has been Sixth Street’s senior business advisor since October.
The US house is encountering resistance, however, according to circles familiar with the process. According to reports, the consulting banks Deutsche Bank and Nomura do not want to open the circle again. Last year they screened more than 50 investors for a catalog of suitability criteria, given the emotional background of the transaction.
controversial topic
The entry of private equity into the German soccer business is controversial – among fans as well as among the clubs in the DFL, the German soccer league, in which the 36 clubs of the first and second Bundesliga are organized. Questions such as fan loyalty and the commercialization of the sport distinguish the process from deals in mechanical engineering, car construction or other sectors in which private equity is regularly active. Candidates dropped out of the examination process for various reasons, Sixth Street, for example, is said to have failed due to insufficient presence in Germany.
A sextet of well-known international investment companies has now been pre-selected: Advent, Blackstone, Bridgepoint, CVC, EQT and KKR. At best, the question would be whether other interested parties would still be granted access if none of the six offered the desired amount. Something like this has already happened in company or share auctions in other sectors, but in the present case it is considered unlikely. The DFL would then probably think about other models.
The investors received documents with current figures weeks ago. 12.5 per cent are being offered for sale in a company yet to be founded, which will market Bundesliga media rights for 20 to 30 years. More than 2 billion euros in revenue are expected. The DFL is to use part of the income and together with the investor to drive digitization and open up new marketing opportunities in order to permanently increase income from rights marketing.
Other countries much further
Compared to other leagues, above all the English Premier League, the Bundesliga lags far behind. While the Premier League earns significantly more than one billion euros per season through foreign marketing, the Bundesliga should only have around 200 million euros. The Spanish La Liga also achieves significantly more.
The financial lead is supported by club investors, especially in England. Many clubs are majority-owned by rich financiers who provide large sums for player purchases. Manchester City is majority-owned by an Abu Dhabi sheikh, city competitor Manchester United owned by the American Glazer family, which is currently looking for a buyer.
Liverpool FC, in turn, is owned by US billionaire John Henry through Fenway Sports Group. Since May 2022, Chelsea has been owned by a group led by American businessman Todd Boehly. Within this short time, around 600 million euros were spent on new players – albeit with manageable sporting success.
German clubs cannot keep up here. Investor participation, as is currently practiced in England, is not possible in Germany due to the applicable 50+1 rule and is not desired by many fans. Recently, protest posters against the DFL’s investment plans could also be seen in many places in the fan stands in the stadiums.
Consultations from Tuesday onwards
Committee meetings will be held on Tuesday. If the first indicative offers are interesting, at least a fundamental decision should be made. But it is also conceivable that the clubs will give themselves another week to think about it. Ultimately, a two-thirds majority at an extraordinary general meeting of the DFL must vote in favor. It should meet in mid-May.
In 2021, the DFL had already made an attempt, although at that time it was only about foreign rights. The project called “Competition” failed due to the resistance of too many clubs. The central figure as a consultant was even then, still for Nomura, the banker Patrik Zeigherman. He has just switched to competitor Unicredit, DFL’s house bank. The DFL declined to comment on the process, the six selected investors and Sixth Street. The other parties declined to comment or were unavailable.
Among the bidders, CVC has a particularly large amount of relevant experience. The private equity house struck a deal with La Liga in Spain in 2021, which includes a stake in the media rights – excluding those of Real Madrid, FC Barcelona and Athletic Bilbao. Last year, CVC acquired 13 percent in France of a newly founded subsidiary of the league association for the marketing of the broadcasting rights, as the DFL is now planning. On the one hand, this can be interpreted as an advantage in the DFL auction – on the other hand, it harbors the fundamental risk of conflicts of interest due to the competition between the leagues. As a former partner of Hertha BSC, KKR has local football experience; On the other hand, the large minority stake in the Springer media group could be a catch.
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