German soccer’s Deutsche Fussball Liga (DFL) body hopes to launch and finalize its next domestic media rights tender for the top-tier Bundesliga before next year's UEFA European Championship national team tournament in the country, and will continue to explore investment opportunities with its clubs.
Domestic rights for the current 2021-22 to 2024-25 rights cycle are shared by Sky Deutschland, the country’s dominant pay-television broadcaster, and global sports streaming service DAZN.
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The total value of the rights for that four-year cycle is €4.4 billion, a drop of €200 million from the previous deal, caused primarily by the economic impact of the Covid-19 pandemic.
With Marc Lenz and Steffen Merkel having begun their roles as joint chief executives (CEO) last month (July), their first focus will be to secure a lucrative new contract and rights fees similar to pre-pandemic levels or higher.
Merkel has experience in this area as he previously served as the DFL’s vice president for German-language media rights and expects strong interest in the next tender.
Speaking to media at the recent German Super Cup curtain-raiser in Munich, Merkel said: “In the next 12 to 18 months, one of the focus topics that we have started working on directly, and especially having come from my previous role, is the domestic media rights tender that we are facing next year here in Germany.
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By GlobalData“Right now, preparations and discussions with the competition authorities are ongoing, we’re on a good track.
“In general, the market conditions are, as for many leagues, not the easiest ones. But on the other hand, when it comes to the actual discussions you still see an unmatched and very high interest in the rights that we offer next year, be it from partners such as Sky and DAZN who fundamentally need those rights to execute on their business model, as well as additionally interested new partners that we are talking to who want to enter the market and therefore need the strongest rights.”
Sky and DAZN are expected to be in the mix to retain rights but could face competition from global retail giant Amazon which has developed a presence in Germany with premium rights in recent years through its Prime Video streaming platform.
Amazon notably holds rights to European soccer’s top-tier UEFA Champions League club competition in the current 2021-22 to 2023-24 cycle alongside DAZN and the two parties have already renewed their respective deals with UEFA for the next three-year period from 2024-25 to 2026-27.
Amazon previously showed some fixtures from the remaining rounds of the 2019-20 Bundesliga season under a short-term deal with the DFL when the league restarted after a two-month hiatus and all matches were played behind closed doors.
Merkel added: “We are working hard together with the clubs and broadcasters and competition authorities to create rights packages and an offering that is really good and compelling and we’re on a good track there.
“There are still nine to 12 months to go but we want to close it before the Euros here in Germany. That is one of the key topics that we’re working on right now.”
Euro 2024 is scheduled to begin on June 14 next year, meaning a 10-month window is in place.
Private equity
While the domestic tender is the short-term focus, Lenz and Merkel’s long-term goal is to stabilize the financial future of the league and continue to explore investment opportunities.
This is despite clubs in the top-flight Bundesliga and second-tier 2. Bundesliga voting in May to end talks with private equity firms over a potential stake in their media rights business.
At that vote, fewer than the required two-thirds of the 36 top-tier clubs across the two divisions opted for the discussions to continue.
There were 20 votes in favor of continuing talks, with 11 clubs voting against and five abstentions. A minimum of 24 votes in favor was required for the talks to progress.
The DFL had received interest from five private equity firms, previously reported as CVC Capital Partners, Blackstone, KKR, EQT, and Advent.
Prior to Lenz and Merkel taking control, Oliver Leki and Axel Hellmann served as joint CEOs on an interim basis but both left their posts on June 30 as part of the fallout.
The issue also contributed to the resignation in early December of previous DFL CEO Donata Hopfen, who had been in situ since August 2021.
The DFL’s new chiefs are now keen to find a long-term resolution to navigate the financial challenges the leagues face.
Lenz said: “Neglecting further steps on that [investment] process does not mean that we are not aware of further challenges that are ahead of us and that the long-term business development obviously is one of the core topics that need to go in parallel because factors such as the changing media landscape and changing media consumption, but also the capitalization of leagues and clubs are also very different in terms of different ownership structures, investment vehicles within leagues and clubs, etc.
“For us, in accepting those challenges, and those discussions were very good with our 36 clubs, but that means coming out of a process where we outlined a way that was not majority approved and the demand and the challenges remain the same.”
The DFL’s plan for private investment into a media rights sales subsidiary would have seen €2 billion paid for a 12.5% stake in the vehicle, which would have been called DFL MediaCo. The entity would have managed and sold the league’s broadcast rights for a 20-year period – and taken 12.5% of the profits from those sales.
Of the €2 billion, 40% would have remained with the DFL to help it increase the league’s international and digital content efforts. This would have included the creation of a video content platform for a more youthful, international audience.
The other 60% would have gone to the clubs, with a sizeable proportion ring-fenced for infrastructure (meaning it could not have been spent on player transfers).
The distribution method, in terms of how much money went to each club, would have been the same as the Bundesliga’s existing format for distributing media rights income.
The proponents of a private equity investment agreement have argued that German soccer is being left behind by other major European soccer competitions in terms of overseas media rights values.
The Bundesliga currently receives in the region of €170 million from international broadcasters annually. By comparison, the Premier League is bringing in €6.3 billion between 2022 and 2025, or €1.6 billion annually.
In recent years, Spain’s LaLiga and France Ligue 1 have agreed investment deals with CVC, giving up equity stakes in their media rights businesses in exchange for significant capital.
The DFL CEOs are hopeful talks with the clubs can resume to follow in the footsteps of those rival leagues and ultimately bring in much-needed funds.
Lenz said: “For us, the importance is around the long-term development and what needs to be done in the short-term and those go hand in hand because obviously right now we have a certain budget that the league is operating on and it’s pivotal to initiate a couple of steps already.
"In truth, it's obviously with a limited budget because it’s coming out of the operating budget that the league has which is different to working with a strategic partner and significant investment that can be used and allocated over a respective time period.
“Nevertheless, the discussions will continue and they’re two-sided – one with clubs on the long-term development, what needs to be done and what can be done in current financial terms, and the second part is if there is an agreement on the long-term development, how is that going to be financed and when can it be initiated.
“The discussions were stopped in May for various reasons but we don’t think it is the ultimate end of those discussions because the necessity to develop as a league remains exactly as it was previously.”
Lenz continues: “Within the next couple of weeks, in parallel to the domestic auction there will also be a discussion around the long-term development of the league and there might be various positions within clubs. With 36 clubs, you often have 36 opinions on a different scale.
“Our core task in the short-term is also to find the necessary consensus to initiate steps on the long-term development. That is complementary to the short-term perspective on the media rights auction.”
Image: Daniel Kopatsch/Getty Images
