The DFL, the German soccer league, will make a third attempt to sell a stake in the media rights for its top two divisions to private equity investors in the hope of securing a majority vote from its clubs to proceed with an auction.
The 36 clubs that make up the top-flight Bundesliga and second-tier 2. Bundesliga will vote at a meeting on December 11 on whether to enter a strategic partnership with a private equity firm with a view of selling a share in their commercial rights.
According to Bloomberg, the DFL will seek an investment of up to €1 billion ($1.09 billion) in the entity, significantly lower than the figure it was seeking previously, and is likely to offer a stake below 10%.
A potential sale of a share in the DFL’s media rights would have to be concluded before April, as the league will go to market with its next cycle of domestic broadcasting rights for the 2025-2026 to 2028-2029 seasons.
The DFL revealed a number of guidelines - which it called "red lines" - and made it clear that it will not sell a share in its organization but will offer "a temporary minority interest in licensing revenue from the sale of the DFL's commercial rights to safeguard the clubs’ interests."
The league stated that models of this kind are not new in soccer and pointed to how clubs have used marketing partners to provide support over the last 20 years. The Sportfive agency, for example, is a prominent player in the Bundesliga in this area and works with several clubs.
The DFL also outlined that once the temporary minority interest expires, the licensed rights would automatically return to the body.
It added: "Unlike in the case of borrowing outside capital, for example – already ruled out by the DFL governing bodies – there would be no need to repay the growth capital (including interest), which would pose challenges for future generations of league and club officials. Instead, the capital would be covered via the temporary interest of a partner."
In May, Bundesliga and 2. Bundesliga clubs voted 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 sides 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.
At that time, the DFL’s plan for private investment into a media rights sales subsidiary would have seen around €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 proponents of a private equity investment agreement have argued that German soccer is being left behind by other major European 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’s Ligue 1 have agreed investment deals with CVC, giving up equity stakes in their media rights businesses in exchange for significant capital.
In a recent interview, the DFL’s joint chief executives Marc Lenz and Steffen Merkel stated that despite the German clubs voting against the private equity proposal, the body will continue to explore investment opportunities with its teams and were hopeful of resuming discussions.
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.”
Bloomberg reports that under the DFL’s new guidelines, using the proceeds to pay a special dividend to clubs, a feature of the last auction, is off the table on this occasion.
The step taken by the league addresses previous criticism from smaller, mainly second division clubs that were concerned it would benefit the bigger teams. Clubs will still receive financial compensation for giving up a small percentage of their broadcasting rights.
This will be the third time the DFL will seek an investment deal. In 2021, the league was also forced to abandon an attempt to sell a share in a new commercial arm.
