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- Clubs have twice rejected private equity investment in media rights business
- Lenz says discussions with teams “will continue”
- DFL also wants to secure new domestic rights deal before Euro 2024
The German Football League (DFL) is prepared to revive private equity investment talks as the organisation continues to explore growth opportunities for the Bundesliga.
The DFL’s long-running private equity saga initially began in 2021, with Bridgepoint, CVC Capital Partners and KKR all reportedly in the running for a 25 per cent stake in the Bundesliga organiser’s international broadcast rights business, which was expected to value it at roughly €2 billion (US$2.2 billion).
Talks, though, were shelved at the behest of clubs but later resumed in 2023, only for teams to again push back. The latest proposal was said to have seen CVC, as well as Blackstone and Advent International, eyeing up a 12.5 per cent stake in the media rights business. The deal ultimately failed to secure a two-thirds majority from the 36 clubs across Germany’s top two leagues.
The rejection sparked questions over whether the rights would come up for sale again and if the DFL would persist with private equity. However, new DFL co-chief executives Marc Lenz and Steffen Merkel, who replaced Donata Hopfen in June, are hopeful of resuming discussions to bring in extra funds.
“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,” Lenz told media ahead of last weekends’ DFL Supercup, as reported by Sportcal.
“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 also revealed that “within the next couple of weeks” there will be talks around the long-term development of the Bundesliga. As for the short term, he and Merkel want to find “the necessary consensus” to help chart the right course for the future.
The Bundesliga is not the only major European soccer league that has failed to sell a stake in its media rights business, joining Italy’s Serie A which saw a deal with a CVC-led consortium collapse. Spain’s LaLiga and France’s Ligue 1 have gone on to strike investment agreements with CVC.
External investment is one of several items lying in Lenz and Merkel’s in-tray. The pair are gearing up for the Bundesliga’s next domestic media rights tender, with the league’s current deal running from the 2021/22 season until the end of 2024/25.
The bulk of rights are currently held by Sky and DAZN as part of a four-year agreement worth €4.4 billion (US$4.8 billion), which is down on the €4.64 billion (US$5.07 billion) that the Bundesliga pocketed from its previous pact with Sky, Eurosport and ARD.
A lack of competition was reportedly the root cause for the price going down and the economic impact of the Covid-19 pandemic was also cited. The pressure is now on the co-chief executives to land a lucrative new deal.
“Right now, preparations and discussions with the competition authorities are ongoing, we’re on a good track,” said Merkel.
“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 believed to be keen to retain rights, though Amazon could also be in the mix. The internet giant’s Prime Video streaming service already holds Uefa Champions League rights in Germany, alongside DAZN, and the Bundesliga will hope additional interest can drive up the price for its domestic rights.
“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,” said Merkel.
“There are still nine to 12 months to go but we want to close it before the Euros here in Germany [next summer]. That is one of the key topics that we’re working on right now.”
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