The German football league (the Bundesliga) has called off talks over a potential investment from private equity after mass protests from fans, the third time it has failed in its efforts to bring in outside capital. This means Germany has kept to its Sonderweg.
The notion of a
Verein or association is deeply embedded in German culture and it is
possible to characterise Germany as an ‘associative state’. Leaving aside a couple of company owned teams
such as Bayer Leverkusen, football clubs in Germany were Eintrager Verein (e.V.) or member associations. In 1998 the German football association
adopted the 50+1 rule which has been much admired by reformers in Britain. This allows the club to become a commercially
run entity (such as a limited liability company) and distribute profits to its
investors. At the same time 50 per cent plus one of the voting shares must
remain in the hands of the e.V., so that ultimately the members’ associations
retain control.
The rise of a
'franchise' club in the shape of RB Leipzig presented a challenge to the 50+1
model. They were formed in 2009 by acquiring and renaming an existing fifth
division club. They evaded the 50+1 rule
since their handful of members is largely drawn from executives of Red Bull
GmbH, the manufacturers of the energy drink which also has a team in Austria.
Particular
resentment was directed by fans at Hoffenheim, a village with a population of
just over 3,000 in southern Germany, and their president Dietmar Hopp. Hopp is a billionaire, who made his fortune
in IT. He is a divisive character in
German football, having bankrolled Hoffenheim up from the fifth tier to the
Bundesliga between 2000 and 2008. He is
seen as a symbol of the commercialisation of German football.
In 2015, Hopp was allowed to take a majority
voting share - one of three exceptions (the other two are works teams) to the
50+1 rule which means members must own more than half the shares in their club. This because is of the Leverkusen rule developed
to take account of the case of Bayer Leverkusen which has links with the
chemical company but was founded by factory workers. 'Lex Leverkusen' allows scope for investors
who have been funding the parent club ‘continuously and substantially’ for more
than 20 years to bypass the 50+1 regulations.
In February 2020 opposition to Hoffenheim by ultras led to bizarre
scenes at a match against Bayern Munich when both sides withdrew their keepers
for the last 13 minutes and passed the ball around after an offensive banner
about Hopp had been displayed by fans.
Fans protest against
global capital
Deutsche Fussball Liga, which operates the top two tiers of
German football, had been hoping to sell a €1bn stake in a new company that
would control broadcast and commercial rights. It initially attracted interest
from several large private equity firms. But many fans oppose inviting global
capital into the domestic league and several matches have been delayed or
disrupted in recent weeks by demonstrators throwing chocolate coins, sweets and
tennis balls on to the pitch. At a match between Hansa Rostock and Hamburg last
weekend, stewards had to chase remote-controlled cars loaded with smoke flares
around the pitch.
The money raised from investors would have been used to
improve broadcast operations, including a possible new streaming platform. Many
German football executives worry the league is falling behind rivals in Europe
because of a lack of international interest in the matches. However, at an
extraordinary meeting in Frankfurt on Wednesday, clubs voted not to proceed
with the investment negotiations. Hans-Joachim Watzke, chair of the DFL
steering committee, said the battle over investment “threatened to undermine
the integrity of the competition”, and meant the league could not guarantee
that any contract signed with an investor would be “sustainable”.
The investment plans ran into fierce opposition from German
fans, who were concerned that the arrival of global capital would undermine the
traditions of the domestic game. German football already has rules that limit
the involvement of outside investors in team ownership, although they have been
evaded in particular cases.
Daniel Mittler, the managing director of German consumer
finance lobby group Finanzwende said the DFL’s decision was “good news for all
football supporters”. There had been growing doubts among club executives about
private capital investment in the DFL.
The chief executive of league leaders Bayer Leverkusen told
the Financial Times this month that
there were more effective ways of boosting the league’s appeal, such as
allowing individual clubs to bring in outside investment.
Last week CVC Capital Partners was left as the only bidder
still in the process after Blackstone decided to withdraw. CVC, which has
investment deals with the Spanish and French football leagues, declined to
comment. The collapse of the current round of talks follows two previous failed
attempts to bring in outside investment. Clubs voted against a far larger
investment proposal last year that could have raised more than €4bn.
Comments
Post a Comment