Bayern Munich rejected deal may be the way of the future

This week the FT revealed that Bayern Munich had recently held talks with private equity firm EQT about a possible stake sale. While those discussions appear to have fizzled out with the departure of Bayern CFO Michael Diederich, it is nonetheless a sign of the times.

German football is largely immune to foreign ownership. The 50+1 rule prevents the majority of clubs from being controlled by anyone other than members, while more general hostility to private equity (expressed through fan protests) has derailed past efforts to bring investment in at the league level.

Bayern already has a group of private minority shareholders. Adidas, Audi and Allianz each own just over 8 per cent of the Bavarian side. Members are guaranteed control of at least 70 per cent, leaving 5 per cent for the club to play with.

Selling such a little slice at a valuation of about €4bn would have brought in around €200mn, a nice boost to the coffers as the German team looks to keep up with its wealthy rivals elsewhere.

There is a precedent. Liverpool sold a tiny sliver to Dynasty Equity in 2023, around the same time Arctos took a roughly 12 per cent stake in Paris Saint-Germain. Real Madrid is exploring its own structural revamp so that it too can sell a small slice of equity to an outside investor.

This model of a private equity investor taking a small, passive stake in a sports team is also what’s been happening in the US. Several NFL teams have sold small stakes to outside investors this year thanks to rule changes that allow a handful of private equity firms to buy up to 10 per cent in a franchise.

Such investments do away with the long-pushed notion that European football teams need new management and fresh thinking in order to become commercially successful. They are, in effect, an endorsement of the current owners, who get a handy liquidity boost to help them keep doing what they are doing.

It’s a different approach to, say, Clearlake at Chelsea or RedBird at AC Milan, where controlling the club and overhauling its operations is key to the investment thesis.

Bayern Munich has won 12 league titles in 13 years, regularly makes the latter stages of the Champions League and has the fifth-highest revenue in global football. If you want exposure to European football, there are surely fewer more attractive opportunities out there.

With Champions League TV money continuing to grow, teams with a near guaranteed spot in the competition are going to become more and more attractive for investors. These small, hands-off deals could soon become the norm.