Bayern Munich turn away from private equity deal

Germany’s leading football club Bayern Munich held talks this year with EQT over selling a minority stake to the private equity firm, in a deal that would have reignited a heated national debate over the merits of private capital firms investing in football.

Negotiations fell apart when Bayern’s chief financial officer Michael Diederich, EQT’s contact at the club, left in the summer to become co-head of Deutsche Bank’s corporate banking business, according to three people familiar with the matter. German football fans have historically been highly critical of outside investment into the sport, with widespread protests prompting the country’s football league last year to call off talks over a potential private equity investment.

With a few exceptions, clubs in Germany are subject to the ‘50+1’ ownership rule, which stipulates members must hold majority voting rights, in effect blocking commercial entities from gaining control. The rise of RB Leipzig, a German club whose rise was bankrolled by energy drink maker Red Bull, led to it being labelled a “plastic club” by critics.

The Bayern Munich members’ association owns 75 per cent of the club, with the remaining shares divided equally between three German companies: Adidas, Audi and Allianz. The club’s constitution stipulates that members must hold a 70 per cent stake in the subsidiary that runs the operations of its football teams, leaving a 5 per cent stake which they could potentially sell to an external partner. Bayern Munich also has teams in other sports, including basketball and handball.

The consultancy Football Benchmark estimates Bayern Munich’s enterprise value at €4.28bn, behind only Real Madrid, Manchester City, Manchester United and FC Barcelona. People familiar with the matter told the Financial Times there was no indication that Adidas, Audi or Allianz wanted to sell down their stake.

Over the past few years private capital has been flowing into football clubs and leagues in other European countries. Last month the US group Apollo agreed to buy a majority stake in Atlético Madrid in a deal valuing Spain’s third-largest football club at more than €2bn. Clearlake Capital acquired the English Premier League club Chelsea for £2.5bn in 2022, while RedBird Capital took over the Italian side AC Milan in a €1.2bn deal the same year.

Real Madrid president Florentino Pérez last month outlined plans to sell a minority stake to an outside investor for the first time, as the Spanish club battles against the financial might of clubs in England’s Premier League. Bayern Munich, which has more than 432,000 members, has been Germany’s most successful club for decades, winning 12 of the past 13 Bundesliga titles and regularly reaching the latter stages of the Uefa Champions League.

The club, which signed England captain Harry Kane in 2023, is among the top five in the world by annual revenues. The talks with Bayern Munich demonstrate EQT’s growing interest in sports, as Europe’s largest private equity firm scours for high-profile deals that could help it attract retail investors.

EQT’s only notable move into sport to date is a $25mn investment by its venture arm into Baller League, a six-a-side football competition that partners with influencers and streamers. The Swedish firm, which manages almost €270bn of assets, held discussions recently about a tie-up with Arctos, a specialist sports investor. It is unclear which of EQT’s funds would have invested in Bayern Munich if the talks had led to a deal. EQT,

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The Political Economy of Football V2

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