German football clubs vote to back private equity investment

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German football clubs have backed a move to bring in private equity investment after two previous failed attempts, as they seek to increase the value of broadcast rights and develop a global audience.

Private equity firms Advent, Blackstone, CVC Capital Partners and EQT have all submitted offers to buy a stake of less than 10 per cent in a new entity that would control the broadcast and commercial rights of the top two tiers of German football, according to people familiar with the process. 

Deutsche Fussball Liga, the league operator, is hoping to raise up to €1bn from investors, the people said. The money raised would be used largely to improve German football’s broadcast product, with the aim of increasing the value of international media rights.

At a league meeting on Monday, clubs voted to move ahead with talks over a potential deal, giving DFL leeway to continue discussions and pick a partner from the bids already submitted.

The English Premier League is able to generate billions of pounds from its overseas television deals, while other European leagues have lagged well behind. According to figures from Enders Analysis, the Premier League earns more than €2bn a year from its international rights, compared with about €200mn for the Bundesliga. Many German club executives believe more needs to be done to build a global following. 

Some of those involved in the talks have also raised the potential for building a direct-to-consumer streaming service, bypassing the traditional broadcast rights model. The German league is due to put its domestic rights out to tender in the new year, but the recent rights auctions for French and Italian football point to a softening market for broadcast deals.

The vote on Monday was the third attempt to persuade German clubs to sign up to a private equity tie-up. Two previous attempts — both larger in size but broadly the same in scope — failed to secure the required backing of clubs.

The most recent effort was knocked back in May, despite receiving support from more than half the clubs in the top two divisions. DFL had been looking to raise as much as €4.5bn at one point during that process. 

Unlike most leagues in European football, Germany has strict limits on who can own clubs, known as the 50+1 rule, which effectively guards the majority of teams from being acquired by professional investors. Those rules have helped keep most clubs financially stable, but have ringfenced German football from the influx of foreign capital that has poured into the English, Italian and French game in recent years. 

Advent, Blackstone, CVC and EQT declined to comment.

Private equity has historically been viewed with suspicion by many in Germany, although large buyouts have become increasingly common in recent years. 

Both the French and Spanish football leagues concluded large investment deals with buyout group CVC during the pandemic to bolster the battered balance sheets of their clubs. German football’s sounder footing negated the need for similar rescue funding, but some clubs are keen to bring in investment and expertise to help expand the game.