German soccer’s Deutsche Fussball Liga (DFL) will discontinue talks with private equity firms over a potential stake in the media rights business of the men’s top-tier Bundesliga.

At a vote yesterday (May 24) at an extraordinary meeting of the DFL in Frankfurt, fewer than the required two-thirds of the 36 top-tier Bundesliga and second-tier 2.Bundesliga clubs voted for the discussions to continue.

There were 20 votes in favor of continuing talks, with 11 clubs voting against and five abstentions. A minimum of 24 votes in favor was required for the talks to continue. At the request of VfL Bochum, voting was conducted via secret ballot.

The DFL had received interest from five private equity firms, previously reported as CVC Capital Partners, Blackstone, KKR, EQT, and Advent.

The current DFL interim directors, Oliver Leki and Axel Hellmann (joint chief executives), both confirmed they would be leaving their posts on June 30 as part of the fallout.

Hellmann said, of the clubs’ decision: “Those who were against will have to answer one question: where will security and stability for the Bundesliga come from in the future?”

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Leki added: “The next two years, carrying on as we are, will be a difficult job.”

The DFL’s plan for private investment into a media rights sales subsidiary would have seen €2 billion ($2.15 billion) paid for a 12.5% stake in the vehicle, which would have been called DFL MediaCo. The entity would have managed and sold the league’s broadcast rights for a 20-year period – and taken 12.5% of the profits from those sales.

Of the €2 billion, 40% would have remained with the DFL in order to help it increase the league’s international and digital content efforts. This would have included the creation of a video content platform for a more youthful, international audience.

The other 60% would have gone to the clubs, with a sizeable proportion ring-fenced for infrastructure (meaning it could not have been spent on player transfers).

The distribution method, in terms of how much money went to each club, would have been the same as the Bundesliga’s existing format for distributing media rights income.

The proponents of a private equity investment agreement have argued that German soccer is being left behind by other major European soccer competitions in terms of overseas media rights values.

The Bundesliga currently receives in the region of €170 million from international broadcasters annually. By comparison, the Premier League is bringing in €6.3 billion between 2022 and 2025, or €1.6 billion annually.

Hans-Joachim Watzke, supervisory board chair at the DFL, said: “Sometimes, things are simple in life. Despite the clear majority, it is clear to us that the process is over. That is democracy.”

He has confirmed that a new DFL board will be put in place in July.

Watzke, Leki, and Hellmann had spent the last several months attempting to secure enough votes for the motion to move forward.

The teams to have voted against the proposed investment include the top tier's Cologne, Stuttgart, Schalke, and second-tier St Pauli.

In a statement, Cologne said: “By entering into a partnership with a private equity investor over a period of 20 years, Bundesliga clubs would lose some of their freedom to make decisions.”

The German site Sportschau reported earlier this week that, in terms of a private equity firm's influence over DFL affairs, they would be afforded a form of veto over important matters “related to the investor."

Oke Göttlich, St. Pauli’s president, said ahead of the vote that his club would only consider such private investment “if it were absolutely clear what is to happen with the money, that it wouldn’t just be unfairly distributed as it is now and wouldn’t just further destroy the competition.”

Even a late amendment to the proposal from the DFL board, which would have given clubs until June 23 to submit questions and proposed amendments to any investment plan, could not sway the dissenting voices.

The idea has also generally been an unpopular one with match-going German soccer fans, with supporter groups from several clubs having organized demonstrations and marches against the proposed investment in recent months.

In a survey of over 56,000 supporters conducted by the Kicker publication in early May, 67.5% of respondents said they were opposed to private investment in the DFL.

The Bundesliga has been evaluating and internally debating the merits of private equity investment in its media rights business for the last couple of seasons.

Initial proposals from four firms – CVC, Bridgepoint, Intermediate Capital Group, and KKR – were rejected in May 2021 after a prospectus detailing plans to create a subsidiary that would market international revision and digital rights had been issued to 30 firms.

Discussions about reviving that process began again in July last year when the German outlet Handelsblatt reported that an auction process was being planned.

The issue contributed to the resignation in early December of DFL chief executive Donata Hopfen, who had been in situ since August 2021.

If CVC had been selected as the Bundesliga’s media rights investor of choice, it would have held stakes in three of the dominant European soccer leagues. It already has deals in place with LaLiga and Spain and Ligue 1 in France.

Elsewhere in the confluence between European soccer and private equity, Italy’s top-tier Serie A has reportedly chosen financial advisor Lazard as a representative in assessing approaches from investment firms and banks regarding its media rights business.

Reuters has cited two sources with knowledge of the issue as saying that Lazard has been selected as the advisor of choice, with 15 clubs understood to have voted in favor of that option while five voted against it.

The latter number is reported by the Italian publication Calcio Finanza to include Serie A champions Napoli, as well as Fiorentina.

Calcio Finanza has indicated that the institutions to have shown interest in striking financing deals with Serie A are Searchlight, Apollo, Barclays, Goldman Sachs, Jefferies, JP Morgan, and Oaktree.

It is anticipated that full consideration of offers around this matter will only begin once the domestic media rights deal covering 2024-25 onwards has been concluded.

Lazard has already served as an advisor to the league on this issue once, in mid-2020, before Serie A abandoned the concept at that time.