A deal between the German Football League and a strategic partner is expected to bring in up to one billion euros. Before the general meeting on Monday, the two new DFL managing directors, Dr. Steffen Merkel and Dr. Marc Lenz: The red lines are non-negotiable.
Mr. Lenz, Mr. Merkel, what is your vision for the Bundesliga and the 2nd league, what are your objectives?
Mark Lenz: Both are top leagues in Europe – and our goal is to work with the clubs to ensure that we remain attractive in terms of sport and economically competitive, with financially stable clubs and with deep social roots. Two overarching aspects are relevant to this: healthy economic development and better regulation of international undesirable developments with a view to management costs, deficits, debt and ownership contributions and structures.
On Monday, DFL members will vote on whether they can enter into negotiations with a strategic partner. I assume you’re expecting a yes?
Steffen Merkel: We have had a lot of discussions with all clubs and see a positive mood as the basis for discussion and voting. Everyone was able to express their views and ask any questions. We approached this process with a high degree of transparency, and I have the impression that this was able to dispel one or two reservations.
What does a DFL investor bring to the Bundesliga?
We look at the pressing questions surrounding the vote on DFL investor entry. There are two failures at BVB – and we have a message from the USA.
12/08/23 – 3:56 p.m. 16:04 minutes
A larger deal failed in the summer, and despite all the transparency, there are already clubs that have communicated their no. Why should the necessary two-thirds majority come together?
Lenz: All clubs share the view that further development is necessary and we have to invest in it. This raises the question of financing these investments. We have identified options and revised the key points of the licensing model, taken criticism into account and highlighted why we see advantages in a strategic partnership. A partner would bring in capital and added value, and the model fully secures the league’s sovereign rights, for example in the sporting area, draws clear red lines and would only give a partner limited say in the economic area. This is unusual for private equity companies. If a potential partner doesn’t accept the red lines, he or she isn’t the right one for us.
To what extent have these lines been sharpened compared to the summer – or was there simply more transparency in communication?
Merkel: In many ways it was about transparency in communication. An important point was the question of whether a partner has a say or a veto. There were still one or two question marks, which is why we fully disclosed the list of key points – including all rights – in two club meetings at the beginning of November. This involves questions such as: Does the partner have rights regarding kick-off times, the competition mode or moving games abroad? Of course not! Anyone who is interested can read a lot about this on our website. We have nothing to hide.
How do you explain the skepticism, especially from organized fans?
Merkel: We have had discussions with representatives of various fan organizations and of course take the feedback very seriously. We take many points of criticism into account, for example through the red lines. At the same time, as DFL managing directors, we have to keep an eye on the overall system and make the league competitive. Our job is to offer options – not for its own sake, but in the spirit of 36 clubs who expect and can expect exactly that from us: that we examine options for further development and that we show which paths we can take together.
Do you see the danger that the investor will unpack the much-quoted thumbscrews if the business plan fails to provide the right to renegotiate?
Lenz: No. In the event of a negative deviation from our business development goals, a partner may request that appropriate remedial measures be implemented. However, participation is limited to the economic area and is never linked to access to the sporting area. In addition, the clubs retain clear majorities in all relevant committees and thus also the decision-making authority.
Merkel: Many of these remedies would also be more technical in nature. If we notice in year five that goals are clearly being missed, a partner cannot suddenly decide that we have to play competitive games abroad, for example, and thereby cross the much-cited red lines. It’s about, for example, intensifying marketing measures and the like.
Lenz: The red lines must and will remain in place over a period of 20 years: the league and clubs will always keep the reins of the deal in their hands. The right to renegotiate applies to extraordinary and unexpected developments that would completely change the fundamental conditions of the partnership, for example a ban on central marketing. In such cases it would be legitimate to discuss changes together.
Everything is broken down almost down to the last euro.
Dr. Steffen Merkel, DFL managing director
What exactly should happen with the 600 million euros invested in the business model?
Lenz: Public perception has recently focused primarily on a possible streaming platform, but this is only one of around 20 planned measures. Investments are planned in a balanced manner: one third for strengthening the national media product, one third for digital development and one third for international measures.
Merkel: For example, we are looking at how media transmission for our media partners can be further improved through new formats and offerings. A big point is also additional investments in rights protection and thus, especially in Germany, against digital piracy and illegal live streams. And: We have to expand international sales. This is achieved, on the one hand, through more local presence than is currently the case through the offices in New York, Beijing and Singapore, and, on the other hand, through special formats. The ideal media product for the US market looks different than that for Japan because fans there want to see their respective national players. We also need a central and further developed solution for the virtual blending of LED boards so that the clubs can better display target market-specific advertising. Everything is available to the clubs in detail, broken down almost down to the last euro.
Provocatively asked: If you look at the Premier League as a comparison, has the league been sleeping in terms of international sales over the last ten years?
Merkel: The Premier League has some structural advantages, just think of the language, so I wouldn’t say we’ve been sleeping. Thanks to their strong national pay-TV market, the English were already able to make significantly more money and invest internationally 15 years ago, while we in this country still had our backs to the wall after the church crisis. This can be applied to the current process: After the COVID crisis, markets are transforming, so we need to invest now to be prepared for the future.
We stand for a future of football with the 50+1 rule.
Dr. Marc Lenz, DFL managing director
Lenz: This also applies to the clubs. Due to their ownership structure with investors and their networks, the Premier League clubs have completely different approaches, for example in terms of internationalization. And please don’t misunderstand this: We as the DFL management also clearly support a future for German football with the 50+1 rule. A strategic partnership at league level is intended to enable the necessary, long-term investments and bring additional added value for central marketing – without selling shares, but only through a partner’s participation in the license revenue of a maximum of eight percent. The intentions of 50+1 are also maintained at league level.
Critics such as Cologne’s Vice President Eckhard Sauren say that the 600 million euros could also be raised through internal financing and that these options have not been examined enough. What do you say to these?
Lenz: 36 clubs means: 36 different strategies, committees and financial requirements. The fact is: We, including the DFL committees, the former AG Future Scenarios with several club representatives and the banks supporting the process, have looked at various models and recently discussed several options and the respective consequences again in the club discussions. If a club prefers a different solution in the individual overall context, for example internal financing, then that is to be accepted – but the accusation of allegedly insufficient involvement is not.
Merkel: Internal financing would mean significantly higher taxes from the clubs to the DFL. That would reduce the financial resources of all clubs, restrict individual design options and ultimately possibly reduce competitiveness. We explained this in the club meetings. And from our discussions we don’t have the impression that such a model would currently have a majority.
In addition to further economic development, you referred to the topic of international regulation. Where are you in this regard?
Lenz: The regulatory framework is definitely a central issue for maintaining stability and our competitiveness. It is also important to secure the European sports model, with the national leagues as the backbone. We are in good discussions and have already submitted concrete proposals for additional international regulation and, in particular, an absolute cost cap. International undesirable developments must be addressed together with UEFA as a strong European umbrella organization – in the interest of all of European football and, in particular, for a positive future for financially sensible leagues and clubs. For the Bundesliga and 2nd Bundesliga, this topic is of crucial importance alongside healthy economic development.
This interview first appeared on December 7th in the print edition of kicker – also available in eMagazine.
2023-12-11 08:23:23
#DFL #managing #director #hide
