The private equity companies CVC and Blackstone are the two remaining candidates as investors in the DFL. Both companies receive money from Saudi Arabia, are already involved in German football and count on lobbyists.
Two bidders are still in the running. If the German Football League (DFL)’s search for investors clears the final hurdles, including a possibly still explosive vote on a change to the statutes, a private equity company will participate in the DFL’s proceeds from next season.
In return, one of these companies will pay the DFL around one billion euros. The offers from the two bidders CVC Capital Partners and Blackstone are said to only differ marginally in terms of the investment amount.
The decision as to who will receive the DFL’s contract should therefore primarily be about who has the more coherent concept of increasing media revenues in the coming years so significantly that the revenue sharing does not become a loss-making business for each of the 36 clubs DFL in Bundesliga and 2nd League.
Private equity: investment and advice for the DFL
Translated into German, private equity companies are investment companies. They finance companies whose shares are not traded on markets such as the stock exchange. Most of the time, and this is also the model at the DFL, they also advise the company they join.
Private equity firms, in turn, raise money that they then manage and invest. Both CVC and Blackstone are among the large companies in the industry.
CVC and Blackstone each receive money from the Saudi Arabian sovereign wealth fund
CVC, which is based in Luxembourg but has its roots in the USA, says it currently manages 188 billion euros. At Blackstone, headquartered in New York, it is more than 200 billion euros. The Blackstone Group, which also includes a real estate division, manages almost a trillion euros.
It is not possible to understand in detail where the two investment giants got their money from. Financiers include private individuals as well as institutional investors. At CVC as well as at Blackstone, these include the Saudi Arabian sovereign wealth fund PIF, which is already heavily involved in the sports business either directly or through investments.
Possible conflicts of interest
This can lead to conflicts of interest. CVC has also invested in the highest football leagues in Spain and France. The Spanish La Liga is ahead of the German Bundesliga in terms of sales, but unlike the English Premier League it is still within reach.
Theoretically, it would be possible to use insider knowledge – for example when bidding for the acquisition of media rights – to play the leagues off against each other in order to achieve the greatest possible return.
Blackstone hired at FC Augsburg
Unlike their investors, investment companies are happy to disclose their investments. CVC is listed as holding 60 percent of betting provider Tipico, which is an important sponsor of both the DFL and industry leader FC Bayern.
In this way, cross-connections can be identified and conflicts of interest are conceivable. They also exist at Blackstone, whose manager David Blitzer holds shares in the Bundesliga club FC Augsburg through a subsidiary.
CVC vs Blackstone: Race is getting tighter
According to information from Sportschau, CVC is still the favorite to win the DFL’s contract as an investor. However, Blackstone is said to have presented itself well to the Presidium and Supervisory Board of the German Football League on Wednesday (January 17, 2024) and made up ground.
The private equity company EQT, based in Sweden, was eliminated that day and, in contrast to its two opponents, has hardly any know-how in the sports business.
Zealous lobbying
As is usual with transactions of such volumes, lobbying is being carried out vigorously. According to information from Sportschau, Robert Schäfer acted as an advisor for EQT. The current managing director of a sports management company previously held a managerial position at Fortuna Düsseldorf and Hannover 96.
Carsten Schmidt, former boss of the pay-TV channel “Sky” and then CEO of Hertha BSC for almost a year, is said to be working as a consultant for CVC.
Johannes Ruppert is said to be lobbying for Blackstone. He was a close confidant of former managing director Christian Seifert at the DFL before moving to David Blitzer’s investor group, which has invested in football clubs other than FC Augsburg, such as ADO Den Haag. Johannes Ruppert sits on the supervisory board of the Dutch second division club.
It is said in DFL circles that Ruppert will also sit on the supervisory board of the newly founded DFL subsidiary. However, this assumes that Blackstone receives the contract from the DFL. A decision should be made in the first quarter of 2024.