Bundesliga Ownership Big Money, Big Influence

Investors are pumping millions of euros into Germany’s top soccer league, the Bundesliga. But some fear clubs are sacrificing their independence for cash.
Catching balls for millions.

When Schalke 04 faced Hannover 96 on the pitch last weekend, it wasn’t just any soccer match. The game, which Schalke won 1-0, was between two teams whose managers have opposing ideas of how to excell in German league play and European tournaments - the one fan-financed and the other investor-owned.

Schalke club president Clemens Tönnies, who has made millions in the meat-processing industry, rejects outside investors. Shalke "is still a club” owned by fans, he said in an interview with the regional newspaper Westfalen-Blatt.

To pay for players, Mr. Tönnies has borrowed up to €50 million, or $57 million, via bonds for mid-sized businesses and accepts  sponsorship money from Russian energy giant Gazprom.

Hannover club president Martin Kind, who makes his money with an hearing aid manufacturer, has a different approach. He intends to acquire a majority of Hannover 96 with six other partners in 2018.

Mr. Kind has been at the forefront of the battle to change the so-called 50+1 rule in professional German soccer. Under the rule, fans maintain control of 50 percent of club shares, plus one.

There are a few exceptions, such as VfL Wolfsburg, which is owned by Volkswagen, and Bayer Leverkusen, owned by the chemical company in the same city. Another club soon to join those exceptions is 1899 Hoffenheim whose long-time sponsor is Dietmar Hopp, a billionaire software entrepreneur who helped launch SAP.

In December, Mr. Hopp won permission from the German soccer league, the DFL, to acquire a majority sake in Hoffenheim after the league agreed to amend its 50+1 rule. Under the revised rule, a club member or group of members who have contributed a significant amount of money to the club over a period of 20 years can acquire a majority of club shares.

Mr. Hopp, a club member since 1989, has invested more than €350 million in bringing the club into the Bundesliga. He plans to acquire a majority stake in July 2015.

Mr. Kind, a long-time member and sponsor of Hannover, is using the same arguement to take control of the club.

It appears as if a money dam has broken in German soccer, as sentiment swings to serious investors

“Investors can contribute to professionalization," he said. "They provide skills, responsibility and money.”

Experts are calling for even more changes to the ownership rule. “You could introduce a holding period of around 10 years for a stake over 10 percent,” said the Munich-based sports lawyer Martin Stopper. "I consider that reasonable."

It appears as if a money dam has broken in German soccer, as sentiment swings to serious investors. More and more Bundesliga clubs are beefing up their capital basis by bringing investors and strategic partners onboard.

“Around €250 million flowed into Bundesliga club coffers via investments in 2014,” said Niels Gronau, the founder of the sports consultancy Die Edelhelfer.

Many German club managers, looking for ways to pay for expensive players, point to England, where all 20 teams of the Premier League operate as independent incorporated companies.

Last year, both Hamburger SV and VfB Stuttgart set up join-stock companies. The destitute Hamburg club then sold a 7.5 percent stake to the logistics billionaire, Klaus-Michael Kühne, for €18.75 million in January and has already begun searching for additional investors. Stuttgart has decided to sell up to 25 percent of the club’s new joint-stock company to “two to three strategic partners with ties to the region,” VfB club manager Stefan Heim said.

Hertha BSC in Berlin sold a 9.7 percent stake to financial investor KKR for €18 million a year ago, and more deals are likely to follow.

Bayern Munich started the trend of tying strategic investors to a club. From 2002 to 2014, Germany’s record-winning club scooped up around €275 million by selling stakes to sportswear maker Adidas, carmaker Audi and financial services giant Allianz. The three companies have seats on Bayer’s board.

The Bavarian model of making important sponsors into investors has been copied by Germany’s only soccer team listed on the stock market: Borussia Dortmund. The club won the Essen-based chemicals company Evonik as its biggest shareholder and main sponsor. Evonik bought shares worth €61 million, while stadium sponsor and financial services group Signal Iduna and sporting goods maker Puma together invested €44.7 million. The three companies also have seats on the supervisory board.

Thomas Mersch and Stefan Merx are freelance correspondents for Handelsblatt. To contact them [email protected]