Home Private Equity Bowing to Fan Revolt, German Soccer Rejects $1 Billion Investment

Bowing to Fan Revolt, German Soccer Rejects $1 Billion Investment


Germany’s soccer fans had thrown everything they could at the problem, often in a quite literal sense: At various points over the last few weeks, they protested the specter of a private equity giant’s taking a stake in the country’s domestic league by raining tennis balls, chocolate coins and even marbles onto fields across the country.

The demonstrations forced games to be delayed, embarrassed the authorities and may have helped to persuade one of the world’s largest financial firms not to pursue a deal. But it was thanks to an escalation in technology that ultimate victory was secured: Once the remote-controlled cars were deployed, belching smoke and disrupting yet another game, the league caved.

The end came in an emergency board meeting, where the league’s constituent clubs voted to abandon talks with CVC Capital Partners, a private equity firm registered in Luxembourg, over a deal that would have provided teams with a $1 billion cash injection in exchange for a portion of the league’s broadcasting revenues over the next two decades.

“Given current developments, a successful continuation of the process no longer appears possible,” Hans-Joachim Watzke, the chairman of the league’s supervisory board, said Wednesday.

The vote was a comprehensive — if increasingly rare — victory for the interests of fans at a time when sports has shown itself unable to resist the overtures of deep-pocketed investors. That supporters of a few dozen German soccer clubs appeared to have won the argument through a mix of fury and wit somehow made their triumph seem even more remarkable.

CVC Partners has in recent years struck deals similar to the German proposal with a number of teams and competitions. The firm already has stakes in La Liga, the elite soccer league in Spain, and Ligue 1, its equivalent in France, as well as the WTA Tour and the prestigious Six Nations rugby competition.

The D.F.L., the body that oversees the top two divisions of German soccer, had originally voted to follow suit in December, narrowly endorsing a motion that would allow the league to investigate a “strategic partnership” with either CVC or Blackstone, one of the world’s largest private equity funds. Blackstone withdrew from the process earlier this month, leaving CVC as the only contender.

The turning point for the proposed German investment, most agreed, came on Sunday, when two remote-controlled cars were let loose during a second-division game between Hansa Rostock and Hamburg. Each had a smoke bomb attached to its back that billowed blue and white fumes into the air. The match was stopped for several minutes while stewards attempted to chase the cars down.

By then the protests and the subsequent furor were calling into question “match-day operations, games themselves and the integrity of the competition,” Mr. Watzke said.

The prospect of even indirect private investment into a league where clubs must, by law, be majority-controlled by fans proved a toxic prospect.

Protests broke out almost immediately after news of the league’s intention to seek a deal became public in December, and as fans made it clear that they did not want to follow the path laid down by England’s Premier League, where clubs are bought and sold by oil tycoons, venture capitalists and nation states.

Some games started to a backdrop of eerie silence as fans withheld their cheers. Others saw banners outlining the fans’ position, often in explicit terms, unfurled in the stands. A variety of objects were thrown onto fields to halt play.

Thomas Kessen, a spokesman for Unsere Kurve, an umbrella group that advocates on behalf of fans, described the protests as “comprehensive, creative and peaceful.”

Eventually, the protests proved so frequent and so fervent that the D.F.L. had little choice but to backtrack.

“For all active soccer fans and all members of the clubs, this is a great success that shows that German soccer is member-based and democratic,” Mr. Kessen said. “These very members must be involved in such landmark decisions.”

Melissa Eddy contributed reporting.

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