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15.03.2023Bayer 04

Legal certainty for the 50+1 rule: The DFL executive committee presents proposal to Federal Cartel Office

With the target of further increasing the legal certainty of the 50+1 rule and overcoming tentative concerns of the Federal Cartel Office about the overall rule (50+1 basic rule in regard of the financial support exemption rule), the executive committee of the German Football League (DFL) has agreed a proposal regarding financial support. This proposal has now been presented to the Federal Cartel Office. Here are the details plus a statement from Fernando Carro, chairman of the board at Bayer 04.
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This includes no future financial support exemptions to the 50+1 rule. Clubs that have already been granted a financial support exemption in the past based on the applicable rules of the DFB or DFL, will be subject to a conditional provision of the status quo. These conditions are aimed at making the financial support exemptions more consistent with the 50+1 basic rule. The next step will be for the Federal Cartel Office to assess the proposal in consultation with the parties involved.

The review goes back to an initiative of the DFL executive committee on 18 July 2018. The committee applied to the Federal Cartel Office for a decision in accordance with § 32c GWB (German Act Against Restraints of Competition) To test possible cartel concerns relating to the 50+1 rule and its execution and interpretation. The starting point was a survey carried out at the DFL general meeting on 22 March 2018: At the time, the clubs approved on a majority basis the proposal for a "process of improvement of the legal certainty plus other considerations regarding changed framework conditions in accordance with maintaining the 50+1 rule."

The Federal Cartel Office presented their initial assessment on 31 May 2021 in a meeting with representatives of the DFL and then in written form to the DFL and the parties involved in the process up to that point. That included: "While the basic rule would probably be accepted as cartel neutral in its own right based on the previously applied sporting-political aims this outcome is no longer feasible relating to financial support exemptions."

This preliminarily assessment was followed by an intensive, at times controversial, but constructive exchange between representatives of the DFL executive committee and the DFL, the so-called financial support clubs and the Federal Cartel Office. From the perspective of the DFL executive committee, the target was and is to protect the 50+1 basic rule, based on the current rules of the DFL e.V. to develop solutions conforming to cartel law and thereby achieving the target of "improvement of legal certainty."

If the proposal submitted by the DFL executive committee is declared binding by the Federal Cartel Office in accordance with the assessment and consultation process as per § 32b GWB and then the appropriate amendment to the rules of the DFL e.V. is approved by a two thirds majority by the DFL general committee, that would overcome the potential concerns of the Federal Cartel Office and thereby achieve the target of the original application by the DFL executive committee to the Federal Cartel Office.

The key points of the proposal of the DFL executive committee in terms of increased legal certainty of the 50+1 rule:

  • The possibility of financial support exemptions from the 50+1 rule will be removed from the rules of the DFL e.V.
  • Clubs, who were awarded a financial exemption in the past (Bayer 04 Leverkusen, TSG Hoffenheim, VfL Wolfsburg) will in future receive a licence to participate in the Bundesliga or Bundesliga 2 in accordance with maintaining the status quo. This protection maintaining the status quo is only guaranteed under certain circumstances. These include the following changes:
    • The supporting club is obliged to ensure participation and transparency to members of its former parent club. The concrete proposal says that the parent club must have the right to delegate at least one representative to the supervisory committee of the committee of the capital company that has control and consent authority. This representative must have the full rights of a member of the committee or a shareholder – this includes in particular the right to speak, the right to information as well as the right to vote.
    • Given the significance of identity-establishing characteristics of a club decisions can be made in relation to the name, the logo and colours of a club, the headquarters and a significant reduction of the number of standing places in the stadium only with the approval of the supervisory body or the shareholder general meeting. Here the representative of the former parent club has a right of veto – changes cannot be made without their vote.
  • In respect of existing profit and loss transfer agreements, balancing payments will be made providing loss relief has been provided by the controlling financial supporter and loss relief exceeds a threshold of 7.5% of the total proceeds. For a sum exceeding that threshold value conversation is to be paid (in the sum of the prevailing 12 month Euribor interest rate +1 percentage point).
  • With regard to a silent partnership of a controlling financial supporter/majority shareholder a balancing payment will be made, providing during the period under consideration (three years in accordance with UEFA rules) the majority shareholder and/or an associated company balances a loss from the capital company or as a silent partner incurs losses after granting of the exception from the 50+1 rule provisions and that this balance of loss exceeds a threshold of 12.5% of the total proceeds. A sum exceeding the threshold value requires a balancing payment (in the sum of the relevant 12 month Euribor interest rate +1 percentage point).

Carro: "important to achieve viable solution"

 

Fernando Carro, chairman of the board at Bayer 04: "Given the majority view in German professional football it was important after months of intensive discussions to achieve a viable solution for all sides. For that reason alone, we have approved the compromise, which is painful for us in parts."

TSG Hoffenheim and Dietmar Hopp announced on 1 March 2023 that Dietmar Hopp will in future no longer make use of the exemption from the 50+1 rule granted on 1 July 2015 and that he would like to return the majority of his voting interests to the club without compensation so that TSG will be able to return to the circle of '50+1 rule clubs'. As long as this restoration is not completed, TSG Hoffenheim is still subject to the aforementioned obligations.

 

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