The TV rights auction has been interrupted. The severity of DAZN’s allegations does not mean that a quick agreement can be expected. Legal and financial problems loom.
In terms of sport, the Bundesliga is celebrating European Cup successes again, but financially it is slipping ever deeper into crisis.
Just a few weeks after the controversial investor process ended, the German Football League also had to stop what was by far its most important project. The billion-dollar TV rights auction was interrupted after the first day due to a dispute with the online broadcaster DAZN.
When and how things will continue after this unprecedented dispute with one of the most important donors is currently completely unclear. In addition to the damage to the image that has already been caused, there is a risk of lengthy legal disputes.
After the DFL and DAZN made serious accusations against each other in letters to the 36 professional clubs, the contending parties held back publicly on Thursday. “The DFL has not made any formal errors in the current auction process,” the league said in a statement. “DAZN’s allegations are inaccurate and are rejected by the DFL. The DFL will not currently comment on further details of the proceedings in consideration of the confidentiality rules agreed and binding by all parties – including DAZN.” The DFL did not want to comment on further action or the possible restart of the auction.
Dispute over bank guarantee
The unusual dispute between DFL and DAZN occurred after the first round of the auction on Monday. According to its own information, DAZN submitted the highest offer in the bidding for package B, but should provide a bank guarantee in the short term. As it writes in a letter to the DFL management and the 36 clubs, the company has “issued a tough letter of comfort” as it did in the last tender.
A bank guarantee is issued by a bank to cover a customer’s debts. A letter of comfort is a promise from a third party to cover the liabilities of a person or organization.
It continues: “Despite this previously accepted position, on Monday, April 15, 2024, in the middle of the tender process, you demanded a very specific bank guarantee from DAZN within 24 hours – an impossible task.” “Bild” and “Frankfurter Rundschau” initially quoted from the letter.
B is the largest package with the games on Saturday at 3:30 p.m. and on Friday evening as well as the relegation games. This pack contains a total of 196 live games. DAZN did not win the bidding, despite what the company considered to be a “financially superior offer”. Sky reportedly won the contract, but declined to comment.
Violation of antitrust law?
The awarding of package B violates German and European antitrust law, DAZN wrote to the clubs. The streaming company therefore contacted the Federal Cartel Office, which approved and monitored the tender.
The authority said: “Those involved have contacted us about the matter. We are currently not commenting on the ongoing process.” It is not possible to predict when and in what form the Cartel Office will provide clarification.
At the moment it is difficult to imagine that the two parties to the dispute will find each other again. The relationship of trust is shaken. The rejection of the DFL management, which informed the clubs in relation to the DAZN letter, was also too clear: “The insinuations and accusations made here are incorrect, baseless and we reject them very clearly.” The letter from DAZN Group Limited also contains “a large number of incorrect representations and shortenings of facts,” wrote the DFL managing directors.
Time pressure for the league
The Bundesliga is now under enormous time pressure because the contracts that are still valid expire at the end of the coming season. The league currently earns an average of around 1.1 billion euros per season. More than a quarter of this comes from DAZN, which will also be able to broadcast the Friday and Sunday games live in the coming season.
For their planning and, above all, for the long-term commitment of new players, the clubs need to know as soon as possible how much money there is for the 2025/26 to 2028/29 seasons. It seems unlikely at the moment that the auction will continue in the next few days.
If DAZN completely withdraws from bidding after the trouble, the DFL will even be faced with the dilemma of lacking a financially strong competitor for the other pay-TV packages. It would be just as problematic for the league if the company took the dispute to court and a long-term legal battle followed.
Media expert sees many problems
Media scientist Michael Schaffrath is already seeing a variety of problems after the TV rights auction has been stopped and said that the DFL is producing “strangely irritating headlines again.”
The professor from the Technical University of Munich added: “And the fact that this is now being discussed in public is certainly not evidence of professional communication management and undoubtedly damages the image.”
The head of the media and communications department continued: “Protracted legal disputes would be fatal and counterproductive for the entire tender process, because both the broadcasters and the DFL need planning security quickly.”