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DAZN, the sports streaming group backed by billionaire Len Blavatnik, has threatened legal action against the German Football League after losing out in the auction for the rights to show the country’s best matches.
The German Football League (DFL) has been forced to suspend the auction process for the Bundesliga’s domestic television rights after DAZN claimed that it had unlawfully awarded the deal for the largest bundle of games to rival Sky.
In a letter to the co-head of the football league sent on Thursday, DAZN said it would file a statement of claim in an arbitration tribunal to challenge the decision next week unless a solution could be reached.
The letter, which has been seen by the Financial Times, said that it was “determined to take legal action — if necessary before state courts — in order to achieve a correction of the unlawful behaviour of DFL”.
The legal process will start with arbitration, according to one person familiar with the situation, but could continue in German civil courts. DAZN has until Tuesday to legally challenge the outcome of the auction.
The DFL declined to comment on DAZN’s letter, and pointed to its previous statements on the matter, in which it stated that the process had been conducted “in accordance with the auction rules known to all interested companies”.
“The DFL has not made any errors in the procedure regarding the current auction process. DAZN’s allegations are inaccurate and are rejected by the DFL,” the German league said.
DAZN believes that it had bid a higher amount than Sky in the auction this month for the rights to show a package of 196 matches each season, including many of those on Saturday afternoons and Friday nights.
DAZN declined to comment on the contents of the letter but told the FT: “The course of action the DFL leadership is pursuing is not in the best interests of the Bundesliga, the clubs and their fans. DAZN believes that how this decision was reached needs to be held to account with the outcome changed or the process rerun. We will determinedly, using all legal avenues, see that it is.”
Under the auction rules, a bidder can be awarded the package if its offer met the league’s minimum requirement and is at least 20 per cent higher than the next highest bid.
The DAZN letter says that “according to our understanding, DAZN’s bid for rights package B was 20 per cent higher than Sky’s second-highest bid and above the reservation price defined by the DFL”.
DAZN also claims that the DFL failed to give the company time to provide a requested bank guarantee. It said that “apparently, no bank guarantee was offered by Sky . . . this is further evidence that the decision of the management was unlawfully pre-determined to DAZN’s significant financial and reputational detriment”.
DAZN said that it had then obtained the bank guarantee “within a few working days”.
Any legal action could take several years to conclude, according to a person close to the process. This could threaten coverage of the league’s games after next season as they cannot be shown without a rights deal in place.
In the letter, DAZN said that it was also considering withdrawing from the entire rights process, which would potentially remove any competitive tension to drive prices higher.
DAZN currently shares the rights to show the Bundesliga with Sky, albeit with a smaller number of games.
The DFL’s struggles, with just two bidders for the best matches, reflect a broader malaise in the rights for European football this year, with an auction to show French football also facing problems and a drop in the real amount paid per game for auctions in the UK and Italy.
Concerns about broadcaster appetite prompted the DFL to court private equity investors, with a view to setting up its own streaming platform. However, that process was abandoned after widespread fan protests.
Sky declined to comment.
