It seems that today will be decided whether Kaiserslautern has a future or not. There currently is a big meeting with the city, the state and the involved bank houses. Last Thursday a solution got in sight, but a final breakthrough was not reached. How the solution shall look like: a new company takes over the stadium. The city will be main investor, a group of five bank houses joins them by changing demands against the club (36 M) into active capital money in the company. Problem: the bank houses did not agree yet. All share the opinion that the club should be rescued, but the taxation offices demanding 12.9 M repayment is not worked into the rescuing concept and this makes the situation very insecure. After the deal 1.FC Kaiserslautern has to pay rent between 2 and 4 M annually for playing in the stadium depending on the league they belong to. Selling the stadium is the only possibility to rescue the club, otherwise an insolvency procedure has to follow. I just watched a report in the latest news saying that it is still critical with two bank houses. One is close to agreeing in the concept, another one remains very critical. A final decision is expected in the next two to three hours.
Thanks for the update. Let's assume Lautern is "saved," in some arrangement worked out with its creditors. What are the chances the DFB will still relegate Lautern because of their financial issues (they still may get relegated because of their performances on the field, but I think they'll do enough to stay up if the club has a future)? Even if they are not relegated, they are losing $4 million a year in rent, with no new revenue streams looming on the horizon, which would suggest that significant roster changes need to take place. Hence, I think Kaiserslautern will become a perennial relegation candidate (at least short term), and this could signal the end of Kaiserslautern as a major player in German soccer.
Do the problems that the German banks are having themselves have any implications for this deal? (ie their balance sheets are weak, so they are less able to justify a debt/equity swap).
I haven't heard anything about the outcome yet. The bank houses want that state and city give more guarantees to lower their risk. Problem is that state and city already spent much more than reasonable and also acceptable for the public household. Regarding the future chances I don't know. Probably better in Bundesliga than anywhere lower. For survival they will need to avoid relegation. For them it would be great to make the UEFA Cup via the DFB Cup (chances aren't too bad with a home game against Bremen - if Bayern defeats Bayer at home, then Kaiserslautern would be automatically in). The main problem I see is that they keep the debts and the situation did not really improve. All they do is selling the stadium to get the necessary money and increase the expenses. If they did not learn from the past, they can't be helped. They'll need a cheaper team for sure and should stop chasing a dream - they neither have the necessary money for playing international on a regular base, nor the team for it (but the team is paid like they would be good enough for that). Today the houses of the former responsibles were searched by the prosecutors. And some fresh news: http://www.swr.de/nachrichten/rp/index.html#meldung1 They have hope and positive signals, but one bank house is still refusing to accept. The negotiations might last until deep in the night.
Further current news: The rumours that only one bank house is not accepting, was not confessed yet. From one participant it could be heard that they are not one inch further than last week. The sum they are talking about are 13 to 22 M.
FINANCING CONCEPT SECURED [...] After a six hours meeting the club announced that the financing concept is secured to a large extend. That way also the danger of insolvency seems to be avoided. In the third and last crisis meeting an agreement between club, city, state and bank houses could be reached after intense negotiations. The solution is to found a company under city ownership with participation of three bank houses with the aim to take over the stadium. They agreed to keep the purchasing sum for the stadium silent. For the case of relegation there are problems to be expected, which makes "major energy by the club necessary to compensate the expenses connected with it" as a press release said. "Today we did a big step ahead. The company is an essential step to eliminate the debts of the club", said Rene Jäggi. The Club President excluded a survival in 2.Bundesliga though - "We would have too much debts, alone 13 million Euro would miss on the income side." All decisions still have to be accepted and need intense legal checks, which will be started next Thursday. Everything has to be done until March 15, when the licensing for the next season has to be sent to DFL.
A few things: 1. Jaggi's quote seems terribly transparent: DFB, don't relegate us on financial grounds, or that will be the end of us. Let it be decided on the field. 2. I don't know how the German bankruptcy/insolvency process works, but in the US, banks are loathe to push companies into bankrutpcy because they realize that if the company stays out of bankruptcy, they have a much better chance of collecting some or all of the debt, whereas if the company goes into bankruptcy, the banks are looking at the prospect of collecting pennies on the dollar. 3. Where does the cash for the stadium go? Debt service, to Lautern with restrictions, or to Lautern without restrictions. It's curious they didn't announce a price for the stadium (I would think that the government as part-owner would be obligated to do so).
According to Minister President Beck Kaiserslautern won't have problems to get the licence for Bundesliga. What I'm wondering about was his second sentence: "in case of relegating we have to discuss anew about this topic". For me this sounds like a guarantee they only gave for staying in Bundesliga, but as far as I know DFL is only allowed to consider 100% guarantees without any conditions in the licensing. And besides that: 2.Bundesliga licensing is at the same time, there can't be talks after relegation as then the licensing is over. It's a matter of evaluation. The best thing is to get the full amount, of course. The question is just how to get the maximum out of a bad company. If they think that they can still make some money and not go further down, then they will try to rescue the company. Otherwise they will push for getting at least a bit in the insolvency process before the value of the company is going further down and they will get even less if the insolvency is just delayed to a later date. Factually Kaiserslautern repays debts. I think that the bank houses delete some debt contracts for getting parts of the stadium ownership. You are right, indeed the government (city and state) will have to announce the sum and basically they have to agree before doing this deal - oddly I have never heard anything about it. Latest I heard from the state were a 5 M guarantee, which for the x-th was announced to be the last help. If Kaiserslautern goes down despite of the deal, then there will be some heads rolling, at least in the bank houses, but maybe also on political level. After all it is a very risky deal as the only way they can keep the money is if FCK stays in Bundesliga. If they don't, then they'll have a stadium, which is without any function and won't be able to be kept until the WC 2006. Indeed the 12.9 M still owed to the taxation offices, were not considered at all - maybe the state also has the hand in this game, but this would be a scandal if this is detected. And even in case of not relegating Kaiserslautern will keep the problem of an overpaid roster in comparison to the sportive class.
The concept was permitted by city and state meanwhile. City had no problems to get it through, state made it with the votes of the odd governing parties of the Social Democrats + the Liberals against the votes of the Conservatives + the ecological party. The loss would be about 30 M if the concept fails, and you can expect major political consequences in this case. But admittedly after reaching the UEFA Cup, the perspectives in case of avoiding relegation are not too bad.
Is there a story on this somewhere? And, are you telling us that the CSU and the Greens voted as a bloc against the FPD and the SPD? While that might be more of a topic in bigpolitics.com, it's a story nonetheless
Couldn't the WC committee just switch venues since the club have been having financial difficulties? I don't know if it's feasible for the creditors to assume ownership of a ground since several are already being built elsewhere.