German football sweats on Kirch

Click to follow

The possible collapse of Leo Kirch's heavily-indebted media empire has caused panic in the Bundesliga. The German equivalent of the Premier League fears it faces financial disaster, along with many leading soccer clubs.

Kirch is to pay €1.5bn (£1.05bn) to the two top divisions by 2004 for broadcasting rights. This, typically, accounts for between one-third and a half of the revenues of most German clubs, who were paid between €8m and €25m each last season.

Peter Bander, managing director at Wolfsburg, the Bundesliga club, said: "How are we going to replace that? Bayern Munich could survive. Most others could not."

Michael Pfad, managing director of the German league, said: "Television is our most important source of income."

The future of Formula 1 is also in doubt because of Kirch's possible demise. Deutsche Bank is believed to have proposed the sale of its Formula 1 rights to Daimler-Chrysler or BMW.

But Jurgen Hubbert, chairman of DaimlerChrysler's car business, has denied an interest. He said the main Formula 1 backers – BMW, Fiat, Renault and Ford – wanted to launch their own series from 2008, to be called Grand Prix World Championship.

Mr Hubbert said: "We have had suggestions from the Kirch Group about how we could work together. They were unsatisfactory." He may change his mind. Deutsche Bank has a significant stake in DaimlerChrysler, and its chairman, Hilmar Kopper, also heads the car maker's supervisory board.

If Formula 1 is not sold at a full price, this would call into question the orderly disposal of Kirch's assets sought by German bankers and politicians. Werner Schmidt, chairman of BayernLB, Kirch's largest creditor, said: "There are one or two pearls within Kirch's empire that could attract national or international buyers."

Deutsche Bank is involved in all aspects of the Kirch debacle and was until recently working on a possible deal between Kirch and Rupert Murdoch. Last weekend, Deuts- che's chief executive, Rolf Breuer, undermined Kirch's chances of survival in its present form. He said: "Banks are not prepared under the current circumstances to give further funds to Kirch."