Germany to save football from Kirch insolvency

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The Independent Online

The German government is preparing to step in to bail out the country's football clubs after it looked increasingly likely that Kirch will file for insolvency today.

The move will be closely watched in the UK, where the Government has refused to consider any financial support for the clubs of the Football League, many of which are threatened with bankruptcy as a result of ITV Digital's inability to honour its £315m media rights deal with the league.

Like ITV Digital, Kirch bought the rights to televise Germany's Bundesliga, which includes the country's top sides, at the height of the sports content bubble in 2000, pledging to pay the clubs about £1bn over four years.

The German government yesterday said it was considering setting up a €200m (£122m) financial guarantee fund to stop German soccer clubs going bankrupt if Kirch, which has a €6bn (£4bn) debt mountain, collapses.

In the UK, not only has the Government not offered any help to football clubs but Tessa Jowell, the Secretary of State for Culture, Media and Sport, appears to have sided with ITV Digital over the dispute. Last week she told clubs they had got themselves into this mess by paying their players too much.

Carlton and Granada, ITV Digital's owners, put the pay-TV operation in administration, partly blaming the size of the football deal for the move.

John Nagle, a spokesman for the league, said: "There's mileage in this [German] sort of support. But the first stage of what we ask of our government is that they are willing to condemn Carlton and Granada. That's not much to ask."

The league met the administrators of ITV Digital on Wednesday and asked for talks with Carlton and Granada. Mr Nagle said only direct contact with ITV Digital's shareholders could resolve the situation but there has so far been no response.

Kirch made its last £61m payment to the Bundesliga as scheduled on 15 February. But it appears unlikely it will be able to make similar payments due in May and August. Germany's junior economics minister, Alfred Tacke, met football officials yesterday and Chancellor Gerhard Schröder, an avid fan of the sport, was also said to be at the talks. No detailed proposal has yet been worked out.

Wilfried Straub, chairman of the German Football League, said any help would take the form of the state providing collateral, not subsidies. "This is not about getting tax money, it's about credit guarantees – if the league needs them – which of course must be paid back."

Barring a last-minute rescue package, there is an expectation Kirch will file for insolvency in Munich today. Talks between Kirch's bank lenders and the company's strategic investors, led by Rupert Murdoch's News Corporation and Silvio Berlusconi's Mediaset, which sought to inject money into the group and keep it going, are believed to have broken down.