By David Owen
February 5 – Yet more US investment is flowing into European football, with the announcement that Kohlberg Kravis Roberts (KKR) has forged a strategic partnership with Hertha BSC of the German Bundesliga.
Under the deal, which is said to allow for a “comprehensive de-leveraging” of the Berlin-based club, long-term investments of €61.2 million have been agreed, while KKR acquires a 9.7% stake. As a result, the cost and earnings situation of the club, which plays its home games in Berlin’s Olympic Stadium and currently lies eighth in the Bundesliga, is said to be “sustainably” improved. The same goes for its balance-sheet structure.
Founded in 1976, KKR made its name as a leveraged buyout specialist, succeeding notably in the acquisition of RJR Nabisco at the end of the 1980s, in what was then the largest corporate buyout in history. Today, KKR is an investment firm with more than $90 billion in assets under management. It has invested over $4.4 billion in 15 private equity transactions in Germany since 1999.
The KKR/Hertha deal was approved unanimously by the club’s supervisory board and presidium. German club ownership rules generally ensure that control remains with members.
Michael Preetz, Hertha’s managing director, said the partnership with KKR represented a “quantum leap for the economic situation of our club”, which would now have more room for manoeuvre. Hertha would “remain fully committed to our strategy of focusing on our superior youth development and of integrating young, talented players”.
Johannes Huth, head of KKR Europe, said the firm was looking forward to “the opportunity of supporting Hertha BSC as a long-term partner” and believed in the “significant potential of strengthening the club’s position both at home and abroad”.
Hertha’s “large and loyal fan base, its unique development programme for young talents and the fact that it is the German capital’s leading football club” made it an “attractive partner” for KKR, Huth added.
The partnership was said to have been initiated with the support of the European investment firm IM 1872, which focuses on investments in the field of sports. Marc Mayor, managing partner of IM 1872, said: “Everyone knows that Berlin is ‘the place to be’ in Europe; we believe that Hertha is the ‘club to be’ in the football world.”
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