BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh

 You are in:  Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Commonwealth Games 2002

BBC Sport

BBC Weather

Monday, 8 April, 2002, 11:22 GMT 12:22 UK
Kirch sidestep saves World Cup
Bayern Munich v Werder Bremen
Germany's Bundesliga relies on payments from Kirch
Financial manoeuvring has ensured the broadcast of the next two football World Cups will not be affected by Kirch's insolvency.

The German media giant - which owns the television rights to the World Cup in 2002 and 2006 - admitted it could not pay its debts before a German court on Monday.

But the World Cup rights had already been stripped out and placed into a separate entity before the insolvency was declared.

Sepp Blatter, head of the world football governing body Fifa, and Kirch's chief executive agreed to place the rights - valued at 1.9bn euros (1.2bn) - into Swiss-based KirchSport.

While KirchSport is still a fully-owned subsidiary, its location in Switzerland protects it from the administration process.

Blatter confirmed in a Fifa statement: "In anticipation of the insolvency of the German group KirchMedia...all necessary precautions have been taken in advance in order to ensure the protection of the Fifa World Cup rights and the broadcasting operations related to this event.

"We have been closely monitoring the recent developments regarding the Kirch Group and implementing the appropriate measures in order to ensure the smooth organisation of the television operations of the 2002 Fifa World Cup.

"Our television partner will be able to produce a high quality signal feed for all viewers around the world."

Bidding process

Under Kirch's contract, the World Cup rights revert to Fifa in the case of insolvency.

But it would have been difficult to re-auction the rights to rival broadcasters with less than two months to go until kick-off.

The rights for the 2006 World Cup may still be renegotiated amongst Kirch's competitors.

While the viewing of the World Cup seems safe, German football clubs are facing a period of uncertainty.

Bundesliga fears

Kirch owns the television rights to Bundesliga matches until 2004.

And TV rights payments from Kirch make up more than half the income for some German football clubs.

But the German government is taking a softer line than the UK government took after the collapse of ITV Digital.

The German government has said it will consider bailing out clubs in peril, while the UK government told debt-laden football clubs to sort out their own financial mess.

And Kirch may be in a position to pay some of the money it owes the clubs in any case.

But the implications of Kirch's insolvency will take some time to unfold, and the clubs are likely to end the season in considerable financial uncertainty.

BBC Sport's Harry Peart
"The saga is embarrassing for Fifa"
See also:

08 Apr 02 | Business
Kirch declares itself insolvent
08 Apr 02 | Business
Kirch 'to escape break-up'
05 Apr 02 | Business
Banks prepare for Kirch collapse
05 Apr 02 | Business
Fears of German football crisis ease
03 Apr 02 | Business
Q&A: Kirch's insolvency
05 Apr 02 | Business
Media giant falls back to earth
28 Mar 02 | Business
Kirch holds breath as talks break up
27 Mar 02 | Business
Berlusconi firm 'abandons' Kirch
26 Mar 02 | Business
Kirch empire nears break-up
20 Mar 02 | Europe
German media giant sheds jobs
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories