German sports club FCK walking a tightrope

Article posted by Coliseum, April 27^th, 2020

Image: FC Kaiserslautern

The German sports club – 1. FC Kaiserslautern (FCK) in southwest Germany – has been caught in the COVID-19 vortex. Media reports stated that the Palatinate “want to discontinue the lease payments for the Fritz Walter Stadium until further notice”.

This already applies to the current installment in April. In a letter to the municipal stadium company, the club bases its approach on the seasonal break forced by the coronavirus crisis. In the current season, the FCK pays a basic lease of 425,000 euros per year. Overall, it is a low six-figure amount.

The Palatinate, historically also Rhenish Palatinate, is a region in southwestern Germany.

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Fritz-Walter-Stadion is home to the 3. Liga club 1. FC Kaiserslautern and is located in the city of Kaiserslautern, Rhineland-Palatinate, Germany. It was one of the stadia used in the 2006 FIFA World Cup™.

A spokesman for the city of Kaiserslautern confirmed that the FCK currently has no option other than to suspend payments from the lease and operator agreement to the municipal stadium company.

The city now wants to weight the options on how to tackle with the situation. So far, there has been no comment from the third division club, which is in a pickle – economically – and recently there have been considerations regarding a planned insolvency.

The Palatinate currently has a liquidity deficit of around eleven million euros in order to secure the game operations for the next season. Professionals and all employees have been on short-time work since March 17, and game play is suspended until April 30 at least. However, due to the coronavirus crisis, the Deutscher Fußball-Bund (DFB) has now relaxed the approval process for the 3rd division in order to provide relief. Among other things, there will be no refusals to register in the coming season due to unproven economic performance.

The German Football Association (DFB) is the governing body of football in Germany. A founding member of both Fédération Internationale de Football Association (FIFA) and Union of European Football Associations (UEFA), the DFB has jurisdiction for the German football league system and is in charge of the men’s and women’s national teams.

Just a few weeks back, the city had granted the FCK a further reduction in leases from EUR 3.2 million a year to EUR 625,000 plus various bonus payments for the next two years. The difference of around 2.5 million euros burdens the taxpayer. But, the club not only needs to stay afloat due to the COVID-19 menace, but, since the new management took office in December, the company has been aware of the “explosive economic situation”, said FCK Managing Director Soeren Voigt. His predecessors had commissioned a bankruptcy law memorandum that, on November 25, 2019, the club certified that it was neither overindebted nor insolvent. It contains a “key point paper” with measures to maintain medium-term liquidity until June 30, 2021. Voigt, however, described plans to the city council as not serious.

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