777 Partners Deal Under DFL Scrutiny?

It was an incredible result for Hertha Berlin on the weekend. The relegation-threatened club from Germany’s capital beat VfB Stuttgart 2-1 thanks to goals by Marc Oliver Kempf (29’) and Florian Niederlechner (45’). That result means Hertha is still five points behind a non-relegation spot but within three points of Stuttgart, who occupy the relegation playoff spot.

In other words, hope has returned that Hertha could fight off relegation, at least on the field. But a report by Germany’s Süddeutsche Zeitung from the weekend suggests that there are significant problems off the pitch that could, in theory, lead to the club not receiving a Bundesliga license next season.

Sources speaking to the Süddeutsche Zeitung have suggested that Hertha is perhaps the most difficult case ever encountered by the Deutsche Fußball Liga (DFL) licensing commission. The club, so the report, has burned through the €374 million ($411 million) received by the previous investor Lars Windhorst, and, at the moment, lacks the funds to pay back a €40 million ($44 million) loan that will be due in the fall.

Hertha hopes to generate the necessary cash by selling several players that were paid for with the Windhorst millions. The problem is that many of the players in the squad currently lack a strong market. Players like Dodi Lukebakio, Marco Richter, Lucas Tousart, and Suat Serdar and currently out on loan Krzysztof Piatek would certainly not have a problem finding a new club, but with other clubs knowing about Hertha’s situation, they are unlikely to generate big transfer fees.

The potential €40 million hole in Hertha’s finances is just one of the problems, however. The report also highlighted that the DFL is also concerned about Hertha’s new investor, 777 Partners. 777 Partners bought Windhorst’s 64.7% stake in the club in March.

In order to comply with the 50+1 rule, the club, at least on paper, remains in control by holding 51% of the voting shares. The DFL, however, has now voiced some concern that 777 Partners, who are also the majority owners of Genoa in Italy, Standard Liège in Belgium, Red Star in France, Melbourne Victory in Australia, and Vasco de Gama in Brazil, has significant influence over decisions that could be in violation of the 50+1 rule.

Reports from Germany have suggested that unlike Tenor—the Windhorst company that held the Hertha shares—777 Partners can influence all club-relevant decisions. Tenor was only able to influence decisions that exceeded a volume of €20 million ($22 million).

“Over the past few months, we have had the opportunity to learn about the rich history and culture that makes Hertha BSC so special, and we are looking forward to learning even more,” 777 co-founder Josh Wander said in a club statement after the takeover was made official in March while also underlining their commitment to the 50+1 rule. “We have great respect for the manner in which football is structured in Germany and are looking forward to working together with all those involved in order to help Hertha fulfill their full potential.”

Discussions regarding the 50+1 rule in Germany have intensified in recent months as the league is looking to bring in an investor to sell part of its international rights. Furthermore, the German cartel office has recently come down with a ruling that supported 50+1 but also scrutinized the Bundesliga to allow exceptions to certain clubs.

With that in mind, the DFL might be forced to make a strong example of Hertha or, at the very least, look more closely into the relationship between 777 Partners and the capital club. It also needs to be pointed out that the club recently appointed club legend Pal Dardai as the new head coach, a decision that appears to be made without any opposition by the 777 Partners, who may have preferred a more glamorous choice.

Hertha did also acknowledge on Monday, that the club is indeed in communication with the DFL regarding the licence for the 2023/24 season. “We are in frequent contact with the DFL regarding the current licensing and the content of our partnership with our investor 777 Partners,” Hertha said in a club statement published by Transfermarkt.

“Both topics must be discussed and clarified while complying with all legal requirements—in particular the 50+1 rule,” the Hertha statement added. “We will not comment any further on these ongoing processes and speculation in the media.” The DFL, in the meantime, stated that it will not comment on ongoing licencing processes.

One thing is for certain as Hertha is fighting against relegation, the issues off the field could very much derail Dardai’s campaign, especially as they might ultimately decide the club’s future.

Manuel Veth is the host of the Bundesliga Gegenpressing Podcastand the Area Manager USA at Transfermarkt. He has also been published in the Guardian, Newsweek, Howler, Pro Soccer USA, and several other outlets. Follow him on Twitter: @ManuelVeth