David Blitzer Is Making Headlines As A Soccer Investor

From Augsburg to Salt Lake City. Investor David S. Blitzer has dominated the football headlines this week. On Monday, FC Augsburg, where Blitzer is a major shareholder, signed American forward Ricardo Pepi in a deal worth $18 million.

It is a new record signing for the German club, surpassing the previous record deal by several million dollars and all that in the middle of the COVID-19 pandemic in which German clubs are forced to play behind closed doors. Blitzer became a major shareholder of Augsburg last year when he bought 45% of the Klaus Hofmann GmbH, which, in turn, owns 99.4% of the FC Augsburg KGaA, which runs the day-to-day football operations of the Bundesliga club. 

Critiques have called the takeover a circumnavigation of Germany’s 50+1 rule. The rule requires the parent club to own at least 50% plus one additional voting share of the football company, ensuring that the club’s members still hold a majority of voting rights.

In praxis, even though the Klaus Holtmann GmbH holds 99.5% of the KGaA, the membership club, or eingetragener Verein (e.V), which sits at the core of the club, still have 50+1 of the voting shares. Augsburg is not the only club with that sort of arrangement. Hertha Berlin through investor Lars Windhorst and 3. Liga club TSV 1860 Munich with Jordanian investor Hasan Ismaik has also used this sort of mechanism to bring on foreign investors while keeping the 50+1 rule intact.

It is a model that will become more common, especially with COVID-19 having a significant impact on the Bundesliga. On Wednesday, Borussia Mönchengladbach announced that they would also open the door for investors. 

The Blitzer model could indeed soon become the standard. American investors have for some time pushed into German football. Creative mechanisms around 50+1 means that the rule in itself is no longer prohibitive for the Blitzers of this world to enter German football. 

Empty stadiums in Germany also have meant that the entry of investors will be unlikely to be met with stiff resistance. One could only imagine what the reaction in Augsburg would have been when the second piece of Blitzer-related news dropped this week. 

On Jan. 5, Major League Soccer announced that Blitzer was part of an investment group that had taken control of Real Salt Lake. The club has been without an owner for more than a year after Dell Loy Hansen was pushed out following a series of scandals. 

The league announced that David Blitzer and Ryan Smith’s Smith Entertainment Group (SEG) had bought the club. “The combination of David Blitzer and Ryan Smith’s SEG form a dream partnership for Real Salt Lake,” said MLS Commissioner Don Garber in a league statement. “David and Ryan’s teams have become synonymous with how athletics and community intersect, as they have demonstrated leading world-class organizations outside of professional soccer. 

Blitzer is now a significant shareholder at Real Salt Lake, Augsburg, Crystal Palace, and Spanish clubAD Alcorcón. The American also owns shares of the NHL franchise New Jersey Devils and the NBA club Philadelphia 76ers. 

It is an impressive portfolio of sports clubs and franchises stretching across two continents. It is also a significant piece in understanding the Ricardo Pepi to Augsburg deal. The Bundesliga side has been adamant that the investment in the 18-year-old striker was made thanks to some astute wheeling and dealing over the last few transfer windows. 

Yet it is hard to believe the deal happens without Blitzer and his influence over Augsburg and his knowledge of the American market, which Augsburg has seen as a crucial part of the club’s growth. Blitzer and Pepi could certainly put Augsburg on the map in America, but first, the club needs to avoid relegation from the Bundesliga. But with many clubs in Germany unable to invest, being able to pump fresh money into the squad will be a major advantage ahead of the Rückrunde. 

Manuel Veth is the host of the Bundesliga Gegenpressing Podcast and 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