The Ligue de Football Professionnel (LFP), the governing body of French soccer, has dipped into its reserve funds to compensate for a shortfall in payments from international sports streaming service DAZN. This move comes after DAZN withheld half of its scheduled rights fees payment, causing financial strain on the league and its member clubs.
DAZN, which secured the rights to broadcast Ligue 1 matches following a contentious bidding process in mid-2024, was expected to distribute €70 million ($73 million) this month. However, it only paid out €35 million ($36.5 million), freezing the remaining amount in escrow.
This unexpected shortfall sent shockwaves through the LFP as it scrambled to ensure continued financial support for its member clubs. To address this crisis, the board of directors approved withdrawing €35 million from their reserve fund.
Unanimous decision amid legal proceedings
On February 13th last week, an urgent meeting was convened with presidents of all 18 top-flight clubs under LFP's umbrella. Despite ongoing legal proceedings at Paris Economic Activities Court against DAZN's actions, they unanimously agreed not to wait for a court decision and expedite fund release from reserves. This decision was facilitated by their partnership with CVC Capital Partners investment firm that holds stakes in the LFP Media subsidiary.
French media outlets have reported that DAZN decided to withhold half of its media rights payments due to dissatisfaction with perceived lackluster efforts by LFP against piracy issues. Additionally, there were complaints about limited assistance from certain clubs in providing editorial content for streaming services.
Currently, both BeIN Sports and DAZN broadcast domestic games under agreements worth approximately $550 million annually - most of which is paid by DAZN.
Brice Daumin, managing director of DAZN France, said:
“In mid-December, we approached the LFP with an action plan aimed at better protecting our exclusivity, combating piracy, and gaining improved support from clubs to enhance the appeal of the Ligue 1 offering for our subscribers.
“However, we never received a response from them. Therefore, on February 5, we remitted half of the amount due, €35 million, while placing the remaining €35 million in escrow pending a reply from the LFP, hoping to trigger a necessary response.”
DAZN's response and future implications
In response to LFP's lawsuit, DAZN cited challenging operational conditions, including piracy issues and insufficient cooperation from certain clubs in promoting the Ligue 1 product as reasons for not paying the full rights fee. Brice Daumin, managing director of DAZN France, reflected on the disastrous media rights saga of summer 2024 that put eight Ligue 2 clubs at risk of bankruptcy.
As the court decision is expected by week-end when reserve funds are also due to reach member clubs, this ongoing financial controversy could potentially lead to future financial woes among LFP member clubs. The situation underscores the importance of reliable partnerships and effective anti-piracy measures in maintaining a stable sporting ecosystem.
