Could Bayern Munich be "erased" from German soccer?

Could Bayern Munich simply be “erased”? It very well might. A German lawyer has filed a suit before the district court of Munich requesting that the parent organization of Bayern Munich, “FC Bayern e. V.” be stricken from the official registry of associations - in other words, that Bayern Munich cease to exist legally as a recognized association, as a club.

You may be thinking, “wut?” Well, let me explain. The lawsuit revolves around German legalese and - surprise! - it’s complicated.

Two Bayerns: e. V. and AG

Legally, our beloved soccer team Bayern Munich exists as a corporation, Bayern München AG (“Aktiengesellschaft” = “Corporation”), of which Karl-Heinz Rummenigge is CEO. That's fine and dandy, but 75.01% of the shares for that company are held by Bayern München e. V. That’s where things get complicated.

Bayern München e. V. is the entity that controls all the other FC Bayerns: the basketball, handball, chess (seriously!), bowling, table tennis, and gymnastics teams. The professional soccer side of the club became its own corporation (“Bayern München AG”) in 2001 in collaboration with Adidas, Audi, and Allianz, and is legally independent of Bayern München e. V.

Bayern München e. V. is the target of the lawsuit, and it revolves around that abbreviation "e. V."

What the heck is “e. V.” and why does it matter?

What is "e. V."? It stands for "eingetragener Verein," which can be translated “registered association." In Germany, a "registered association" is an association or club that has satisfied the criteria to be registered by the government, receiving certain legal privileges in return.

Now, it so happens that the German Civil Code has several things to say about "registered associations." One of them, paragraph 21, stipulates that an "e. V." has to be dedicated to "idealistic” or “non-material goals" - in other words, its main purpose should be for the sake of something (like sport) other than profit. Some profit is permissible, but is has to be "on the side," a secondary "side business" ("Nebentätigkeit”).

The problem

Since Bayern München e. V. is the primary shareholder (75.1%, with over 270,000 members) of Bayern München AG, which realized about half a billion euros in 2015, the lawyer argues that the primary purpose of this association can no longer be described as “idealistic,” but rather is obviously profit-driven. Accordingly, so the argument goes, Bayern München e. V. is in violation of the German Civil Code and should be dissolved.

Now, it’s highly unlikely that FC Bayern München e. V., let alone the soccer team, will simply cease to exist. Bayern Munich’s legal identity is independent of the soccer-playing reality on the pitch. What is at stake, though, is the much-debated 50+1 rule regarding the ownership of Bundesliga clubs.

50+1 no more?

The DFL stipulates that no company may hold a majority of votes in a Bundesliga club. Since our primary shareholder Bayern München e. V. is an association with 270,000 members, Bayern Munich satisfies this rule, while Adidas, Allianz, and Audi each control 8.33% of Bayern München AG, which runs the soccer team.

If, however, the court rules that Bayern Munich is in violation of the German Civil Code for registered associations, that would affect not just Bayern, but virtually all Bundesliga clubs. It would essentially force the association of all those 270,000 members to curtail its influence on the professional soccer side - Bayern München AG.

That would significantly undermine the 50+1 rule in German soccer and potentially pave the way for the streamlined corporate control of Bundesliga clubs. At present, the DFB and DFL only allow “associations” ("Vereine") in the Bundesliga - not companies. Even Red Bull - ahem - “Rasenball” Leipzig pays lip service to the rules.

If the court rules that Bayern's association ("e. V.") cannot simultaneously remain an e. V. and hold a majority in the lucrative Bayern Munich corporation (“AG”), the 50+1 rule, which presumes that Bundesliga clubs are controlled by “associations” or “clubs” (“e. V.”), not companies (“AG”), will suddenly lack any basis in law.

For now, Bayern München e. V. insists that it is formally independent of the company that controls the lucrative soccer club. What the court thinks remains to be seen. But Bayern Munich, and the rest of the Bundesliga, will either require a formal legal exemption from the German Civil Code or may have to restructure its legal identity along corporate lines, ending the influence of by far the largest sports club in the world.