Kirch crisis sparks Bundesliga aid plan

KirchMedia, which holds the television rights for German football as well as to the 2002 and 2006 World Cups, is struggling to stay afloat, threatening the 235 million owed to the 36 clubs in the German first and second divisions.

German banks are already bracing themselves for the impact of its imminent collapse which would leave them facing as much as 6.5 billion (4 billion) in debts.

Kirch’s predicament bears an eerie similarity to the plight of ITV Digital, which collapsed into administration casting doubt over the remaining 180 million of a 315 million contract with the Football League.

In Germany, the federal and some state governments are preparing to guarantee the television income through loans.

German trade minister Alfred Tacke said the payments were to give the clubs time to negotiate a new television deal but clubs would have to pay back the money eventually. Tacke said: "The money should help clubs have enough time to re-negotiate their TV rights but they will have to repay that money."

German league boss Werner Hackmann dismissed claims taxpayers were bankrolling the clubs to fund highly-paid players. He said: "This is not about state subsidies or taxpayers’ money. We are talking about a guarantee. After all, the current situation is not football’s fault."

Banking officials say Kirch, with debts of 5.7 billion, may declare insolvency this week unless banks and potential investors agree on a rescue package.

Kirch paid just under 1billion for a four-year deal with the Bundesliga for TV rights.

The last 63 million payment was made to the Bundesliga on 15 February but similar payments due in May and August are now under threat. The firm’s pay-per-view venture failed to attract enough subscribers and has been a huge drain on Kirch’s resources.

If Kirch does go into insolvency, that will create problems for FIFA who sold the firm the World Cup rights, but a spokesman for football’s world governing body refused to comment, beyond saying: "For all the potential scenarios we have set up contingency plans."

The BBC and ITV have already agreed a deal with Kirch for this year’s tournament and 2006, and officials at the television channels believe this will not be affected if Kirch go bust.