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US private equity group 777 Partners has paid Lars Windhorst less than €15mn up front to buy his majority stake in Hertha Berlin football club, a heavy loss on the financier’s original €374mn investment.
Windhorst confirmed previously undisclosed details of the recent sale during a London court hearing last week when a barrister representing one of his creditors cross-examined him about his financial arrangements.
During the hearing, Windhorst said he had sold Hertha Berlin for a €65mn purchase price, offset against a €50mn loan that 777 had previously provided.
The deal also included a “performance-related” payment of up to €35mn potentially due in future. It was agreed in March between one of Windhorst’s Dutch investment companies and a Belgian company belonging to 777.
Windhorst told the hearing that 777 had not yet paid all of the €15mn and that he did not remember how much had been received so far. He disagreed with the barrister that this meant 777 had defaulted on the deal.
“There was no default as far as I’m concerned,” he told the court, adding that he had agreed to defer some of the payment and could receive a “triple-digit” million amount from the sale in future.
The claimant’s barrister asked Windhorst how this would be possible if the deal allowed for an extra €35mn at most and even this payment was conditional on Hertha Berlin — which was recently relegated — coming first in Germany’s top-level Bundesliga.
Windhorst replied that he was “not on top” of the details of the deal, noting that he was “personally doing lots of transactions”.
777 declined to comment.
Windhorst first took a stake in Hertha Berlin in 2019, at a time when he was still receiving large amounts of funding from France’s H2O Asset Management. He promised big spending to turn the struggling team into a “big city club”.
But its fortunes failed to improve on the pitch even after Windhorst’s spending spree and his tenure as owner was overshadowed by a Financial Times revelation last September that he had hired an Israeli intelligence firm to orchestrate a campaign to oust the club’s president, Werner Gegenbauer.
Many fans were outraged and German news outlet Der Spiegel called the clandestine campaign against Gegenbauer a “scandal that is unparalleled in the history of the Bundesliga”.
Windhorst initially dismissed the story as “nonsense” but a probe commissioned by Hertha Berlin found that invoices related to the campaign were paid from one of his bank accounts.
In November, he struck the deal to sell Hertha Berlin to 777, which is pursuing a strategy of buying lower league football clubs, including Red Star FC in Paris, the Rio club Vasco da Gama and Italy’s FC Genoa.
Earlier this week, the financier was hit with a €150mn freezing order by London’s High Court in relation to a separate creditor claim.