World Cup up for grabs if Kirch keels

THE German government is preparing a £123m rescue package for the country's football clubs as media giant Kirch threatens to fall into bankruptcy.

'ITV Digital is nothing compared to what's happening in Germany,' says Paul Richards, media analyst at Numis Securities. 'Kirch is the equivalent of BSkyB, Granada and Carlton together and holds a huge amount of media rights as well.'

Owned privately by tycoon Leo Kirch, the group racked up £4bn debts during the boom. It expanded its loss-making satellite TV division and paid huge sums for the TV rights to sports events, including £1.3bn for Formula One motor racing and £240m a year for football's Bundesliga.

It was last night preparing to file for insolvency as hopes faded of a last-ditch rescue.

The crisis could see Rupert Murdoch emerge with the worldwide rights to the 2006 football World Cup - a Kirch asset.

Murdoch is a minority investor in Kirch, alongside the family of Italian prime minister Silvio Berlusconi.

German football clubs were expecting £123m from Kirch before next season.

The German government, which is holding emergency talks with the league, says it is 'prepared in principle' to offer loan guarantees so that the clubs can borrow to meet the shortfall.

Direct cash grants would cause an outcry, given the huge salaries paid to many footballers.

Kirch's collapse is the latest of several high-profile German bankruptcies, including aeroplane-maker Fairchild Dornier, building group Holzman and office-supply group Herlitz. The English Football League is seeking a meeting with ITV Digital's owners, Carlton and Granada, as the bitter row over payment for TV rights continues. Carlton and Granada have been keeping their distance since placing ITVD into administration.