Friday, September 24

Spanish La Liga sells 10% of its capital to an investment fund

La Liga, the entity that organizes the Spanish first and second division football championship, has sealed an agreement with the CVC Capital Partners investment fund to sell 10% of its capital for 2.7 billion euros.

This ” agreement in principle ” was announced, Wednesday, August 4, by the entity, which, according to it, will “To strengthen the overall growth of La Liga and its clubs by continuing to transform it into a global digital entertainment company” and provide an opportunity for “Develop a new economic model” not limiting “To matches and television rights”.

Under the terms of the deal, La Liga will set up a new company to house its business activities, such as sponsorship deals and match income, in which CVC will take a 10% stake. The television rights business would remain outside the transaction.

Taking this sale into account, La Liga’s valuation has now reached 24.2 billion euros. The entity ensures that “90%” of this sum will go “To the clubs” Spaniards who, like many of their European competitors, are in a precarious financial situation because of the Covid-19 pandemic which has forced them to close their stadiums.

According to a report published in May by UEFA, the crisis is expected to cost the 55 European leagues € 8.7 billion for the last two seasons, including € 7.2 billion for the 711 most important clubs and 1, 5 billion for others. The crisis came to interrupt two golden decades, with an average growth of 8.2% per year since 1999, until reaching in 2019 a cumulative income of 23 billion euros for the 711 European teams – the English clubs in the lead.

Read the op-ed: “The Super League crisis has revealed the need for a European football regulator”

A happy windfall for Real and Barcelona

The deal has yet to be approved by the La Liga executive committee and all clubs involved. According to the sports daily Marca, the money will be distributed “Taking into account the income from television rights of the last six seasons”, which means that the two biggest Spanish clubs, Real Madrid and FC Barcelona would pocket 261 million and 270 million euros.

A happy windfall, notes Marca, because the first is in bad shape financially while the second is heavily in debt and engaged in a cleaning up of his accounts to seal the extension of his legendary captain, Lionel Messi. “The agreement could solve many of the problems created by the health crisis, notes the newspaper. As, in addition to the renovation of Messi, for the signing of [au hasard] Mbappé [au Real Madrid] or to contribute to the immediate financing of works in the stadiums, as for the new Santiago-Bernabeu [stade du Real Madrid].

CVC Capital Partners is one of the largest investment funds in the world, managing nearly 97 billion euros. This participation further strengthens his presence in the sport, he who is already a shareholder of the Pro 14 and the England Rugby Championship, the Six Nations Tournament and who was for a time owner of Formula 1.

The investment fund tried a similar deal with the Italian football league, but it is currently blocked by some clubs, such as Juventus and Napoli. In France, the Professional League (LFP) included in its statutes at the end of 2020 the possibility of creating a commercial subsidiary which would make it possible to generate new sources of income, but this has not yet seen the light of day.

The injection of money from an investment fund into European football comes months after another attempt to change the business model of the sector, the much maligned and possibly buried one of the Super League.

Le Monde with AFP and Reuters

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