As Europe’s top football clubs deserted the continent’s planned Super League this week, the exodus was a rare humiliation for the competition’s mastermind: Florentino Pérez, president of Real Madrid.
It was Pérez’s ambition to use the Super League to multiply revenues for the clubs involved, locking in cash flow for a decade and providing relief for those that were struggling with debts even before the pandemic struck.
But it was not a playbook confined to Real Madrid, Europe’s biggest clubs, or even football itself.
Instead, Pérez has been pursuing a similar strategy — and working with the same tightknit group of financial advisers — to try to transform his Spanish construction group ACS into the world’s biggest toll road operator.
Earlier this month he unveiled a plan that could provide ACS with a steady stream of income for years to come — through a €10bn bid to buy Italy’s largest motorway network from Atlantia.
His vision for the Super League and ACS is the culmination of a decade or more of planning and positioning from a businessman who managed to survive the 2007-2008 Spanish property crash that sunk many rivals.
For both deals, the 74-year-old turned to Key Capital, a little-known Madrid-based brokerage and advisory boutique, to help execute them. One of the firm’s partners, Anas Laghrari, was tapped as the prospective general secretary of the newly formed company intended to run the Super League, under Pérez as chair.
“There is a step-change going on in the way Florentino organises his investments,” said Jonathan Amouyal, a partner at London-based hedge fund TCI. “He probably wants more stability, more predictability and more visibility of his businesses . . . A lifetime in doing construction projects is very difficult.”
Spain’s power broker
But, as Pérez is discovering, the fierce backlash over his attempt to remake football is proving even more trying.
As the desertion of almost all of the 12 founding members lands a seeming fatal blow on the new league, the question is not just how Pérez and Real Madrid will react — but whether his ambitions for ACS will fare any better.
“I’m sure he [Pérez] will come back with something,” one person close to the Real Madrid chief said of the next chapter in his quest for a Super League. “You don’t work four years on something like this and just drop it.”
For decades, Pérez has been one of Spain’s biggest power brokers, because of his overlapping roles in business and sport. Long before his arrival, the box at Real Madrid was where the country’s executives and politicians struck their deals. The club is so close to the heart of the ruling elite that the former King Juan Carlos used to begin meetings with ministers by discussing its latest results.
But under Pérez, first elected as the club’s president in 2000, three years after forming ACS, Real Madrid became a commercial proposition as never before.
This was initially through its signing of “Galactico” star players such as David Beckham and Luis Figo, purchases largely financed by a half billion euro property deal in which the club’s old training ground was transformed into some of Madrid’s most prestigious office space.
“There they are,” Spain’s ABC newspaper once quoted Perez as saying of the four towers raised on the ground, on whose construction ACS helped, in a reference to his star signings. “The Figo tower, the Zidane tower, the Ronaldo tower and the Beckham tower.”
Although the Galactico project failed initially to produce a cohesive team, over Perez’s time at the club, Real has won the Champions League five times.
“He has never dissimulated. He has always linked his business image to that of Real Madrid,” said Lorenzo Bernaldo de Quirós, president of Freemarket, a Madrid-based consultancy.
ACS rejects the idea that Pérez has linked his personal fortunes to Real. “ACS is present throughout the world,” said someone close to the company, pointing out that the sprawling group has 180,000 employees. “But if Real was following ACS’s areas of businesses, it would have an Australian player, a Canadian player — this is nonsense.”
As Pérez found himself at the centre of the outcry over the Super League, he told Spanish television this week: “I don’t own Real Madrid. Its members do. What I am doing is for the sake of football.”
Dealing with debt
Another feature is shared by Real Madrid and ACS: debt. Real Madrid, whose revenues Pérez said this week have been €400m short of budget over the past two seasons, has an outstanding loan of €575m for the redevelopment of its Bernabéu stadium and a reported €200m in emergency government-backed coronavirus loans.
Like rival construction groups, ACS, which has a market capitalisation of €8.4bn, borrowed and bought significantly in the run-up to the financial crisis. At present it has €8.4bn in long-term financial liabilities and €2.9bn in short-term debt.
ACS characterises its most recent deals — including a €5bn agreement this month to sell industrial services businesses to Vinci of France — as part of a decade-long effort to strengthen its financial position and focus more on the toll road and renewable energy industries.
“They have a very good base business, but it is cyclical and they took on too much debt before the financial crisis,” said an ex-banker who worked with the group. “Florentino hasn’t had the balance sheet to match his ambitions, and perhaps he didn’t have the corporate governance to restrain them.”
Just as ACS hopes that a steady stream of toll road cash — the ultimate prize in his pursuit of Atlantia’s motorways — will provide the basis for its future business, so Pérez has expressed similar ambitions for Real Madrid.
“Television pays: we, the big clubs, have fans in Singapore and China, everywhere. You see it in social networks . . . This is what generates money,” he said this week. “I got into the world of football in 2000. It has to evolve, as life and businesses evolve . . . it has to change, to adapt . . . What we want to do is save football, so that at least for the next 20 years it can live peacefully, without losing €200m.”
The trusted advisers
By many accounts, Perez prepared the groundwork for the Super League for years, through work with JPMorgan, the financial backers of the competition, and other leading clubs. He argues that the economic damage wrought on football by the pandemic was the catalyst for the project, which Key has been central to.
“Key Capital is not someone I had ever heard about until a few years ago and then suddenly they are everywhere,” says one senior Madrid-based banker. “Florentino is a guy who takes a lot of importance in who he trusts.”
It was Key, founded in 2010, that helped design a previous ACS transaction with Atlantia, in which the two groups jointly purchased the Spanish toll road group Abertis in 2018 — without calling on ACS’s cash-strapped balance sheet. Instead, ACS handed Atlantia a stake in its German subsidiary Hochtief.
Key, alongside Société Générale, is now also helping Pérez in his bid to seize Atlantia’s toll road business, which the Italian establishment favours handing to a consortium led by the country’s state investment fund.
While the Atlantia deal would be transformative for ACS, it is Key’s role in the Super League that has put the firm in the spotlight.
In particular, two of Pérez’s closest advisers are shareholders and senior partners at Key.
One is Laghrari, a 37-year-old Moroccan-born French national who worked as an equity derivatives trader at SocGen until he left for Key in 2013. Pérez has known Laghrari since he was born, having worked with his father on construction projects in Morocco.
One person who has worked closely with both men said Laghrari has become like family, spending hours with Pérez every week: “Anas has Florentino’s entire trust. If Anas doesn’t like something or doesn’t trust something, Florentino will not do the deal.”
Pérez, who can lack confidence in his command of the English language, turns to Laghrari for everything from reading contracts to advice on structuring transactions.
The other trusted Pérez adviser is Borja Prado, a 65-year-old patrician who is the third-biggest shareholder in Key, with almost 15 per cent, after Laghrari, with 17 per cent, and the group’s founder Alex Matitia, with more than 43 per cent.
Prado, who has advised Pérez for decades during stints at Rothschild, Lazard and Mediobanca, also served as chair of Endesa, the Spanish electricity group acquired by Italy’s Enel in a 2009 deal in which ACS played a crucial role.
“You can go back in time and find Borja getting votes for Pérez to become chair of Real Madrid,” said one Spanish executive who knows the men well. “They are as close as it gets.”
The two have lived through past reverses — such as 2006, when Pérez quit as Real Madrid president following a poor set of results, or the financial crisis, after which ACS had to sell assets to shore up its position.
Pérez has bounced back after such setbacks, reshaping ACS, and, on his 2009 return to Real, making the club more of a juggernaut than ever.
But now, with the Super League seemingly in tatters and the fate of ACS’s bid for Atlantia yet to be decided, the Madrid boss faces two of his toughest tests yet.
With additional reporting by Murad Ahmed in London