Spain’s top football league agrees to €2.7bn private equity investment

CVC Capital Partners Ltd updates

Spain’s top football league has agreed a €2.7bn deal with CVC Capital Partners, marking private equity’s latest attempt to invest in a major European league.

The deal, which has not been agreed by clubs, values La Liga at just over €24.2bn. CVC would take a minority stake in a newly created entity that would manage broadcast, sponsorship and digital rights for La Liga, which runs Spain’s top two football divisions, but would not take over its regulatory powers for the sport.

Under the project, named “La Liga Impulso”, just under €2.5bn of the investment would go directly to clubs over a three-year period, according to two people with knowledge of the deal.

Real Madrid and FC Barcelona, Spain’s most successful clubs, would stand to receive about €260m each, according to one of the people. Barcelona declined to comment. Real Madrid did not immediately respond to inquiries.

Clubs could be asked to vote on the deal as soon as next week, the two people said.

It comes at a time when other top European leagues have ended talks with private equity firms after a backlash about handing over control to an outside group.

Last year, CVC won the backing of some clubs in Italy’s top Serie A league for a similar deal but those talks stalled after opposition from elite teams. In May, Germany’s top football clubs voted to retreat from talks with private equity firms over the sale of a stake in the Bundesliga.

CVC’s La Liga investment would aim to help clubs recover from the financial hit suffered during the pandemic, although a person close to the league insisted the financing was not a rescue package. It would also aim to attract a larger international audience, improve technology and inject some funds into grassroots football in Spain.

CVC declined to comment on the deal.

Barcelona and Real Madrid are expected to play an important role in determining whether the deal is agreed. They have clashed with La Liga over their support for the European Super League, a breakaway competition that would have guaranteed each founding member a “welcome bonus” of €200m-€300m.

Although most of the ESL’s backers withdrew their support within days of its launch after a backlash from fans, the two Spanish clubs are still battling for its future despite strong opposition from Uefa, European football’s governing body, and La Liga.

Investors have targeted sports deals during the pandemic, as leagues and clubs struggle to recover from the loss of revenue from matches that were cancelled or played in empty stadiums.

While some private equity firms own stakes in clubs, such as Silver Lake’s investment in Manchester City’s owner, City Football Group, many are drawn to what they see as a lower-risk bet on the leagues themselves.

CVC, a former owner of Formula One and MotoGP, has snapped up stakes in rugby contests such as the Six Nations, English Premiership and Pro14 and has bought into the International Volleyball Federation. It is planning a $600m tennis deal, and has previously held talks to buy a stake in the San Antonio Spurs, the US basketball team.

La Liga’s top 20 clubs posted total revenues of €3.1bn in the 2019/20 season, which was disrupted by the pandemic, an 8 per cent drop on the previous year, according to Deloitte. Their rivals in the English Premier League posted revenues of €5.1bn.

Real Madrid has eschewed major signings so far this summer, while Barcelona has been forced to cut wages and other costs to comply with La Liga financial regulations that would otherwise prevent the club from registering players in the summer transfer window.

Private equity firm Ares Management has acquired just over a third of Atlético Madrid, last season’s La Liga champions, and backed a €181m capital raise by the club.

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