Spain's top football league La Liga to sell 10% stake to CVC Capital Partners

The $3.2bn deal requires the approval of clubs and values the league at about $29bn

Spain's top football league La Liga has agreed to sell a 10 per cent stake for €2.7 billion ($3.21bn) to private equity firm CVC Capital Partners.

The deal values La Liga at around €24.25bn ($28.8bn) and requires the approval of the league’s 20-member football clubs that include Barcelona and Real Madrid, which could benefit from the liquidity boost.

If approved, the investment will be a boon to the league after the Covid-19 pandemic shut down stadiums and clubs incurred billions of dollars in lost revenue.

"The objective of this agreement is to lead the transformation that the entertainment world is experiencing and to maximise all the growth opportunities that the clubs have to develop a new business model that allows them to diversify and intensify income generation and marketing models," La Liga said in a statement on Wednesday.

It said accelerating its digital transformation and moving from the current mono-product model, which is based almost exclusively on the game and the sale of audiovisual rights, to a multi-product and multi-experiential model that has a direct relationship with fans will help the league become a global company with the best entertainment content.

About 90 per cent of the funds raised will be directed to clubs, which must use them to finance investment programmes agreed upon with La Liga.

Spain's La Liga is the second-most lucrative football league in the world after the English Premier League, according to Fitch Ratings. Total domestic and international TV rights increased to €2.03bn ($2.4bn) a year in the last tender for 2021 to 2023, from €1.38bn in the previous 2016 to 2019 cycle.

"The high level of contracted broadcast revenue is reflective of strong fan and corporate support, including during stress years. The league has a moderate-to-high percentage of shared revenue across competing teams," said the rating agency.

The second-tier league Segunda receives 10 per cent of the revenue distribution, with the remaining 90 per cent going to La Liga, according to Fitch estimates.

Half of the 90 per cent is distributed equally between the league's teams, with 25 per cent allocated according to results from the previous five seasons, and the last 25 per cent based on figures that include the number of TV subscribers and viewers per match.

La Liga has no definite wage cap and its player-salary structure does not promote equal opportunity between the clubs when it comes to talent acquisition, according to Fitch.

"The same two to three teams, which earn and therefore spend significantly more on players than the remaining 17 to 18 teams, tend to compete for the prized top four positions that qualify for the group stage of the lucrative Uefa Champions League," said Fitch.

Argentine forward Lionel Messi, who was the highest-paid player last year with $126 million in earnings, according to Forbes, was a free agent as of July 1 after he failed to reach an agreement on the renewal of his Barcelona contract, which expired on June 30.

Messi, 34, subsequently signed a five-year contract extension with the club last month but took a 50 per cent pay cut.

CVC has been a major investor in sports over the past 25 years. In March, the private equity firm entered into a partnership with Six Nations Rugby that aims to further develop the Six Nations Championships & Autumn International series.

As part of the deal, through one of its funds, CVC is investing £365m ($508m) in Six Nations Rugby.

The London-based private equity firm also has a 28 per cent share in the Guinness PRO14 rugby union competition.

In February, CVC entered into a partnership with the International Volleyball Federation to launch Volleyball World, with the goal of boosting investment in volleyball globally.

Volleyball is the fourth-most popular sport globally and was the most-watched sport at the 2016 Rio Olympic Games, with 2.6 billion viewer hours around the world, according to a CVC statement

In 2006, CVC acquired a controlling stake in Formula One and built up its position in the group before Liberty Media bought the franchise for $8bn in 2017.

Updated: August 4th 2021, 9:04 AM
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