Real Madrid and Barcelona jointly criticised Spanish football league La Liga’s agreement to sell 10 per cent of its business to private equity firm CVC Capital Partners for €2.7 billion ($3.21bn).
The deal, the first of its type by a major European league, values La Liga at €24.2bn and requires the approval of the league’s 20 football clubs, which include Barcelona and Real Madrid.
La Liga will retain the management of TV rights.
“This agreement was reached without the involvement or knowledge of Real Madrid and today, for the first time, La Liga has given us limited access to the terms of the agreement,” Real said in a statement.
“The clubs have signed over their audio-visual rights exclusively for their sale on a competitive basis for a period of three years. This agreement, by way of a misleading structure, expropriates 10.95 per cent of the clubs’ audio-visual rights for the next 50 years, in breach of the law.
“This opportunistic fund is the same which tried and failed to reach similar agreements with the Italian and German leagues,” the club said.
The agreement with CVC was seen as a welcome boost to clubs whose finances have taken a hit because of the Covid-19 pandemic, with games played in empty stadiums.
Barcelona, still reeling from the news that Argentine forward Lionel Messi will quit the club after 20 years, said the plan “has not been sufficiently discussed with the clubs [the owners of the TV rights]”.
“The deal affects part of all clubs’ audio-visual rights for the next 50 years,” they said in a statement. “FC Barcelona feels it is inappropriate to sign a half-century agreement given the uncertainties that always surround the football world.”
La Liga said in a statement on Wednesday that the objective of this agreement was 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”.
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 audio-visual rights, to a multi-product and multi-experiential model that has a direct relationship with fans will help the league to 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 a year in the last tender, for 2021 to 2023, from €1.38bn in the previous 2016 to 2019 cycle.
A May report by European football governing body Uefa predicted the continent’s top-flight clubs are expected to suffer losses of more than €8bn as a result of the pandemic, with lower gate receipts, smaller broadcast revenues and fewer sponsorship deals.
CVC has been a major investor in sports over the past 25 years. In March, the private equity company entered into a partnership with Six Nations Rugby that aims to further develop the Six Nations Championships and 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 in the world 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.