CVC’s $2.2 Billion LaLiga Investment Gets Green Light From 37 Clubs

LaLiga’s general assembly has ratified the joint venture Boost LaLiga, with 37 of Spain’s top 42 clubs from the first and second divisions voting to accept the $2.253 billion (€1.994 billion) investment from CVC Capital Partners on Friday.

The proposal needed 32 clubs to approve the project. In August, 38 teams voted in favor of the deal, which drew criticism from leaders of the league’s top clubs, particularly FC Barcelona’s Joan Laporta and Real Madrid FC’s Florentino Perez, two key supporters of the failed Super League project in July. In Friday’s vote, one team abstained, and UD Ibiza joined Barcelona, Real Madrid and Athletic Bilbao in voting against Boost LaLiga.

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The opposition bloc recently proposed an alternative deal backed by Key Capital Partners, based in Madrid. Their counteroffer to the CVC deal was a $1.994 billion loan with a 3% interest rate over 25 years. People close to that deal told Sportico that the funds are secured and coming from a pool of investors, such as J.P. Morgan, Bank of America and HSBC, though the banks have not confirmed such.

“There appears to be less regulation behind the J.P. Morgan proposal, with no specific guidance on how this money should be spent,” said Patrick Kinch, a sport analyst with Global Data. “Interesting also are the interest rate repayments, which range from 2.5 to 3%. That’s probably not a problem for Real Madrid, because they currently have €800 million in loan repayments over the next 25 to 30 years for stadium redevelopment, so I’d imagine that the additional J.P. Morgan loan wouldn’t be as eye-watering a figure to repay as for La Liga’s smaller clubs, who might struggle to pay that back with those interest rates over the coming years.”

On Thursday, three clubs requested that the Higher Sports Council, Spain’s top soccer authority, block the voting. The council responded that it had no power to stop a vote or prohibit CVC’s entry into LaLiga’s business.

LaLiga’s legal status as an association does not allow firms to buy shares. So instead of taking a direct stake in the league, CVC would share between 10.5% and 11.4% of broadcast revenues for the next 50 years through the joint venture. In return, CVC will inject $2.2 billion into the league. Clubs that do not want to participate can be carved out of the deal. According to LaLiga’s statement, 70% of the funds will be used for investments linked to “infrastructure, international development, brand and product development, communication strategy, innovation and technology and a content development plan for digital platforms and social media.”

In terms of infrastructure, innovation and marketing, there is a stark difference between Real Madrid and Barcelona and the rest of the LaLiga teams, according to Global Data. For instance, Real Madrid and Barcelona have “roughly 240 million followers across Twitter, Facebook and Instagram each,” Kinch said. “The next biggest in LaLiga is Atletico Madrid, and they’ve got about 30 million followers. Spain’s biggest clubs are eight times more popular than the next biggest team. That probably reflects why they do not need to market and develop internationally as compared to other LaLiga clubs.”

Meanwhile, Spain’s top two teams are struggling to keep talent since LaLiga imposed a salary cap. First introduced in 2013, the cap aimed to protect long-term financial health of clubs. Last November LaLiga reduced the salary cap further due to the impact of the COVID-19 pandemic. LaLiga’s top clubs were hit badly as they had to let go of their expensive players, disappointing fans in Spain and abroad.

“That was an iconic period for LaLiga when they had el Clasico between [Cristiano] Ronaldo and [Lionel] Messi. They need something new now,” Kinch said. Securing talent is as important for big teams as it is for LaLiga, as the international value of broadcast rights depends on the quality of the competition.

According to Kinch, there is a growing differential in the international value of LaLiga and the Premier League at the moment, and this is becoming apparent in international TV rights markets. The Premier League deal with NBC is worth $2.7 billion over six years (2022-28), whereas the LaLiga’s U.S. deal is set at $1.4 billion over eight years, roughly half the value. “This is where the international value is at the moment in terms of European soccer, and that’s something that LaLiga is trying to address by marketing themselves more effectively, because they’re going to need it without those big names,” Kinch said.

The president of LaLiga and the future president of Boost LaLiga, Javier Tebas, has argued that the CVC deal is a great step for LaLiga. “Even for Real Madrid and Barcelona,” he told journalists after the assembly vote. “Because it is going to help our league to be better and more competitive.” According to Spanish media, teams that opposed the CVC deal are considering taking the matter to the court.

The investment disbursement will be made in four installments, and according to LaLiga’s statement, the first $400 million will be distributed in a few weeks.