La Liga Agrees to Sell $3 Billion Stake to CVC Capital Partners
TOKYO – Spain’s top soccer league has agreed to a tentative deal to sell 10% of its business to private equity firm CVC Capital Partners for around $ 3 billion, according to executives familiar with the deal.
If approved by clubs in the league, the deal could help cash-strapped teams in the league, including giant teams like FC Barcelona, fix their finances and ease the cash flow shortage caused. by the coronavirus pandemic.
CVC, a major investor in the sport, has attempted to strike similar deals with major leagues across Europe in recent years. He almost struck a similar deal with Italy’s Serie A for a share of that league’s media rights before the deal collapsed over objections from a group of teams. Something similar could happen in Spain, where the league, known as La Liga but encompassing the country’s first and second divisions, must gain the support of the majority of its 42 clubs in a general assembly to finalize. the sale.
As La Liga and CVC have agreed on a price for a partnership that will last for decades, representatives of the league and CVC have met with club officials to gain support, officials said, who requested anonymity. because the agreement was not concluded. been finalized.
La Liga and CVC did not respond to requests for comment.
The deal for a stake would be the first of its kind concluded by a major European league, and it would come as the football industry struggles to get its finances back on track after being rocked by the lingering effects of the coronavirus. The pandemic, which has closed stadiums for months, has resulted in billions of dollars in lost revenue and exposed the precarious business models of some of the best clubs in the sport, where extravagant spending and bad decisions regularly put teams on the line. danger of bankruptcy.
The CVC / La Liga deal comes at a particularly delicate time for Spanish football. Its two biggest clubs, Barcelona and Real Madrid, are still trying to move forward and create a breakaway European Super League, a midweek club competition for the continent’s top teams, after a first effort to launching the project failed dramatically in April. One of the biggest objections to the project has come from La Liga, whose president, Javier Tebas, remains a vocal critic of the project which he says would destroy the fabric of European football.
Still, much of the rationale for separating the teams is similar to La Liga’s motivation to join CVC. The pandemic has financially penalized European football clubs, especially those with the largest stadiums, who are losing billions of dollars in revenue and struggling to meet disproportionate payroll commitments.
Barcelona’s finances have attracted the most attention. The team are desperately trying to restructure their debt under a new president, Joan Laporta, and the league has told them they have to lose around $ 200 million in wages to re-sign their biggest star, Lionel Messi, whose contract expired at the end of June.
Any deal for an injection of private equity money would most likely require Barcelona and Real Madrid to commit to the league. The teams make up a large part of the league’s global visibility and popularity, and despite their flirtation with the Super League, Barcelona’s immediate need for cash to meet La Liga spending caps may weigh on its decision on the League. ‘HVAC offer.
Still, it is not certain that Spanish clubs will accept the deal. In Italy, a $ 2 billion deal with a group led by CVC for a similar 10% stake failed because a handful of the biggest teams, including future Super League members Juventus and the Inter Milan said the price was too low.
CVC has embarked on a sports buying frenzy with the aim of becoming the largest player in a relatively new market for leading European leagues and competitions. He has made numerous deals in rugby over the past year, including one in March that saw CVC agree to pay 365million pounds (roughly $ 500million) for a share of the Six Nations Championship, the best ever. rugby competition for European national teams.
CVC’s proposed investments in football would be the biggest commitment of its resources since its extremely profitable exit from the Formula 1 car racing series in 2017. CVC had previously had conversations with the world’s football governing body, the FIFA, about investing in new competitions, and that was on a shortlist of companies that the German Bundesliga were considering partnering with before they dropped the idea of a stake sale.
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