Spanish La Liga have agreed to sell 10 percent of its commercial business to a private equity firm, CVC Capital Partners for the sum of $3 billion.
In a statement La Liga issued to confirm the new deal, the league football governing body said the league would create a new company that will manage the assets involved in the deal.
After that, CVC would become a partner to La Liga to run the company but the football league body would maintain control of the league’s selling arrangements for its broadcast contracts and sporting regulations.
Now that the deal has been agreed upon at the level of the La Liga executive committee and the CVC investment committee, all the clubs in the first and second division of La Liga will have to vote for or against the deal before he could stand. If the majority of the clubs agreed to the deal, that means that CVC would have a 10 percent stake in the commercial aspects of the league.
Due to how important the votes of the clubs are, agents of CVC have been reaching out to clubs executives to convince them to vote in favor of the deal, according to reports.
Once the deal gets the majority of the votes, it will become the first time in European football that a league went into such a commercial partnership deal with a private company.
Before CVC approached La Liga for the commercial partnership deal, the company had approached Italian Serie A for a similar deal over a year ago. Then, the company offered Serie A $2 billion to partner with the league for the sales of commercial assets of the league.
However, Serie A kicked against the deal and did not see the light of the day, thanks to opposition from Italian giants like Inter Milan and Juventus, who believed the company’s valuation of the league’s commercial assets was too low.
The benefits of the deal to La Liga
Reports claimed that La Liga agreed to go into partnership with CVC Capital Partners for the sum of $3 billion because of the financial hardship most of the clubs in the league have been battling with.
Recall that since the coronavirus pandemic forced football to halt in Mid-March 2020 before it resumed three months later, clubs have been battling to generate as much revenue as they used to.
This is so because, for three months, clubs could not play football games due to the pandemic. When football resumed, the games were played behind closed doors which means that the clubs could not have access to match days revenue.
Clubs like FC Barcelona and Real Madrid are not only affected by the pandemic, they are in financial hardship due to their over-ambitious spending over the years.
The club that seemed most affected is FC Barcelona. The Spanish giants reportedly need to raise over $200 million from forcing players to accept pay cuts. They are also condemned to sell some of their stars to meet up with La Liga’s financial fair play.
Hence, the injection of $3 billion to La Liga from CVC Capital Partners will go a long way to minimize the financial burden among clubs in the league.
The league will distribute 90 percent of the injected funds among the clubs which means that a grade A club like Barcelona would earn nothing less than 250 million dollars share from the deal which could go a long way to bring them back on track financially ahead of the 2021-2022 season.
Despite how good the deal looked for the clubs that are financially suffering, Real Madrid are said not to be happy with the deal because they believe the $3 billion is not enough for the partnership deal. Hence, CVC and La Liga might encounter opposition as time goes on.