By Fernando Kallas and Corina Pons
MADRID (Reuters) – The 1.99 billion euros ($2.24 billion) media rights deal between LaLiga and private equity firm CVC is likely to open the door for similar high-stake investments across Europe’s major soccer leagues, LaLiga told Reuters on Monday.
“We are the first but won’t be the only one,” Spanish soccer league executive director Oscar Mayo told Reuters in an interview.
“Many leagues are calling us to ask if we can help them on how to structure their deal.”
Speaking ahead of Tuesday’s launch of the partnership, the first of its kind in soccer with a private equity fund, Mayo added: “France is in the verge of doing so and already have the support of their government, Portugal and Italy are also close. It won’t take long to see similar deals being signed.”
Reuters reported in December that buyout funds including CVC and Bain Capital were lining up preliminary bids for a stake worth some 1.5 billion euros in the French league media rights business.
Beyond a much-needed cash injection, Ligue 1 hopes that private equity firms could help make French soccer more attractive, and double or treble revenues in five to 10 years.
“The industry have matured enough now to have the credibility to do this type of partnership,” Mayo said.
“Ten years ago the clubs were losing money, lots of players were suffering with unpaid salaries, we had a debt of more than 300 million euros with the government. The industry was not ready, it was difficult even to get financial help from banks. We needed to create stability and structure through the Financial Fair Play so we could inspire trust to investors.”
The 1.99 billion euro investment will secure CVC an 8.2% stake in a new company that will manage revenues from LaLiga’s broadcasting and sponsorship rights for 50 years.
LaLiga expects the total value of its business to increase from 24.2 to 33-35 billion euros in between seven to 10 years, and it will also help the clubs to invest their share of the money the right way.
The clubs will have to allocate 70% of funds for infrastructure and modernisation projects. Up to 15% can be used to sign players, with the remaining 15% for reducing debt. Each club will present their projects to LaLiga before June and it will have to be approved.
“We want to build in four years what would have taken 20 years to do in normal circumstances. We’ll grow faster than other leagues and close the gap to the English Premier League,” Mayo said, explaining that first installment of 400 million euros was delivered in January and in July CVC will have paid the first 1 billion euros.
The other 1 billion will be paid in installments over the next two years.
“The clubs will be modernised, the fan experience will be better and our value will grow. The other European leagues are aware of that and will follow our path,” Mayo said.
CVC has invested in Formula 1, Moto GP, rugby and tennis and it is the third time the private equity fund has tried to invest in a top European league, after separate plans with Italy’s Serie A and Germany’s Bundesliga were scrapped last year.
Real Madrid, Barcelona and Athletic Bilbao are taking legal action against LaLiga over the deal. The three clubs opted out from the deal, calling it “an illegal transaction that causes irreparable damage” to Spanish football.
($1 = 0.8894 euros)
(Reporting by Fernando Kallas and Corina Pons in Madrid.)
