WHAT JUST HAPPENED?
The Spanish premier league, La Liga has agreed to sell a 10% stake of it’s ownership to CVC Capital Partners. Whilst the deal requires the approval of clubs, some football clubs are not happy!
WHAT DOES THIS MEAN?
‘La Liga Impulso’, is what this project is called, and it would involve CVC taking a minority stake in a newly created entity that would manage broadcast, sponsorship and digital rights for the league. However, it could not take over the league’s regulatory powers.[1]
“It is an ambitious investment plan that will provide La Liga and the clubs with resources with the aim of continuing the transformation towards a global digital entertainment company, strengthening the competition and transforming the experience of the fans.” Said the private equity giant, CVC Ahead of the proposed agreement finalising.[2]
It should be noted that CVC had previously entered into talks to buy a stake in the media business of Serie A but the deal had fell due to objections from some clubs. However, the Impulso deal has reignited interest in the Italian league as made by the owner of Torino FC who stated, “I think we should reconsider it, given the current circumstances ….. It was a good idea and it’s a pity that someone has arrived before us,” he added.[3]
Whilst Real Madrid and FC Barcelona have been embroiled in a dispute with La Liga over plans for a breakaway European Super League, the deal proposed is not be viewed as a rescue package, with 70% of the investment reserved for structural.[4] However, this does not negate from the harsh reality that the football community has experienced with hopes that the deal will allow Spanish clubs to recover from the financial hit during the pandemic, attract a larger international audience and inject funds into grassroots football in Spain.[5]
HOW DOES THIS IMPACT THE LEGAL SECTOR?
The financial injection would allow clubs such as Barcelona to retain world-renowned talents and avoid facing the faith of Real Madrid who experienced a number of significant exits in the transfer market such as Sergio Ramos to Paris Saint Germain. For Barcelona especially, such a deal will resolve the complexity behind the irresponsible mismanagement of finance from the old regime which has led to free summer arrivals such as Sergio Aguero not being able to be registered with Barcelona as of reasons of not meeting the club’s salary cap requirements.[6] These actions will bring in work for law firms who will work alongside football agents to renegotiate contracts and the various other brand endorsement that a player may have in connection to playing for a particular football club.
If the deal is approved, La Liga’s total value will come to just under $29 billion will mainly be used to accelerate the league’s digital and global expansion strategies.[7] Subsequently, the deal will also reduce the league-wide salary cap[8] that has been a problematic aspect for Spanish clubs securing talent and competing with Real Madrid, Barcelona, and Atletico Madrid. Consequently, this will help the Spanish league bridge the gap and compete with the business model of the English Premier League.[9] This will bring in work for law firms as clients (football clubs) will have more money to purchase players and would mean carrying out contractual negotiations, sorting football visas, planning new measures, and standards of protecting the players and the football club’s intellectual property during this digital expansion.
The deal will also stop the oligopoly-like state of Spanish football competition where only a handful of clubs are dominating the league and European competitions. However, such transition brings a significant predicament of retaining exclusivity and leverage over competitors for those that dominate the league.
“I think there could be one or two clubs that won't agree with it, but this is positive for soccer in general," Real Betis president Ángel Haro told The Associated Press. “The clubs would be getting a very relevant amount of money to help improve the teams and the clubs' infrastructures in general. This makes the league stronger.”[10] Subsequently, Real Madrid opposed to the deal as it felt that it has been blindsided form deal after its executives were left out of the negotiation on Wednesday where 14 clubs that did not include Real Madrid or Barcelona has unanimously approved the deal, clearing the way for a vote by the 42 clubs in the La Liga divisions by next week.[11]
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REFERENCES:
[1] Samuel Agini, Kaye Wiggins and Arash Massoudi, ‘Real Madrid opposes private equity’s €2.7bn Spanish football deal’ (The Financial Times, Dated 4th August 2021).
[2] Frank Dalleres, ‘CVC to enter football with £2.3 billion to deal for 10 per cent of Spain’s La Liga’ (City AM, Dated 4th August 2021)
[3] Elvira Pollina, ‘Soccer -Torino FC boss urges Serie A to reconsider private equity deal’ (Regina Leader-Post, Dated 4th August 2021)
[4] Frank Dalleres, ‘CVC to enter football with £2.3 billion to deal for 10 per cent of Spain’s La Liga’ (City AM, Dated 4th August 2021)
[5] Samuel Agini, Kaye Wiggins and Arash Massoudi, ‘Real Madrid opposes private equity’s €2.7bn Spanish football deal’ (The Financial Times, Dated 4th August 2021).
[6] Jonathan Johnson, ‘Will capital investment in la liga help Barcelona sign Lionel Messi, Real Madrid chase Kylian Mbpappe’ (CBS, Dated 4th August 2021)
[7] Frank Dalleres, ‘CVC to enter football with £2.3 billion to deal for 10 per cent of Spain’s La Liga’ (City AM, Dated 4th August 2021
[8] Jonathan Johnson, ‘Will capital investment in la liga help Barcelona sign Lionel Messi, Real Madrid chase Kylian Mbpappe’ (CBS, Dated 4th August 2021)
[9] Frank Dalleres, ‘CVC to enter football with £2.3 billion to deal for 10 per cent of Spain’s La Liga’ (City AM, Dated 4th August 2021
[10] Tales Azzoni, ‘Spanish League Secures $3.2 billion in funds to help clubs’ (The Chronicle Journal, Dated 4th August 2021)
[11] Samuel Agini, Kaye Wiggins and Arash Massoudi, ‘Real Madrid opposes private equity’s €2.7bn Spanish football deal’ (The Financial Times, Dated 4th August 2021).
Disclaimer: This article (and any information accessed through links in this article) is provided for information purposes only and does not constitute legal advice.