CVC to enter football with £2.3bn deal for 10 per cent of Spain’s LaLiga
CVC Capital Partners is set to make its first major football investment by paying €2.7bn (£2.3bn) for a minority stake in Spain’s top league, LaLiga.
The private equity giant, which has invested heavily in rugby in recent years, has an agreement in principle for around 10 per cent of LaLiga.
“LaLiga confirms a strategic agreement with the international investment fund CVC to inject €2,700m into the competition and the clubs,” it said.
“It is an ambitious investment plan that will provide LaLiga 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.”
CVC’s offer has been accepted by LaLiga chiefs and proposed to the clubs, who will be asked to ratify it in the next month.
The deal, which values LiLiga at €24.2bn (£20.6bn), will mainly be used to accelerate the organisation’s digital and global expansion strategies.
LaLiga sources said it was not a rescue package, with 70 per cent of the investment reserved for structural projects.
Barcelona and Real Madrid are suffering financial difficulties that have prevented them from spending their usual vast sums on new signings.
Both clubs committed to a breakaway European Super League, which promised instant windfalls and greater long-term revenue, earlier this year.
The European Super League project collapsed when English clubs backtracked but Barcelona, Real Madrid and Juventus have continued to pursue it.
LaLiga chiefs see CVC’s interest as an endorsement of their strategy under president Javier Tebas, who has driven greater financial sustainability and international growth.
The Spanish football league’s aim is to bridge the gap to and ultimately overtake the business model of the Premier League.
“The operation will be carried out through the creation of a new company to which LaLiga will contribute all its businesses, subsidiaries and joint ventures and in which CVC will have a minority stake of approximately 10 per cent of the capital,” LaLiga added.
“Additionally, CVC provides funds to LaLiga through a participating account, a long-term agreement that aligns the interests of LaLiga, the clubs and CVC.”
CVC, which majority owned Formula 1 until 2017, has in recent years bought stakes in leading rugby competitions including the Six Nations, Premiership Rugby and the Pro14.
It has also held talks with tennis chiefs over the possibility of bringing together the men’s and women’s elite tours in a single commercial entity.
“This deal marks a really important step in the growing interest of investors into sports, and particularly into European football,” said Luis Garcia Alvarez, manager of the Madrid-based Mapfre AM Behavioural Fund, which has a 10 per cent exposure to European football clubs.
“As the CVC deal probably points out, the football industry has changed completely (for the better) in the last few years in terms of corporate and financial governance and football, as a media or content business, has a lot to gain from operating leverage.
“Hence, we think that we can see in European football a similar story to that of US sports franchises in the last two decades… but at really much more attractive entry prices.”