CVC Strikes Deal with La Liga
3 Min Read
CVC Capital Partners has agreed to buy a 10% interest in Spain's premier soccer league. The agreement, which is subject to club approval, has the potential to ease a financial problem.
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The deal is worth ($3.2 billion) and is the first of its type by a major European league.
Spain's top soccer league has reached an agreement, in general, to sell 10% of its commercial business to CVC Capital Partners, a private equity company, for about $3 billion, according to the New York Times newspaper.
If the league approves of the agreement, it may assist cash-strapped teams, including giants like FC Barcelona, to restore their finances and alleviate a cash constraint created by the coronavirus outbreak.
In recent years, CVC, a major sports investor, has attempted to make similar arrangements with major leagues across Europe, including one with Serie A in Italy.
To finalize the sale in Spain, La Liga requires the consent of a majority of its 42 teams during a general assembly.
After The New York Times published the arrangement on Wednesday, La Liga said it would put all assets connected to the sale under a new business with CVC as a 10% partner.
Additionally, La Liga would retain complete control of its television contracts and sports regulations, as well as its selling agreements.
The CVC-La Liga partnership comes at a critical moment for Spanish soccer. After an early attempt to begin the idea failed miserably in April, the continent's two largest clubs, Barcelona and Real Madrid are still trying to press forward and create a breakaway European Super League, a midweek club tournament for the continent's elite teams.
The New York Times further added that La Liga objected to the project, and its president, Javier Tebas, remains a vocal critic of the scheme that he said would destroy the fabric of European soccer.
Barcelona's finances have gotten a lot of attention. The club has been trying to reorganize its debt under a new president, Joan Laporta, and has been warned by the league that it would need to cut nearly $200 million in salary to re-sign its most famous player, Lionel Messi, whose contract expired at the end of June.
Any arrangement for a private equity investment would very certainly need Barcelona and Real Madrid to recommit to La Liga's present structures.
However, it is not certain that the deal will be accepted by the Spanish clubs. La Liga downplayed the cash injection's immediate impact, insisting that the goal of the investment was to develop for the future. To do so, they've asked that member clubs agree to a strategy that focuses on improving their physical infrastructure and branding.
