A major investment from the private equity firm CVC is one step closer to being made in La Liga after the deal was approved by 38 of the 42 clubs in Spain’s top two soccer leagues.
In exchange for a 10% stake in a new company encompassing all of La Liga’s businesses, subsidiaries, and joint ventures, CVC agreed to invest €2.7 billion (US$3.2 billion) in La Liga in exchange for a 10% stake in the new company.
Real Madrid has already threatened to take legal action to stop the deal, Barcelona, along with Athletic Bilbao and another unnamed club, voted against the proposal.
Announcing the vote’s results, La Liga president Javier Tebas said that CVC’s investment is now expected to total between €2.1 billion and €2.2 billion, depending on the inclusion of Real, Barca and Athletic in the investment.
In addition, CVC will receive 11% of La Liga’s future media rights revenues for the next 50 years, although the percentage would drop if the aforementioned clubs opt out of the deal, according to Tebas.
Real Madrid, Barcelona, and Athletic Bilbao won’t benefit from CVC’s cash injection, but the opt-out clause means they won’t have to give up any of their future media rights revenue, both thanks to the opt-out clause.
About 90 per cent of CVC’s funding will go directly to the clubs as part of the “Boost La Liga” deal. Clubs can use 30 per cent of their allocation to sign players and pay off debt.
According to La Liga, 70% of the remaining funds should go towards infrastructure and technological development, while a portion of the total investment is also allocated to other levels of Spanish sport.
“We are convinced that Boost La Liga is the answer to the challenges we have to face in the medium and long term,” Tebas said in a statement. “It is a strategic agreement that will provide our clubs with greater capacity, will transform their management model, and will allow us to have a much more attractive competition. It is the boost we need to turn La Liga into a global digital entertainment company with the most attractive soccer competition in the world.”
La Liga‘s biggest star Lionel Messi completed his move to Paris Saint-Germain last week after leaving Barcelona, where he had played for the entirety of his professional career. Barcelona was unable to re-sign him because of La Liga’s financial fair play rules.
This investment was seen as a way for Barcelona to potentially secure Messi’s future, but the club has since stated that ‘it is inappropriate to sign a half-century agreement given the uncertainties that always surround the world of football.‘
A statement from Real Madrid earlier this week said that the club has filed criminal and civil proceedings against Tebas over the agreement.
La Liga and CVC’s agreement was declared ‘totally illegal’ by the Spanish Football Federation (RFEF) on August 11.
La Liga clubs will benefit from the deal in the wake of the coronavirus pandemic that has cost the league’s teams over €2 billion (US$2.3 billion) in total revenue over the 2019/20 and 2020/21 seasons, according to a league-commissioned study.
CVC once owned the Formula One and MotoGP motorsport series and most recently invested heavily in rugby union.