La Liga’s pursuit of CVC Partner investment continues

The Spanish court has given a stay order on the investment as the hearing about this deal is still ongoing.

The famous Spanish League, La Liga, is well known to every football fan, one of the reasons is because of Real Madrid and Barcelona, which have a massive following. However, it was also well known for the greatest rivalry between Cristiano Ronaldo and Lionel Messi, who still now rule the world of football, playing for Manchester United and Paris-Saint Germain, respectively. 

Following the exclusion of the two superstars, the Spanish top flight has been affected very much in terms of finance and viewership. While the Covid-19 outbreak has emerged as another reason for the league’s financial downfall.

As a result, the La Liga president, Javier Tebas, wanted to sign a deal with CVC Capital Partners to see an investment of €2.5 billion. But currently, the deal has been moved aside after three clubs, Real Madrid, Barcelona, and Athletic Bilbao opposed the decision. While the Spanish Football Association (RFEF) has also rejected the multi-billion-dollar investment.

What is the deal between La Liga and CVC Partners?

Let’s sum up this deal in four easy steps:

1. La Liga has to set up a new company

Following this deal, La Liga will be establishing a new company, called ‘La Liga Impulso’, and then have to transfer and deal all its business through that company. This step is required to allow other companies to invest in this business/company.

2. CVC will become a business partner

CVC Capital Partners will be investing €2.7 billion, and in its return, it will acquire 10% of the rights of the La Liga which will be agreed upon and signed for a long 50-years. While CVC as part of this deal will be using its skills and experience to make an upliftment in the La Liga business, which currently is suffering due to Covid 19.

3. La Liga will divide the investment across the Segunda Divison and Segunda Division B clubs

In this step, the 2.7 billion that CVC is going to invest, will be divided into the club’s playing across Segunda Division and Segunda Division B, as an interest-free loan, which CVC is going to get back in 40 years. The amount that each club receives will be determined according to the formula, which is used to calculate the division of television rights.

However, there are some strict rules in this step, the amount which the club will receive would have to be spent effectively and wisely. As per the rules, 70% of the amount received has to be used in the club growth, like stadium development, training ground development, etc.

While 15% of the loaned amount can be used to clear the earlier debts which have been stressing the clubs during this covid-19 outbreak, and the last 15% can be used for squad development, like paying player wages, paying transfer fees, etc.

4. CVC will receive 10% of profits for the next 50 years

If we explain this step in simple words, this deal is seen as a loan rather than investment from the CVC point of view, and to get what they invested, CVC Partners will be collecting 10% profits from La Liga for the next 50 years.

What’s the current progress on the La Liga, CVC deal?

This deal was announced three months back in August, where La Liga fully explained what will happen if they sign up for the deal with CVC. While 39 out of 42 teams who had the voting rights, had accepted the bid. But due to three clubs opposing, the deal has been currently kept on hold.

Real Madrid, Barcelona, and Athletic Bilbao have continued to oppose this deal till now. The four clubs believe that this CVC investment will be affecting their club’s business for the next 50 years and they would be deprived of the financial freedom that they have now. While raising voices with these three clubs, Spanish Football Association (RFEF) has also spoken against the deal saying it “increases inequality” and could affect the future of the competition.

However, La Liga’s president, Javier Tebas, said, “Real Madrid I understand, because they are doing very well financially. But we’re growing the value of the competition. Barcelona I don’t understand so much. The two clubs are in opposition fundamentally, they are still in the belief of the Super League. The better La Liga does, the project they’re believing in – the Super League – has less possibility, if it has any at all.

He added, “They don’t want a stronger La Liga, a bigger La Liga, because the bigger La Liga is, the more they will depend on LaLiga economically, the less possibilities they have [for a Super League]. That’s the key of it.”

Anyway, currently, the matter has been taken to court by three clubs, Real Madrid, Barcelona, and Athletic Bilbao. The Spanish court has given a stay order on the investment, as the hearing about this deal is still ongoing.

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