Kick Off: CVC Agrees Investment Deal with La Liga​

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By Curtley Bale​


The Story

After months of negotiations, private equity firm CVC Capital Partners has agreed to a deal with Spanish football league, La Liga - the body behind the top two divisions in Spanish football.

La Liga has agreed to sell a minority stake in the company that holds its television and sponsorship rights in return for a €2.1 billion investment.

The deal comes shortly after CVC agreed to allow clubs Barcelona and Real Madrid to opt-out of the deal, rather than collapse the whole arrangement. As a result, Spain’s largest two clubs won’t benefit from CVC’s cash injections or interest-free loans.

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CVC has shown an increasing interest in sports. The private equity firm recently invested in the Six Nations rugby championship, Formula One, and the International Volleyball Federation.

38 of 42 clubs voted in favour of the deal, with Barcelona and Real Madrid in the dissenting minority. The €2.1 billion investment was a reduction from the original €2.6 billion to account for the four clubs who opted out. Still, it values La Liga at around €24 billion (Reuters).

As the first-ever centralised investment in a football league, this investment is a big deal. Attempts by CVC to make similar investments in Italy and Germany were denied after clubs voted against the arrangement.

Under the deal, smaller clubs will receive access to funding that they might otherwise not have been able to get, had they not been tied in with the larger, more well-known clubs. Clubs will be able to spend 30% of the funds they receive on player wages and paying down debts, with the rest to be invested in stadiums and club infrastructure (SportsPro).

Football in financial crisis

The investment comes at a good time for Spanish football. Revenues fell to €3 billion during the pandemic, with net debts across all European leagues soaring. In England, the Premier League saw net debt rise to £4 billion, with revenues falling by about 13% (BBC).

In Spain, the crisis among the top clubs is severe, with some Spanish newspapers speculating Barcelona was on the "verge of bankruptcy" (El Mundo). Indeed, Barcelona’s net debt soared to €1.3 billion during the pandemic and the club could no longer keep global superstar Lionel Messi (Deloitte). Although this investment provides short-term relief to La Liga, governing bodies across Europe are looking to bring in future measures to ensure the financial ecosystem of football is more sustainable in the long-term.