La Liga Updates
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Football clubs in Spain’s La Liga have voted overwhelmingly in favor of a deal with private equity firm CVC Capital Partners, but only after the two biggest teams opted out in an 11-hour compromise.
The go-ahead came Thursday after a six-hour meeting in which Real Madrid and FC Barcelona campaigned against the draw, with CVC changing the terms of the deal at the last minute to avoid thwarting it.
Of the 42 clubs in the first and second division, 38 voted for the deal, La Liga president Javier Tebas confirmed. Real Madrid, Barca, Athletic Bilbao and a second division club that wished to remain anonymous voted against. Those four would use the opt-out, according to a person familiar with the case.
Tebas, who said the CVC deal had been ten months in the making, told journalists at a press conference in Madrid that Real and Barça had opted out because they were still in favor of forming a breakaway league for elite European clubs. He said CVC would invest €2.1bn instead of the €2.7bn originally planned due to the clubs not participating, but the implied valuation of La Liga remains at around €24bn.
Closing the deal would be private equity’s first step into a major European football league. Recent attempts by buyout groups to invest in Italy’s Serie A and German Bundesliga have failed after opposition from clubs.
“CVC did not come here to save us in any way,” said Tebas, who said clubs would use 30 percent of the money to spend on players and pay off debt, with the remainder going to investment. in stadiums and infrastructure.
CVC, Real Madrid and Barca did not immediately comment.
Under the terms of the deal, CVC will purchase a minority stake in a new company whose revenue will come from La Liga’s broadcasting and sponsorship rights. The group also wants to increase the global audience for Spanish domestic games, increasing the value of those rights.
The buyout group would be entitled to 11 percent of media rights revenue over the next 50 years, although it will likely sell its stake before then, as private equity firms typically have a 10-year return horizon.
The last-minute changes would allow the opting out clubs to reap additional revenue generated as a result of CVC’s investment, without handing over any money to the private equity group.
The deal will not prevent those who opt out of playing in the league, with La Liga continuing to sell media and sponsorship rights to all clubs and all games.
Participating clubs will receive upfront cash from CVC in exchange for an 11 percent cut in future earnings, but those who opt out will receive neither.
The deal includes a clause that allows the league to be revalued if clubs attempt another breakaway competition. Barca and Real Madrid were part of now-collapsed plans for a European Super League this year.
In the days before the vote, Tebas clashed repeatedly with Real Madrid boss Florentino Pérez, who claimed the deal undervalued Spanish football and ‘mortgaged’ his future. The club decided this week to take legal action against CVC and Tebas to invalidate the deal.
Tensions are still high within Spanish football over Pérez’s failed European Super League initiative this year – an alternative to raise money for the sport’s biggest club that has been fiercely opposed by the league.
Barca blame the competition’s rules for failing to keep Lionel Messi, the world’s most celebrated player, who signed for Paris Saint-Germain this week.
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