MADRID (Reuters) – The 1.99 billion euro ($2.24 billion) media rights deal between LaLiga and private equity firm CVC is set to open the door to similar high-stakes investments in the major European football leagues, LaLiga told Reuters on Monday.
“We are the first but won’t be the only ones,” Spanish football league executive director Oscar Mayo told Reuters in an interview.
“Many leagues call us asking if we can help them structure their deal.”
Speaking ahead of Tuesday’s launch of the partnership, the first of its kind in football with a private equity fund, Mayo added: “France is very close to doing this and already has the support of its government, Portugal. and Italy are also close. It won’t take long to see similar deals being signed.
Reuters reported in December that buyout funds including CVC and Bain Capital were lining up preliminary offers for a stake worth around 1.5 billion euros in the French league’s media rights business.
Beyond a much-needed cash injection, Ligue 1 hopes private equity firms could help make French football more attractive and double or triple their revenue in five to 10 years.
“The industry has matured enough now to have the credibility to do this type of partnership,” Mayo said.
“Ten years ago clubs were losing money, a lot of players were suffering from unpaid wages, we had a debt of more than 300 million euros with the government. The industry was not ready, it was even difficult to get financial help from the banks. We needed to create stability and structure through financial fair play so that we could instill confidence in investors.”
The €1.99 billion investment will secure CVC an 8.2% stake in a new company that will manage LaLiga broadcast rights and sponsorship revenue for 50 years.
LaLiga expects the total value of its business to rise from €24.2 billion to €33-35 billion in the next seven to 10 years, and this will also help clubs invest their share of the money from the good manner.
Clubs will have to allocate 70% of the funds to infrastructure and modernization projects. Up to 15% can be used to sign players, with the remaining 15% used to reduce debt. Each club will present their plans to LaLiga before June and this will have to be approved.
“We want to build in four years what would have taken 20 years to do under normal circumstances. We will grow faster than other leagues and close the gap with the English Premier League,” Mayo said, explaining that the first installment of €400m was delivered in January and in July CVC will have paid. the first billion euros.
The other billion will be paid in installments over the next two years.
“Clubs will be modernized, the fan experience will be better and our value will increase. Other European leagues are aware of this and will follow our path,” Mayo said.
CVC has invested in Formula 1, Moto GP, rugby and tennis and this is the third time the private equity fund has attempted to invest in a top European league, after separate plans with the Italian Serie A and the German Bundesliga were abandoned last year.
Real Madrid, Barcelona and Athletic Bilbao are taking legal action against La Liga over the deal. The three clubs pulled out of the deal, calling it an “illegal transaction that causes irreparable damage” to Spanish football.
($1 = 0.8894 euros)
(Reporting by Fernando Kallas and Corina Pons in Madrid.)