CVC Deal with La Liga

[Beans]

La Liga to sell 10% of its commercial business, what do you think? https://www.nytimes.com/2021/08/03/sports/la-liga-cvc-capital-barcelona-real-madrid.html

Spanish FA come out against deal: https://www.espn.co.uk/football/spa...eal-with-cvc-capital-is-illegal-and-appalling

Seems madness to me, how can the league force Barca and Real to sell 10% of their commercial business without their approval, just because 2/3 of the other teams like it? Apparently the vote includes the second division.

CVC are doing it because they know they'll give up less money now than they'll bring in, after all. But I'm sure there's stuff going on I don't understand.

Didn't see a thread for this, please delete it there is one.

 

[Mb194dc]

Was in the Barcelona thread but probably deserves it's own.

It's a terrible deal, CVC get 11% of La Liga revenue for 40! years. Total madness, can't understand why they'd agree to something so short sighted. Not surprisingly Real Madrid are going to sue even Barcelona are against it. Spanish FA said it's illegal too I think.

Wouldn't be surprised if it's blocked by courts ultimately.

 

[Beans]

Was in the Barcelona thread but probably deserves it's own.

It's a terrible deal, CVC get 11% of La Liga revenue for 40! years. Total madness, can't understand why they'd agree to something so short sighted. Not surprisingly Real Madrid are going to sue even Barcelona are against it. Spanish FA said it's illegal too I think.

Wouldn't be surprised if it's blocked by courts ultimately.

Yeah I thought it needed a seperate thread. I'm glad you agree, look at the growth of the last 40 years! Anyone wish they locked in the 1981 price for the last 40 years? Inflation alone will kill the value.

 

[Gandalf]

Was in the Barcelona thread but probably deserves it's own.

It's a terrible deal, CVC get 11% of La Liga revenue for 40! years. Total madness, can't understand why they'd agree to something so short sighted. Not surprisingly Real Madrid are going to sue even Barcelona are against it. Spanish FA said it's illegal too I think.

Wouldn't be surprised if it's blocked by courts ultimately.

I think La Liga had a couple of objectives in mind here, COVID has hit them rather hard and a lot of the smaller clubs are struggling so the cash injection would be nice after all. The ulterior motive though seems to be more about blocking the Super League, the fine print in this deal would effectively lock Barca and Real out of doing anything with he Super League project or anything like it for the next 40 years. I can sympathize with that aim but I don't think it has been well thought out and will almost certainly die in the courts which in the end is best for all as this is a very short sighted idea for all of the clubs involved.

 

[giorno]

Was in the Barcelona thread but probably deserves it's own.

It's a terrible deal, CVC get 11% of La Liga revenue for 40! years. Total madness, can't understand why they'd agree to something so short sighted. Not surprisingly Real Madrid are going to sue even Barcelona are against it. Spanish FA said it's illegal too I think.

Wouldn't be surprised if it's blocked by courts ultimately.

It's bad for barcelona and real madrid. Not for everyone else

Put it this way: you're getafe, your annual revenue is €60M, you have a small stadium and old, outdated training facilities, you make €45M a year from tv revenue. CVC offer them an immediate injection of €70M - more than their annual revenue! - which they can use to immediately work on improving their facilities and the stadium, effectively giving them a better chance to grow as a club then they could possibly hope for, helping them out of the current financial crisis, and all they're giving up is €4.5M. Even if tv revenue where to grow over the next few years from €45M to let's say €60M, their ability to grow over the next decade thanks to this deal still massively outweights the loss of tv revenue. If in 10 years time, thanks to this deal, they managed to grow as a club, their revenue outside of tv deals doubled or even tripled, then even with the loss of tv revenue they'd still be making for money then they would have otherwise

 

[Tallis]

It's bad for barcelona and real madrid. Not for everyone else

Put it this way: you're getafe, your annual revenue is €60M, you have a small stadium and old, outdated training facilities, you make €45M a year from tv revenue. CVC offer them an immediate injection of €70M - more than their annual revenue! - which they can use to immediately work on improving their facilities and the stadium, effectively giving them a better chance to grow as a club then they could possibly hope for, helping them out of the current financial crisis, and all they're giving up is €4.5M. Even if tv revenue where to grow over the next few years from €45M to let's say €60M, their ability to grow over the next decade thanks to this deal still massively outweights the loss of tv revenue. If in 10 years time, thanks to this deal, they managed to grow as a club, their revenue outside of tv deals doubled or even tripled, then even with the loss of tv revenue they'd still be making for money then they would have otherwise

Private equity look for a return for 10-25% depending on the type of capital they provide. The so called investment is basically expensive financing. Getafe can borrow from a bank too at 4-7 percent depending on their financial standing. Bank debt has the benefit of being tax deductible too. Unless clubs are going to go under and can’t access bank financing, this seems like a strange deal to me.

 

[Teja]

Private equity look for a return for 10-25% depending on the type of capital they provide. The so called investment is basically expensive financing. Getafe can borrow from a bank too at 4-7 percent depending on their financial standing. Bank debt has the benefit of being tax deductible too. Unless clubs are going to go under and can’t access bank financing, this seems like a strange deal to me.

Yup I had the same argument in the other thread. La Liga itself can borrow the money, redistribute however they want amongst the clubs and service the debt with the TV money. I have no idea why they'd want to take on the private equity funding and give up so much money.

 

[giorno]

Private equity look for a return for 10-25% depending on the type of capital they provide. The so called investment is basically expensive financing. Getafe can borrow from a bank too at 4-7 percent depending on their financial standing. Bank debt has the benefit of being tax deductible too. Unless clubs are going to go under and can’t access bank financing, this seems like a strange deal to me.

Getafe would struggle to find somebody willing to finance them to that extent. Banks would want to see a relatively sure return on investment, which getafe could only give by...leveraging their tv revenue...

 

[Gee Male]

Private equity look for a return for 10-25% depending on the type of capital they provide. The so called investment is basically expensive financing. Getafe can borrow from a bank too at 4-7 percent depending on their financial standing. Bank debt has the benefit of being tax deductible too. Unless clubs are going to go under and can’t access bank financing, this seems like a strange deal to me.

Seems strange from the CVC perspective too - relatively rare for a PE firm to commit to a 40 year play. I wonder what else they have in mind here.

Note that CVC are also getting involved in 6 nations rugby after I think selling out of F1. Interesting firm.

 

[giorno]

Seems strange from the CVC perspective too - relatively rare for a PE firm to commit to a 40 year play. I wonder what else they have in mind here.

Note that CVC are also getting involved in 6 nations rugby after I think selling out of F1. Interesting firm.

They're also incentivized to help the development and commercial growth of the league, so i guess they're betting on their ability to do that. More money for the league = more money for CVC

 

[Gee Male]

They're also incentivized to help the development and commercial growth of the league, so i guess they're betting on their ability to do that. More money for the league = more money for CVC

I get that, but that's not generally how PE firms look at things.

CVC owned F1 for 11 years, even that is at the longer end of PE investments, most investments would be a 5-7 year play at a stretch. These firms tend to come in, clean things up, streamline, cut costs, and sell. Their aim is nearly always the capital sale, that's where they make their money. Income in the meantime is less relevant.

I'd be interested to see if CVC are free to sell their stake and interest to a third party or if there are clauses preventing that. If they are free to sell, then La Liga could end up the first domestic league with foreign ownership.

All speculation from me of course, but such is the fun.

 

[Mb194dc]

So finally the clubs that voted against it are out of the deal and will keep their broadcast income:

https://www.espn.co.uk/football/spa...-laliga-clubs-vote-in-favour-of-22bn-cvc-deal

Pretty certain a few years down the line La Liga will massively regret agreeing this deal...

 

[Beans]

So finally the clubs that voted against it are out of the deal and will keep their broadcast income:

https://www.espn.co.uk/football/spa...-laliga-clubs-vote-in-favour-of-22bn-cvc-deal

Pretty certain a few years down the line La Liga will massively regret agreeing this deal...

I’m surprised the deal isn’t worth a lot less without Barca and Real, article I read said the deal is the same size. That doesn’t seem possible.

A 40 year contract doesn’t make much sense, except to get the fee up high enough that the total was enough to be a game changer for teams. Sure makes them look desperate.

EPL has shown that sharing money is best for everyone, the league is incredibly strong