CVC Who is the new investor in Spanish football and what will the clubs do with the money?
LaLiga and the CVC investment fund are facing the final stretch of negotiations that will make them partners in the largest sports competition in Spain in October.
Representatives of both have intensified the meetings in recent days to adjust the terms of the alliance that will give rise to
LaLiga Impulso
, a business in which CVC will have around 8% and with which they intend to turn Spanish football into another
less sporty and more profitable
type of business
.
All the clubs, with the exception of Real Madrid, Barcelona and Athletic de Bilbao, backed the agreement at the last LaLiga assembly after the organization chaired by Javier Tebas presented them with a now or never scenario, of transforming or dying.
The backbone of his speech is that the competition has reached a turning point in which the only thing left to do is invest and grow or lose competitiveness against other leagues and other entertainment alternatives. The difficulty is that it intends to turn what now are
its particular Achilles heels
into pillars of that strategy
and that it succeeds depends on too many external variables that are currently in the air.
At the domestic level
, its great challenges are to
raise revenue from audiovisual rights
and change the distribution model. In the first case, the next renegotiation of rights is scheduled for June 2022 and LaLiga aims to improve collection at a time when renewals have been flat or decreasing in comparable European leagues. With a view to the auction, the organization works to incorporate new players and extend the deadlines.
Regarding the
distribution model
, LaLiga wants - and needs - to eliminate access restrictions and increase its customer base after several years in which the loss of distribution has been a constant.
The
number of domestic subscribers has fallen by around 40%
in recent years, to 2.5 million, and the challenge is to increase the number in a market that has entry prices above 80 euros per month.
Another of their strategic focuses is in the international arena, where they detect a lot of commercial potential and where they also lag behind their European peers in terms of sponsorship and income.
For example, 45% of the sponsors of the Premier shirts are from outside Europe, compared to 15% from LaLiga.
Data, data, data
However, the mainstay of LaLiga and CVC's joint plan is to transform sports competition into a
media company focused on consumers and their data
.
And for this, the fans, especially the younger ones, become the key and most desired target.
It does not seem easy considering the change in the consumption habits of the youngest - they watch less television and bet more on digital platforms - and the natural profile of LaLiga, much older than that of other competitions.
A fact in this sense:
the age group between 16 and 29 years in Spain represents 19% of the total of followers
, compared to 23% that it represents, for example, in the Premier.
So in LaLiga offices there is more and more talk about fostering an
unmatched fan experience
, driving innovative digital platforms and creating a strong
data-driven
proposition for business
partners
for
business decision making.
Because the data, in the end, is the main objective
.
They want to segment them, monetize them and promote new forms of commercialization, inside and outside of Spain.
To name it, having a player like
Take Kubo
(Japan) in Mallorca would not be especially relevant if it weren't for that detail has made the Balearic club the most watched in the Japanese country, and that opens up new avenues of income.
Keys to the covenant
All these changes are subject to compliance with the LaLiga and CVC forecasts, but first, both must officially sign their alliance. The talks between the two partners are now focused on restructuring the initial pact. At first, the agreement contemplated the creation of a new company to which LaLiga will contribute all its businesses, subsidiaries and
joint ventures
and in which CVC would have a 10.91% stake in exchange for the
injection of almost 2,670 million euros. euros
.
However, the rejection in the assembly of Real Madrid, Barcelona and Athletic de Bilbao has forced the project to be redefined and both the percentage that will correspond to CVC and its contribution will be reduced;
The latter will be around 2,000 million euros
, according to sources familiar with the talks.
The fund
valued LaLiga at a total of € 24.25 billion
and the deal has an expiration date of 50 years, although CVC is likely to exit much earlier, once it reaches its performance targets.
The clubs, for their part, will receive the money proportionally and in the form of participative loans with an interest rate of 0% and a maturity of 40 years.
The first payment will be made at the close of the operation, that is, in the last quarter of 2021 if everything goes according to plan.
The amount will reach 40% of the total corresponding to the club and the remaining 60% will be divided into three payments of 20% at the end of the League competition for the following three years.
Despite the fact that the negotiation is still open, the clubs have already been able to use the money that corresponds to them for transfers in this last campaign, that is, 15% of the total amount they will receive.
If they are demoted, the return will be paralyzed for a maximum of 10 years (even if there are intermittent demotions and promotions) and if they descend the first year from the signing of the agreement, the rest of the pending deliveries will be paralyzed.
On the other hand, if any club leaves the competition, they must return the money they have received and if a competition is created that affects the value of the rights, such
as the controversial Super League,
the two partners have agreed to review the conditions of the operation.
According to the criteria of The Trust Project
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