La Liga is confident of victory in the 2.7 billion euro cooperation with CVC

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La Liga Update

La Liga is confident of reaching a 2.7 billion euro cooperation with private equity firm CVC Capital Partners and winning support. Despite the strong opposition of FC Barcelona, ​​Real Madrid also threatened to take legal action to prevent the deal.

Spain’s top football league has sent a report from the Rothschild Banker to the club, stating that the deal provides a reasonable price, after its two largest teams said that CVC was underpaid. The proposal requires the support of 32 of the 42 clubs in La Liga. These clubs will vote on the cooperation by secret ballot on Thursday.

“We will get the majority of seats,” José Guerra Álvarez, managing director of La Liga companies, told the Financial Times. “We believe that the club can freely decide what they want.”

Just as Barcelona was hit by the loss of star players, this private equity deal has become the latest flashpoint in a long-term power struggle between La Liga, which manages Spain’s two major football leagues, and its two most important clubs. Lionel Messi Depart for Paris Saint-Germain, France.

Although La Liga is full of confidence, Real Madrid and Barcelona have made it clear that they intend to do everything in their power to undermine the relationship between the two sides. Barcelona warned that it would be “inappropriate” to sign an agreement that would sell the league’s share of broadcast revenue for the next half century. It accused La Liga of failing to provide an alternative to CVC, while Real Madrid claimed that the deal was illegal.

The chairman of Real Madrid, Florentino Perez, is one of the main supporters of the disbanded UEFA Super League. He stated that even if the team approves the CVC cooperation, the club will “take any legal action it deems appropriate. “To stop it.

According to the proposal, CVC will acquire a minority stake in a company that holds broadcast rights and sponsorship rights in La Liga at a price of about 100 million euros, giving it an 11% share of revenue in the next 50 years. It will also contribute 2.5 billion euros to the club as an interest-free loan.

Italian A league And German Bundesliga Unable to get the club’s support, this year gave up the plan to let private equity companies buy its broadcast income.

But Guerra Álvarez insists, “Without this agreement, without this investment, without this partner, it will be difficult for us to continue to develop our television rights. [in a] Tough market”.

Guerra Álvarez said that its brand strength means that La Liga can withstand Messi’s departure, but emphasized that “the entertainment business is undergoing great changes”, forcing the alliance to compete with new competitors such as streaming services.

The Rothschild Valuation Report seen by the Financial Times stated that the bank “believes that the consideration provided by CVC is fair from a financial point of view.” The deal valued the alliance slightly more than 24.2 billion euros.

The report pointed out that the valuation of a group of premium content companies, including Netflix and Disney, is close to 22 times their earnings in 2021, which is higher than the 15.1 times valuation of La Liga based on CVC transactions.

However, Guerra Álvarez stated that La Liga cannot achieve the same valuation as Netflix and other companies because their business models are fundamentally different.

Rothschild said that the private equity firm that previously owned Formula One and MotoGP and invested in rugby and volleyball can help La Liga develop its digital business and expand its international influence.

Overall, in the 2019/20 season affected by the epidemic, the revenue of Spain’s top clubs fell by 8% year-on-year to 3.1 billion euros, lagging behind the Bundesliga, whose revenue fell 4% to 3.2 billion euros. The market leader’s Premier League’s revenue was 5.1 billion euros, a decline of 12%.

CVC declined to comment. However, it said on Tuesday that Real Madrid’s legal actions were “completely disproportionate and baseless” and that the deal would “benefit everyone”.

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