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The 2.1 billion euro deal between La Liga and the acquiring company CVC Capital Partners demonstrates how a collective approach can obtain long-term financing for small football clubs that often struggle to attract well-known investors.
Mainstream lenders usually avoid smaller teams because they will be discouraged by the risk of players overspending to improve rankings and downgrading to less profitable games. Instead, the club mainly relies on ticket and broadcast income and wealthy bosses.
However, through a coordinated and centralized approach, La Liga, which manages the first two divisions of Spain, shows that when these arrangements form part of a larger package, institutional investors may be inclined to fund smaller clubs.
CVC last month agree An agreement to obtain approximately 11% of the television broadcasting rights in La Liga in 50 years in exchange for 2.1 billion euros of funds, most of which will be provided to clubs as interest-free loans. CVC plans to play an active role in management media right.
The cooperation also raises the question of whether other leagues will follow La Liga, despite the fact that Spain’s largest clubs Real Madrid and Barcelona Football Club opposed the deal and opted out.
A football banker said: “In general, the pandemic makes it difficult for small teams to obtain debt.” “This is a major development, a league-wide transaction. Will it happen elsewhere? Now? It’s possible.”
The transaction with CVC shows how European football has adopted new ways to raise funds for clubs that have lost an estimated 9 billion euros in two pandemic-affected seasons.
Clubs in Europe’s “big five” leagues cut player spending to about 3 billion euros in the transfer market this summer as they have been seeking to cut costs and raise funds.
Putting the league at the center of fundraising efforts shifted part of the responsibilities of the clubs, which themselves worked hard to find willing lenders and investors.
Both the Italian Serie A and the Bundesliga have previously rejected private equity investment proposals including CVC. But the Bundesliga “temporarily” concluded negotiations with the acquiring company in May, opening the door to future transactions.
“As a whole, the internal security of football is much stronger than the case-by-case business,” said Ian Clayden, a partner at consulting firm BDO, which publishes an annual report on the club’s financial status. “This is what many clubs are telling us; they welcome the opportunity to get some kind of growth or development fund.”
The pandemic has prompted clubs to unite to secure loans.In the past year, 11 Spanish teams, mainly in La Liga and Second Division, borrowed a total of nearly 70 million euros from the British lender Rights and Media, and managed the English Football League of the following three leagues in the Premier League. agreed £117.5 million in lending facilities With MetLife.
“Everything must evolve to adapt to the new era. Sports must also evolve and change,” José Guerra Alvarez, managing director of La Liga companies, told the Financial Times.
But some executives and bankers are cautious about simply finding new sources of capital without addressing the club’s irresponsible spending.
The chairman of Plymouth Argyll Football Club and a major player in the first division of English football, which plays in the first division of English football, said that the new crown pneumonia epidemic has caused the champion clubs to fall into a “desperate situation”, “because many of them spend money. Too much money”. Last year, he injected 3.5 million pounds of equity into the club.
UEFA, the governing body of European football, said the team is “increasingly dependent” on debt and equity injections to make ends meet.
According to Deloitte data, at the end of the 2019-20 season, the net debt of Premier League clubs jumped to 4 billion pounds, an increase of about 500 million pounds over a year ago. In Spain, Barcelona’s wages exceeded income and debts soared to 1.35 billion euros, forcing the Catalan club to part ways with star player Lionel Messi this summer.
The authorities of the movement are taking action to solve this problem. As part of changing its financial fair play rules, UEFA is formulating new regulations on player wages and transfer fees to control club costs.
The British government has also introduced a Review Enter the governance and financing of English football. Tracy Crouch, a member of the council leading the review, has concluded that too many clubs rely too much on wealthy bosses.
The Premier League is undergoing its own review, while the EFL is calling for reforms so that the club can survive on income.
The EFL believes that in order to narrow the financial gap with the Premier League, income distribution needs to be changed. It also hopes to implement cost control to solve the problem of wage increases during the tournament, in which the club owner allows the club to spend 107% of its income on wages in the 2018/19 season, including player wages-this mismatch causes all Approximately inject 400 million pounds a year into the EFL club.
“Sustainable development is very easy,” Harriet said. “Don’t spend so much money.”