The Truth Behind La Liga’s CVC Deal.

The Truth Behind La Liga’s CVC Deal.

With all the financial problems that Covid-19 brought to all over the world including La Liga, it was almost inevitable that something like this would come around sooner or later. And so, on the 4^th of August, the Spanish league announced to the public they had reached an accordance with CVC Capital Partners, an investment firm that mainly operates around Europe and Asia. 

       (Javier Tebas la liga president)

What does the CVC deal entail?

As many of you may already know, La Liga’s president Javier Tebas recently struck a deal with CVC but most of you many not know all of the facts behind the contact and the affects it would have on clubs like Real Madrid and Barcelona. 

 

This isn’t even the first time the banking company has invested in a sports with a recent €430.5 million deal with the Six Nations Rugby League and a majority stake in F1 that they bought for €1.6 billion.

 

The deal means La Liga will create a new business that will collaborate with CVC and handle most of the activities behind the scenes. It will be a long term agreement spanning over the next 50 years.               

The La Liga President and CVC came to an agreement over the sale of 10% of the leagues rights for a price of €2.7 billion. 90% of the fee would be split between La Liga clubs, even some going towards women’s football, with the most going to Barcelona and Real Madrid (€284 and €270 respectively).  

 

The clubs would be allowed to spend a certain amount on selective departments, for example Barcelona would be allowed to spend:

 

15% on Transfer fees (€42m)

15% on Paying debts (€42m) 

70% on Investments (€200m)

 

With this Barcelona could use the money for investments on registering their new signings, including Lionel Messi. 

 

The deal would focus on the growth of the digital presence of the league, including investing in it’s brand, interactions with the fans and gaining more viewers from around the world.

 

How do the clubs feel?

 

Included in the contract that clubs would have to sign, there were some worrying additions for the clubs that weren’t original made aware to the public. This didn’t leave Barcelona and Real Madrid quite as happy as their fans. 

One of the issues is about broadcasting rights, which is said would affect the clubs for the next 50 years. The contract would expropriate 10.95% of the league’s audiovisual rights for the next half-century which the white side of Madrid has claimed “Is in breach of the law”. 

 

It’s also rumoured that the teams would have to pay over €850 million over the course of this time whilst only receiving one quarter of that this summer. 

 

Real Madrid released a statement which also included: “We cannot support a venture which hands the future of 42 Primera and Segunda División clubs over to a group of investors.”

 

There is also a clause in the contract that would block the La Liga giants from joining any potential Super League in the future. 

(Joan Laporta, Florentino Pérez and Andrea Agnelli met on Saturday to discuss the Super League.)

Although Real Madrid and Barcelona are both opposed to this ordeal, there may be vey little they can do about it. La Liga’s executive committee, which includes spokespersons from 7 top division clubs, were the ones that originally agreed on the CVC deal. Both Real Madrid and Barcelona do not have any representatives on the committee and are outraged that they weren’t consulted before La Liga reached the agreement with CVC Capital Partners, with Madrid even consulting the idea of SUING La Liga and CVC for €2.7 billion due to misappropriation of assets.

 

Both clubs think that the money is not enough for such stake and don’t agree with the terms and conditions of the agreement. 

The contract will be voted on by all of the 42 teams that make up La Liga and Segunda División but it is very likely the majority will vote in favour due to the fact, many of the clubs, especially the smaller ones, need the money after an especially tough year and a half. 

 

While the El Clasico rivals may also be in lots of debt, the deal will harm them more in the long run. The clubs think the deal is unfair and that CVC are coming away with a great bargain. The two European giants generate La Liga the most income and they think CVC will receive too much of that income. 

 

CVC also tried to strike a similar deal with the top division of Italian football, Serie A, but top clubs such as Juventus and both Milan teams refused the offer as they felt the fee was too little. 

 

Both clubs feel like they have been given the shorter end of the stick.

 

What does this mean for Barcelona? 

 

Barcelona are arguably the worst off out of the two of the clubs, with them already losing star man, Lionel Messi due to it not being possible to register the player without the CVC contract. Will they even be able to sign their new signings? 

 

Fc Barcelona released an official statement on Lionel Messi on Thursday evening, stating their greatest ever player would not be able to continue due to “financial and structural obstacles”. 

   (Lionel Messi reduced to tears at his     farewell ceremony)

Messi had already reduced his salary by 50% to help the Catalan club and it still wasn’t enough for him to stay. It was even legally impossible for him to reduce his salary anymore, as by Spanish law, any new contract is required to be a minimum of 50% less than than the previous wage to prevent financial manipulation.

 

As for the salary cap, the industry recommends the limit should be around 65-70% but at Thursday’s press conference, Joan Laporta claimed that with Messi, the club’s salary cap was at a staggering 110% and even without Messi, it stands at 95%. He also claimed that to sign around €25m of salaries, the club would have to offload around €100m.

 

It’s clear a lot of work needs to be done at Barca!

 

Leo Messi did appear at the Camp Nou yesterday for a press conference and a final goodbye that moved many to tears, especially when he received a standing ovation from the whole of the audience. The Argentine claimed “I did everything possible to stay and I’m very upset that I have to leave. It’s the most difficult time in my career for sure.”

 

It is clearly a new era for FC Barcelona and the question on many lips is “What happens next?”