Friday, September 24

The LaLiga-CVC agreement opens a battle in football that has little to do with sports and a lot to do with money


In mid-August, to comply with a calendar that will allow the World Cup in Qatar to be held this winter, which the regime has been wanting for years to legitimize itself before the world, this weekend a new season of the Spanish league has started, commercially known as the Santander League. . A little over a month has passed since the Eurocup ended and a week after the Olympic football final, and the ball of the highest national competition is rolling again. In the opening match, Valencia beat Getafe on Friday night by one to zero. The first day has raised a minor media interest, with Messi on his way to Paris, without major signings in the local competition and another great conflict in the making in Spanish football. What is less talked about is the match between Celta and Atlético de Madrid, or the Alavés-Real Madrid duel. It is the economic plane and not the sporting one that has starred in sports news. The sale of part of LaLiga’s business to a private equity fund, CVC, has unleashed another storm — one more — in Spanish football.

The attempt of a league of rich people fails but the businessmen who promoted it have already changed the football business

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To fully understand this situation, we must leave sport as a starting point aside and understand that we are talking about companies – football clubs -, an employer association – LaLiga -, a furious economic crisis and many business interests, all mixed up. with a long history of personal confrontations and ego struggles that come from long before this operation began to cook.

The operation

The conflict begins on August 4. LaLiga confirms in a statement that it has reached a “principle of agreement” with the CVC venture capital fund, by which it would inject 2,700 million euros in exchange for keeping 10.95% of the business of the 42 clubs that make up this organization. This fund is known in Spain for being present in Naturgy, Deoleo, or the Vitalia residences and for having owned other sports competitions such as Formula 1 or Moto GP. Now, he is landing strongly in the football business.

10% of the fund’s contribution goes to LaLiga and the rest is shared between the first and second division clubs. It will be done through 40-year 0% loans, depending on the distribution of television rights that each club has, being 70% for technological innovation and infrastructures, 15% for debt and another 15% for players. In return, for 50 years, the fund would receive 10.95% of the business generated by LaLiga, which includes the juicy cake of television rights.

Three sides

From the moment of the announcement, three sides are created in this battle, more economical than sporting. On the one hand, LaLiga, with its president, Javier Tebas, at the helm. He argues that this is a “historic” agreement and that it will help increase the value of the football business in Spain. On the other hand, FC Barcelona and Real Madrid, the two clubs with the most titles in Spain and among the most successful in Europe, which already tried this year to set up a European Super League on their own with other European teams, charge against the decision and even the team chaired by Florentino Pérez takes the case to court. They assure that the agreement “mortgage” for half a century a part of the television rights of football, in the words of Joan Laporta, president of the Blaugrana club. In third place is the Royal Spanish Football Federation, chaired by Luis Rubiales, who has always faced Thebes and who calls the agreement “illegal” and understands that it goes against the interests of modest football and of those teams that may arrive in the years to come to the elite of professional football.

Finally, the agreement was approved last Thursday, August 12, in an extraordinary assembly where the 42 first and second division teams participated. 38 teams voted in favor and four against (Real Madrid, Barcelona, ​​Athletic Club and Real Oviedo). Of course, the operation has undergone variations to satisfy the wayward, although they finally maintained their refusal. Clubs that do not want to participate and make use of CVC money will not have to give part of their audiovisual income to the fund. If finally these four teams decide not to participate, as expected, the investment of the fund will decrease, from the initial 2,700 million to about 2,100 million, and also its participation in the LaLiga business: from 10.95% initially announced to be between a 8% and 9%, as advanced by the football association.

The importance of television

As you can see, at the center of the whole matter is a succulent cake, again cheaper than football: television rights at a time when club finances are drowned by falling income from the pandemic and the splurge on signings in recent years. It is necessary to put this business in numbers to understand its importance. The auction of national rights carried out in 2018 for the 2019/2020, 2020/2021 and 2021/2022 seasons amounted to 3,455 million euros. To this is added the package of international rights, which between 2019/2020 and 2022/2023 will have generated 4,485 million for LaLiga, according to data collected by UEFA. According to this body, 42% of the income of Spanish clubs comes from national audiovisual rights.

However, audiovisual rights have an important appointment after the summer and with a lot of uncertainty. LaLiga must call a new auction and those interested, mainly Telefónica, have already warned that they will not bid at any price, a speech similar to that of Orange, the other operator that currently broadcasts football in Spain. In other major European leagues such as Italy or the United Kingdom there have been reductions in the cost of audiovisual rights, after a few years of bubble that greatly complicated the ability to recover that expense. In fact, Vodafone already dissociated itself from this war in 2018. It remains to be seen if the bubble will also burst in Spain, as is happening in other countries.

Tebas, the president of LaLiga, defended this week after approving the agreement with CVC, that the objective is for an operation of this type to help revalue the audiovisual rights of the Spanish competition. In fact, he estimated that in eight years the price of the rights would grow between 30% and 35%. The organization has sold this operation under the name LaLiga Impulso.

The antecedent of the Superliga

But this new war in the world of football would not be understood without looking back at last spring. Then, 12 of the richest clubs in Europe announced the creation of the Super League, a competition that broke with UEFA, FIFA and put the national leagues in a very compromised situation, which could lose their most important teams. Although nine of those clubs were discharged, Real Madrid, Barcelona and Juventus de Turin maintain the project.

This decision has raised the tension between the management and the two great Spanish teams, the ones that accumulate the most titles in this competition in their showcases and draw the most fans. Tebas himself assured this week that their rejection of the agreement with CVC was due to the confrontation between both parties for that competition.

Again, it was money and not sport that started a war between companies and their employers. Although it was sold as a way to give more interest to football competitions, behind it was the interest of the big clubs to directly manage the audiovisual rights, without having to share so much of the cake with the smaller teams. Historically, Madrid and Barcelona claim that they are the ones that generate the most income and that therefore it should be noted in the distribution of income. And so it has traditionally been.

The long war between Thebes and Rubiales

The other war that has flared up with the agreement between LaLiga and CVC is the one that the professional football association and the RFEF have maintained for a long time. Or rather, its presidents, Thebes and Rubiales. The RFEF does not have the right to vote in LaLiga and therefore did not participate in the vote on Thursday. However, part of the funding received by the more modest competitions, which depend on the RFEF, comes from the money generated by the first and second divisions. Therefore, in a harsh statement, the federation charged against the agreement with CVC, to which LaLiga responded with another in the same tone.

The operation is one more of the multiple public confrontations that both executives have had in recent years. To give examples, when LaLiga tried in 2018 to hold a game of the season in Miami to attract the public in the US, Rubiales charged against Tebas calling it “rude and disloyal.” When a year later the RFEF began to celebrate the Spanish Super Cup in Saudi Arabia, Tebas accused the federation of financing the competition with money from the “pirating” that that country does of European football. The last chapter was lived a month ago. Rubiales proposed a new model of league competition – now with matches in Miami – against the “immobility” of the bosses, and Tebas responded by accusing the president of the federation of “irresponsible.” All of them, disputes cheaper than sports.

And in the background, the economic crisis of the clubs

Neither would the LaLiga-CVC operation and the battle it generated afterwards be understood without taking into account the financial situation that professional football is experiencing. The closure of stadiums due to the pandemic has had a very strong effect on the income of football clubs and, with it, on their economy. The employer itself estimated the losses at 733 million last year. In fact, 15 clubs came to attend the call for loans guaranteed by the ICO and requested 350 million euros of financing. Real Madrid and Barcelona covered most of those requests.

In short, companies with financial problems, personal clashes and disputes within the bosses and an investment fund that gets to do business with television rights. With those ingredients, he got the ball rolling this weekend. At least, yes, it will be sport.



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