Last week, of the 42 clubs in the Spanish La Liga, 38 approved the introduction of the Anglo-Luxembourg investment fund, CVC Capital in their business to the tune of 2.1 billion euros (reduced by 600 million compared to to the original agreement). The economic crisis that follows the health crisis has brought in investment players, who strongly want to diversify their portfolios in entertainment.
In fact, the agreement refused by FC Barcelona, Real Madrid, Atletico Madrid and Athletic Bilbao allows the investment fund to take 10% of the economic rights of La Liga over the very long term. On paper, this would bring in more than 200 million euros to dissident teams, but in exchange for a mortgage of the income. 11% of non-audiovisual revenues and 10.95% of audiovisual revenues during the next fifty years.
A trend that is confirmed
This detail is important because it demonstrates the reality behind the hope. In June, the New Zealand Rugby Federation accepted a proposal from the American fund Silver Lake (already a shareholder of City Football Group). 12.5% of commercial rights against 280 million euros. A deal contested by the collective of All Blacks players who made a counter-proposal. In vain. Approaching, it’s now clear that the deal is very much like the one between La Liga and CVC Capital, ceding part of the All Blacks for at least two generations. This explains the strong reaction of the players.
The trend to sell its commercial rights to investment funds accelerated in the second half of 2020. CVC Capital Partners was the most active. The Italian Serie A had already ceded 10% for 1.7 billion euros to the investment fund, associated Advent International and the Italian fund FSI, for the management of the TV rights of the Italian league. In 2020 he also took a 28% stake in the United Rugby Championship for 145 million euros. In February 2021, he invested $ 300 million in the International Volleyball Federation. In March, he acquired a 14% stake in Six Nations Rugby for an amount of up to 435 million euros. He is currently in talks for a € 515million deal that would merge ATP and WTA. We know the company is looking to take a stake in the Currie Cup, South Africa’s premier rugby federation.
In Formula 1, McLaren Racing sold 15% in 2020 and 33% in 2022 of its capital (depending on the modulations), to a consortium led by MSP Sports Capital, but behind this investment there is Ares Management. This fund invested 1 billion euros in 2020 by acquiring stakes in McLaren Racing, Atlético de Madrid, The San Diego Padres, Rugby Australia and the Professional Fighters League.
Save the immediate
Previously bank loans were the solution, but the health crisis has caused an economic crisis in sports as the demand for content in sports, media and entertainment is growing. Faced with competition, leagues and federations prefer to invest in order to maintain their market share and possibly gain it. From a loan that can range from 3 to 10 years, we have now gone to 25 or 50 years. A heavy legacy for the leaders of future generations.
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