The countdown begins to finally approve or not one of the most ambitious projects since Javier Tebas is the president of the Spanish clubs. A project called LaLiga Impulso and that will bring the rain of 2,000 million euros to the equipment in the form of loans to be repaid in 40 years, in exchange for a participation of around 10% for the investment fund CVC in the income from television rights. It will be next December 10 when a new Assembly is held in which the final approval must be given. In this countdown, a new offer has emerged, presented by Real Madrid, Barcelona and Athletic (the only three teams that said no to LaLiga Impulso) to change it., since they assure that it is more advantageous for the clubs, and knock down the one achieved by LaLiga.
The employer tries to show the differences of both projects. It defends that the agreement with CVC is a “capital contribution and incorporates a strategic partner that shares the risks of the business”, while ‘Sustainable Project’, the alternative presented by Real Madrid, Barça and Athletic, points out that it is “an operation purely debt, with a fixed return for the lenders, who are not involved in the project. ” This alternative, recalls LaLiga, which is backed by two clubs that are still part of the Superliga, a competition that is accused of dealing with the current ecosystem of world football and that would affect the economy of the national leagues. “An expert report prepared by KPMG concludes that LaLiga clubs would lose more than 80% of their value if the Super League went ahead“They recall from the bosses. And it is that one of the banks that would endorse the ‘Sustainable Project’ is JP Morgan, which would also finance the Super League.
Regarding the economic agreement of the alternative to CVC, from the League they affirm that it cannot be carried out: “It is a supersenior financing, which requires granting guarantees to the funders and grants them a preferential right over the totality of the audiovisual income of the clubs. Therefore, this operation would be subject to the individual consent of each and every one of the creditors of the clubs. Many clubs, which have their television rights pledged, They would not be able to adhere unless they dedicate the money received to paying off pre-existing debts, instead of dedicating it to growth projects. The structure of the Impulso Project, on the other hand, is completely compatible with the starting situation of all the clubs. “And one of the controversial points of the agreement with CVC was to give 10% of television revenues to said investment fund , but in the alternative, from the employer they assure that it is not known who would be the manager of those rights: “LThe alternative operation implies transferring 100% of the audiovisual rights to another company that does not explain who is going to manage it. Not a word is said of the Corporate Governance of the new entity. “And they add: “Clubs lose control of their rights for 25 years. And it is not explained if the affected clubs go down, they will continue to have to pay fixed debts for 25 years without having the resources to do so. “
LaLiga Impulso is a project organized by the employers’ association with the aim of adapting to the new reality offered by the market. Whose television rights tend to decline and OTTs burst as a new way of connecting with the fans. “The value of television rights to the major European soccer leagues has fallen in recent auctions. LaLiga is experiencing a sharp drop in the number of television subscribers in Spain, while the new entertainment platforms (Netflix, Amazon Prime, Disney +, HBO) reach record numbers of subscribers. The domestic leagues are being threatened by possible changes in international soccer. A business transformation is necessary to reverse the trend and ensure future growth. And this transformation can only be done with long-term capital that allows investment, not with debt that further stifles the financial situation of the clubs. And with the participation of a strategic partner with extensive knowledge of the sector who coordinates this comprehensive transformation plan with La Liga’s management team and with the clubs, “LaLiga sources say.
CVC, which will be associated with LaLiga for the next 50 years, is an investment fund with experience in sports and technology management. As was his investment and presence in Formula 1, Moto GP, rugby and volleyball. This company has been analyzed by impartial experts, such as Rothschild and Duff & Phelps, reaching the following conclusion: “The valuation offered by CVC funds represents a multiple of 15x EBITDA, higher than the average of listed companies in the world of sports or to the one of the
comparable transactions “.
Now we have to wait until December 10, when the final vote on the LaLiga Impulso project will take place.. In August, it was approved in the Assembly by 39 of the 42 clubs, on December 1 the final proposal of CVC was approved unanimously in the Delegate Commission in a contract in which neither Real Madrid, Barcelona and Athletic will be present. This new agreement must be ratified in the Assembly, with the shadow of an alternative of said three clubs flying over the environment, although reducing strength from the employer with said argument.
Meanwhile, LaLiga has responded to the letter from the three clubs with a document that points out that the financing alternative “is presented in a very biased way, but, above all, financially imprecise.” It is pointed out that it is a debt operation. “It is just a conceptual approach of a boutique called Key Capital, which has already worked on the failed Superliga project, and is not signed by banks or investors,” says LaLiga.
Letter from Tebas to LaLiga clubs
Javier Tebas, president of LaLiga, has sent this Tuesday, December 3, a letter to all the clubs giving his opinion on the alternative presented by Real Madrid, Athletic and Barcelona. “The letter received is not a proposal or binding, it is only a conceptual approach from a boutique called Key Capital, which has already worked on the failed Superliga project, and is not signed by the banks or the investors”, starts the agent. And he emphasizes: “There is no commitment on the part of Bank of America, Jp Morgan or HSBC.”
“The alternative is presented in a very biased way, but, above all, financially imprecise. It is not directly comparable to the Impulse Plan because this is a debt operation and, therefore, requires guarantees and the Impulse Plan is an equity operation and the investor runs the risk of the business “, explains Tebas to the clubs. He continues: “When they calculate the business scenarios and compare the Impulse Plan vs. the Sustainable Plan, they do so with three possible ones (CVC, Positive and Pessimistic). In the optimistic scenario they assume a cumulative annual growth of 10%, or that would mean that, in 50 years, LaLiga TV rights would be more than 193,000 million euros. In this impossible optimistic scenario, CVC would earn 168,639 million euros, but that would mean that the clubs would have entered 1,875,595 million euros. Almost two billion euros. 20% of the current GDP of our country “.
And ditch: “We do not understand how they can pretend that an initiative so little worked is presented as a plausible alternative to a project like LaLiga Impulso, the result of many months of working together to design an operation that provides stability and long-term vision” . Thebes adds: “The project called Sustainable Project is one more attempt to break the consensus and generate uncertainty with the sole objective of continuing to safeguard the selfish interests of a few against the common benefit of the majority.. The signatory clubs of the so-called Sustainable Project try to derail the Impulse Project, whose impact on audiovisual rights does not affect them, proposing an alternative that they themselves are not going to take, since their interest is capital and not debt “.
Tebas concludes by pointing to Florentino Pérez: “Let’s not forget that the letter is led by the president of Real Madrid who barely six months ago declared that we were” ruined “, that our matches were not interesting and that it was inevitable that the audiovisual rights of our competition would go down. The objective of this letter, as then, is none other than to generate uncertainty in this case to affect the operation that we will vote on on the 10th. “
Click here to read the full letter from Thebes to the clubs.