The reasons for Madrid's no to the agreement between LaLiga and CVC

Real Madrid's rejection of the LaLiga Impulso project, for which football clubs would receive 2.46 billion to be returned in 40 years at zero interest, thanks to an agreement between the clubs' employers and the CVC investment fund, it is based on several pillars: that the agreement was forged behind the back of Madrid, that it is infinitely more beneficial for the investment fund than for LaLiga, that other funds could offer significantly better conditions and, ultimately, that what has occurred is a “deception” to expropriate the clubs of their audiovisual rights for 50 years. For this reason, Madrid is considering taking legal action against LaLiga for what it considers a “scam”.

The agreement between CVC and LaLiga contemplates a contribution from the fund of 2,667 million, of which 2,460 would be used for loans to clubs. In return, CVC would receive the 11% of revenue from LaLiga's non-audiovisual businesses (sponsorships, licenses, technology…) and 10.95% from audiovisuals in the next 50 years.

Madrid has prepared a study on different scenarios in the evolution of the audiovisual market. If it stayed at current figures for the next half century (around 1.8 billion annually), CVC would pocket, according to this calculation, 9,855 million euros. If it grew by 2%, the figure would rise to 16,671 million. And if it went up to 10%, CVC would receive 229,406 million. Even in the case of a serious drop in the value of these rights, of 30% for example, Real Madrid estimates that CVC would obtain 6,958 million. That is, according to the club, It is a round business for the fund and very bad for LaLiga.

The rejection of the Super League

The Super league, which drives the white club among others, already rejected a similar CVC proposal for its European expansion project because he believed that the agreement was inordinately beneficial to the fund. Madrid believes it is in a position to find much higher offers (of up to 7,000 million instead of the 2,460 that appear in the agreement with the body chaired by Tebas). In addition, he doubts that LaLiga, which can only sell its audiovisual rights for periods of between three and five years, have legal capacity to assign a percentage of them for fifty.

The white club considers that, in reality, CVC expects a return of more than 20% per year when bank interest in operations of this type is around 2%. He also argues that this same CVC proposal was rejected by the Italian League, where only Serie A clubs have the right to vote, considering it clearly insufficient. In Madrid's opinion, modest clubs that would now accept the agreement due to the delicate situation they are experiencing as a result of the pandemic would be greatly affected in the event of promotion to the First Division in the coming years.

The discussion

In the last hours, the president of Real Madrid has personally discussed the terms of the agreement between LaLiga and CVC with the general director of the fund, Javier de Jaime, with whom he maintained a close friendship, as revealed by El Confidencial. De Jaime explained to Pérez the, in his opinion, advantages of the agreement, although without success. In the conversation, the white leader expressed his discomfort for not having been previously informed of an agreement that he considers very harmful for the clubs and accused CVC of acting as a opportunistic fund for wanting to take advantage of the delicate situation of the clubs due to the pandemic.

Madrid, finally, does not understand why it does not have the document of the agreement between LaLiga and CVC. According to the club, You are allowed to read it at LaLiga headquarters for a limited time, but not receive a copy of it. In your press release Against the agreement, Madrid stated: “This agreement was made without the participation of Real Madrid and without their knowledge, and LaLiga has allowed for the first time today that we have limited access to the terms of the agreement” . The same note adds that the pact, “Using a deceptive structure, it expropriates from the clubs 10.95% of their audiovisual rights for 50 years and against the law.”

Italy and Germany said no

Likewise, it considers that the negotiation has been carried out “without a competitive process and the economic conditions agreed with the CVC fund give it returns of more than 20% per year”. And adds: “This same opportunist fund is the one that unsuccessfully tried similar deals with the Italian and German leagues.”. The note concludes: “Real Madrid cannot support an operation that gives investors the future of 42 First and Second Division clubs and the future of the clubs that will qualify during these 50 years.” The white club's arguments coincide with those used by FC Barcelona to express their opposition to the agreement between LaLiga and CVC.

The League, on the contrary, considers that CVC's capital injection will allow the clubs to grow and, therefore, make their audiovisual rights more profitable. Regarding the accusation that the agreement is not in accordance with the Law and uses deceptive formulas, LaLiga considers that the operation is perfectly legal and in accordance with the powers conferred by law, that is, to encourage those actions that develop and promote competition to value the audiovisual rights of the same.