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MADRID (AP) — Atlético Madrid is revamping its training facility. Sevilla and Valencia are rebuilding their stadiums. Sporting Gijon is expanding its youth academy.
The Spanish club will meet this week to introduce and discuss the project, which has been financed by the private equity group’s $2.1 billion stake. Invested by CVC Capital Partners in the Spanish league.real madrid and barcelona opposed the deal They are not part of an agreement that gives Luxembourg-based CVC an 8.25% stake in a new company that will manage the Spanish league’s television rights. The league’s two-day meeting began on Tuesday.
The 2021 deal was the first of its kind in Europe’s top soccer league, but CVC has since made a similar investment in the French league, and another private equity firm is competing for a stake in the German league’s media rights. It competes with Blackstone.
Here’s a look at how private equity and other investment funds are building a presence in world football, despite pushback from some clubs, federations and fans.
Impact of COVID-19
When clubs faced financial difficulties during the coronavirus pandemic, investors seized the opportunity and now some clubs are thriving in previously underexplored niches. More than a third of teams in Europe’s top five leagues now receive funding from private equity, venture capital or private debt firms, according to a report published late last year by financial data firm Pitchbook. It is said that he is receiving it. It has invested about 5 billion euros ($5.4 billion) in Spain, France, Italy, Germany and England, up from less than 66 million euros ($71 million) in 2018, according to Pitchbook.
“Part of the economic reality is that these companies have suffered as a result of COVID-19,” said Jonathan Lutsky, managing partner at holding company 777 Partners. “Over the past three years, there has been a unique opportunity to enter at an affordable price.”
multi club owner
Miami-based 777 Partners entered the club ownership business a few years ago and now owns Italy’s Genoa, Brazil’s Vasco da Gama, Belgium’s Standard Liège, France’s Red Star and Australia’s Melbourne Club. Victory, german hertha berlin and Seville, Spain. The purchase is English club Everton We are awaiting final approval from the Premier League.
Multi-club ownership approaches often rely on investing in small to medium-sized clubs with lower valuations and greater growth potential. According to Pitchbook, more than 40% of clubs in Europe’s top five leagues have relationships with owners of multiple clubs.
“You get a lot of benefits that you don’t get by owning a single club,” Lutsky said. “The more clubs you own, the more data points you have, the more flexibility your strategy has and the more synergies you can create. We can learn best practice in the field, which all clubs will benefit from.”
Other investors with interests in multiple clubs include California-based private equity firm Silver Lake, which has a stake in Abu Dhabi’s City Football Group. The group’s flagship team is Manchester City, with other clubs in the United States, Japan, Spain and Brazil.
Other industry players include Sixth Street Partners, which has non-ownership deals with Europe’s Real Madrid and Barcelona, and Clearlake Capital. Recently acquired Chelsea. RedBird Capital Partners purchases controlling interest in both companies AC Milan in Italy We also have an investment in Toulouse, France. Within Fenway Sports Groupowns Liverpool, England.
Part of the hurdle to this model has to do with UEFA regulations. Rules for multi-club ownership Created to protect the integrity of the competition. Teams may be drawn to play against each other During the season. On a strict reading of the rules, UEFA should prevent teams belonging to multiple ownership networks from participating in the same European competition.
Investing in the league
Instead of buying stakes in individual clubs, CVC took a different approach by investing around 2 billion euros ($2.1 billion) in the Spanish league in long-term contracts.
Mallorca, the Spanish club partially owned by Golden State Warriors coach Steve Kerr and former NBA great Steve Nash, is one of the teams that used the CVC advance to pay down debt and improve infrastructure. is. The club began making more money by renovating its stadium and was eventually able to make up for what it had given up to CVC by selling some of the league’s television rights.
Mallorca CEO Alfonso Díaz told The Associated Press: “Tickets, sponsorships and other stadium revenues have increased by 43%, and we expect revenue to increase by around 83% over the next two to three years. That’s what I’m aiming for.” “So we’re doubling our revenue compared to the previous[deal with CVC]. In two or three years, we’ll be in a position that would have probably taken us 10 years without the deal. Let’s go.”
CVC too Commitment to invest 1.5 billion euros It acquired a $1.6 billion stake in the French league in exchange for a 13% stake in a new commercial subsidiary that would manage television rights.
CVC and Blackstone senior executive David Blitzer owns a stake in German club Augsburg. Potential buyer is negotiating with Germany’s Bundesliga Get up to 8% of marketing revenue for 20 years in exchange for an upfront payment.
Jaime Blanco, head of Spanish leagues who oversees the CVC partnership, said: “La Liga was the first top flight to do this, but now we’re seeing news of new deals from Germany, Brazil and Mexico. I started listening to it every day.” “Being able to have a partner with industry knowledge, improving practices and an infusion of capital is a very attractive proposition. I wouldn’t be surprised to see more deals like this happen.”
Not for everyone
Real Madrid and Barcelona rejected the CVC deal, saying it made more economic sense for the investors than the clubs. Athletic Bilbao also refused to participate and are suing the league along with Madrid.
The clubs opposed argued that CVC was never a strategic partner, but merely a financial investor involved in a wide range of sectors outside of football, seeking to maximize profits. They argued that the club should not have given up its independence and mortgaged its financial future.
“The deal between La Liga and CVC is a disaster for Spanish football,” Real Madrid president Florentino Pérez told club members at a general meeting last year. “For this reason, we believe that, given its irregularities, this bill will be permanently invalidated by the Spanish courts. Our heritage will be taken away, because our present and future depend on it.” I cannot forgive that.”
French club Le Havre also filed a lawsuit over its CVC contract with the French league after being dissatisfied with the proposed division of funds. France’s National Financial Prosecutor’s Office was also assessing a complaint regarding the possible misappropriation of funds when a French league trading company was established after a partial transfer of capital.
Italian clubs rejected collective contracts with CVC a few years ago, but individual clubs have been more open to foreign investors despite traditionally being family-run.
There are many fans in Germany as well. is strongly opposed It opposed a bid by a private equity group to become involved in the Bundesliga, fearing it would mean a loss of control and accountability in a league where most clubs are controlled by members. be. Protests have intensified since December, with games often being suspended as fans threw chocolate coins, tennis balls and other objects onto the field.
regulatory changes
The arrival of these new investors has prompted some countries to make regulatory changes to accommodate their investments.
777 Partners’ presence in Brazil (which also owns the television rights) was only made possible after a 2021 law allowed the club to become an anonymous soccer company. The changes also allow former Brazilian soccer great Ronaldo to take a 90% stake in Cruzeiro and allow American businessman John Texter to invest in double-division club Botafogo.
Argentina is also working on changing its laws to allow investors to bring money into the country.
Almost every other major soccer country has already taken advantage of this further boost, and investment in the soccer industry is expected to only increase around the world.
“We’re going to see more demand than ever before,” Lutsky said. “And every investor that comes in is going to add value to the team that they’re buying. So buying a stock that’s structured in a way by an institutional investor is going to help future investors. It may become even more attractive for
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Associated Press writers James Ellingworth, Graham Dunbar, Daniella Martal, Samuel Petrekin, Joseph Wilson, Deborah Ray, Eleanor Hughes and James Robson contributed to this report.
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AP Soccer: https://apnews.com/hub/soccer
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