La Liga has announced an agreement in principle to sell a percentage of its business interests to private equity firm CVC Capital Partners for $3.2 billion this Wednesday.
The Spanish top-flight boasts the likes of Real Madrid, Barcelona, Atletico Madrid, and Sevilla and will sell 10% of a recently formed company which houses most of its business to the group.
If the deal is approved, La Liga’s total value will be around $29 billion and the money that will go to the clubs will be to fund “structural improvements” as well as offsetting some of the immediate COVID-19 impact, added the statement.
A league-wide salary cap and the economic impact of the pandemic has left Barca and Real strapped for cash with new signings unable to be registered by the ailing Catalan giants and significant exits such as Raphael Varane to Manchester United and Sergio Ramos to Paris Saint-Germain in Madrid.
According to La Liga, 90% of the funds raised and then passed on to the clubs must go towards league-agreed investment deals — not necessarily new signings and salary increases.
The Super League failure earlier this year saw Barca and Real as two of the staunchest supporters of the move and they remain committed to the breakaway publicly despite the majority of the original 12 withdrawing their support.
“This agreement aims to lead the transformation that the entertainment world is undergoing and to maximize all growth opportunities for clubs,” added the statement.
Management of La Liga’s sporting responsibilities and TV rights will not be part of CVC’s acquisition and the stake sale still needs to be approved by league and club executives.
The investment, should it be confirmed, could see La Liga match or better the Premier League’s business standing over the coming decade.
What does this mean?
Essentially, there will be financial relief for the likes of Barca and Real at a time when their finances have been decimated by the economic impact of COVID-19 and the harsh reality of more than a year without matchday income.
The Blaugrana’s situation is more complicated than that as they were already in financial difficulty pre-pandemic after years of irresponsible mismanagement which the new regime is struggling to get to grips with.
For example, free transfer summer arrivals Memphis Depay, Sergio Aguero and Eric Garcia have not yet been registered as Barca are so far away from meeting their salary cap requirements and even the legendary Lionel Messi’s contract extension cannot yet be actioned because of this.
Will this keep Lionel Messi at Barcelona?
While this is good news in general for the likes of Barca, it will only slightly help their current predicament as the injection is not designed to help them acquire new players or renew existing contracts.
Messi, who is prepared to take a pay cut to re-sign for Barca, remains in limbo with the club nowhere near close to La Liga’s imposed financial limits with the season getting underway in mid-August and the transfer deadline at the end of this month — he is currently a free agent.
Can Real now sign Kylian Mbappe?
The same goes for Real’s pursuit of PSG star Kylian Mbappe in that the Spanish giants must free up enough funds below their salary cap limit to be able to afford both a transfer fee and the France international’s salary.
Short of gutting the entire squad which is an impossible scenario given the number of high earners who it is nearly impossible to move on at present, Los Blancos’ best bet remains to run down his deal in Paris and leave for free next summer and that is what he appears to be trying to do.
To be clear, for Real, Barca, and other Spanish clubs in financial difficulty, this will not magically enable them to start signing players once the deal is agreed — it is more of a guarantee of their long-term economic health.