Prolific sports investor CVC Capital Partners has landed its biggest sports deal yet, agreeing to pay €2.7 billion (about $3.2 billion) for a minority stake in La Liga, Spain’s top-flight soccer league.
The deal, which values La Liga at around €24.2 billion, will see CVC get a 10% stake in a newly formed company controlling the league’s commercial activities.
This was London-based CVC’s third attempt to acquire a stake in a premier European soccer league. Last year, the firm joined Advent International and Italian state investor FSI to pay €1.7 billion for a 10% stake in the media rights of Serie A, Italy’s premier soccer league, but negotiations stalled after several clubs moved to block the deal. It was also reported to be seeking a stake in Bundesliga before the German league pulled the plug on the sales process.
CVC isn’t the only PE firm to target European soccer lately. Earlier this year, Ares Management agreed to pick up a stake in Spanish club Atletico Madrid for €181.8 million. Oaktree Capital Group was reported in May to be close to taking a minority stake in the Italian club Inter Milan.
PE investors are ramping up their exposure to sports teams to take advantage of the growing demand for sports-related content. Sports organizations, hit hard by the impact that pandemic lockdowns have had on their revenue streams, are also increasingly receptive to alternative sources of capital such as private equity.
La Liga is using 15% of its CVC investment to pay off debt. Another 15% will be used for player acquisition, while the remaining 70% will be spent on infrastructure improvements, including technology.
“As the CVC deal probably points out, the football industry has changed completely—for the better—in the last few years in terms of corporate and financial governance. And football, as a media or content business, has a lot to gain from operating leverage,” Luis Garcia Alvarez, a portfolio manager at Spanish soccer equities specialist Mapfre AM, said in an email.
CVC is one of the more active private equity investors in sports. The firm has made three rugby union investments and another in international Volleyball, in addition to its two exited investments in motorsports—Formula One and Dorna Sports.
Related read: Why sports teams and private equity are pairing up
Featured image by Fran Santiago/Getty Images
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