Sports Money: La Liga Goes To Battle With The Premier League
(Via Real Galacticos / YouTube)
In a deal that is first in its kind for a major European league, Spain’s La Liga has announced that it has agreed in principle to sell 10 percent of its business to private equity firm CVC Capital Partners for 2.7 billion euros (3.2 billion USD). It is said that around 90% of the funds will be channeled directly to the clubs. This should benefit both lower and high tier clubs in the league. The clubs still need to vote on it, but Barcelona and Real Madrid have already publicly rejected this deal. Both Barcelona and Real Madrid oppose this deal because it will hand over the rights for 50 years and CVC would come out on top with annual returns of over 20%.
The proposed deal would give CVC Capital a 10% stake in La Liga. This is likely a deal that La Liga was forced to enter due to the money the Premier League has seen come in recently along with the demise of the Super League, which would’ve given the top three clubs in Spain a big cash boost. The Premier League has done an extremely good job in marketing the league and giving it a worldwide appeal, while La Liga has failed to do this even at a time where they had the two best players in the world in Messi and Ronaldo. This has hurt La Liga in the long run due to the Premier League clubs having much more money to sign players and attract top talent. La Liga realizes this and said in its statement, “It is an ambitious plan which will give La Liga and its clubs the resources to continue the transformation into a global digital entertainment company, strengthen the competition and transform the experience for fans.”
This comes at a time where Spanish clubs have struggled financially due to the pandemic forcing teams to play in empty stadiums. The Premier League on the other hand, have had no problem splashing hundreds of millions on new signings, even with teams playing in empty stadiums. In what will be the biggest deal of the Premier League transfer window, Chelsea are on the verge of signing Belgian striker Romelu Lukaku for 115 million pounds (159 million USD) according to the Adam Schefter of soccer, Fabrizio Romano. This is just one of a few big deals that English clubs have been able to pull off due to how big the Premier League has become and the revenue they bring in via TV deals, sponsorships, etc.
La Liga is different to the Premier League as they introduced somewhat of a salary cap back in 2013. This salary cap or “financial fair play” sets a maximum amount of money that a club can spend on players and coaching staff each season in relation to the amount of revenue the club has made throughout the season. Barcelona rejecting the deal means they lost one of the best players in the world in Lionel Messi. Messi agreed to take a 50% pay cut to stay with Barcelona, but this would still put Barcelona over the salary cap. Barcelona needed to reduce 100 million euros worth of wages from other players according to newly re-elected president Joan Laporta, but were unable to as players didn’t want to reduce their wages after the pandemic. Messi also could not take a huge pay cut to the extent of being paid a miniscule amount due to Spanish laws that require any new contract to be a minimum of 50% of previous wages. Had Barcelona accepted the deal with CVC, they may have been able to keep Messi. Instead, they rejected it in favor of a long-term approach and have lost arguably the biggest player in the club’s history.
This will put a huge dent in La Liga’s appeal with them having lost one of the best players ever in Lionel Messi. La Liga has lost three of their biggest players in Messi, Raphaël Varane and Sergio Ramos all in the same summer while the Premier League is spending big money on top tier talents like Romelu Lukaku and Jadon Sancho. La Liga will need to hope that the rumors of Madrid going after Kylian Mbappé come true to give La Liga a new face of the league that will give the league more appeal after the departure of Messi.