Breakingviews: Reheated CVC soccer plan faces better Spanish odds

Sporty buyout fund CVC Capital Partners is at it again. After failing to convince Italy’s Serie A of its plans for the soccer league’s commercial rights, the private equity group is taking its sales pitch to Spain. Its proposals to La Liga have a better chance of finding the back of the net.

CVC’s forays into soccer build on its experiences with Formula One and rugby. Under the plan, which is yet to be approved by the clubs in La Liga’s general assembly, the firm will pay 2.7 billion euros for 10% of a new entity that will focus on boosting revenue from Spanish soccer’s broadcasting and online rights and sponsorships. The hope is ultimately to match the 3.6 billion euros that the English Premier League corners every year.

Even though the transaction values La Liga at 24.3 billion euros, CVC is not paying through the nose. The league’s domestic and international rights were worth an estimated 2 billion euros in the last three-year cycle and are likely to hit 2.3 billion euros this year, two industry insiders told Breakingviews. That values La Liga at just over 10 times its commercial revenue, before CVC’s capital injection. The buyout group’s roughly 17 billion euro plan for Serie A valued the Italian entity at nearly 14 times sales, based on estimates of revenue falling to 1.1 billion euros this year.

Such a juicy offer was blocked by a minority of Italian soccer chiefs wary of ceding too much possession. However, the same is unlikely to happen in Spain. Just over 40 first- and second-tier clubs will get to vote, most likely by simple majority. That makes it harder for heavyweights like Real Madrid, which opposes the deal, or Barcelona to derail the plan.

By the same token, the deal could also make it tougher for such big names to peel off into a pan-European Super League, as they tried and failed to do in April. CVC’s Serie A initiative included hefty financial penalties for any team looking to split from the national league, irking top club Juventus. The set-up with La Liga would almost certainly be the same, limiting future options for top Spanish teams. It’s not just Italian clubs that will be watching with interest from the touchline.

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