Barca and Real join forces against British investors' plan

Their names are the absolute elite in the world of sports, sitting atop the metaphorical Olympus. The football giants Real Madrid and FC Barcelona are not only age-old, irreconcilable rivals, but also consistently rank among the most valuable sports entities on the planet. According to the latest study by consulting firm KPMG, Football Benchmark 2021, Real Madrid, with a valuation of €2.91 billion, is the most valuable football club in the world. Closely behind is its hated rival Barcelona, valued at €2.87 billion. The irony is that despite their fierce rivalry, there is currently a rare form of cooperation between these two elite brands. Both Real and Barca have opposed a proposal put forward by La Liga officials. The league’s leadership wants to provide financial relief to clubs that were severely impacted by the coronavirus pandemic.

For that reason, La Liga’s board has already verbally agreed to a €2 billion injection from the British private equity fund CVC Capital Partners. In practice, this would mean that investors from CVC would receive, in return for their loan to 42 clubs across Spain’s top two divisions, 10.95 percent of all broadcasting revenue—for a duration of 50 years. Yes, for the next half-century, there would be a contractual partnership between La Liga and the British financiers. Clubs would be able to immediately tap into the financial resources, of which 90 percent would go directly to the participating teams. On the other hand, how that money could be spent would be regulated. A maximum of 15 percent could be used to sign new players, another 15 percent to pay down existing debt, and the remaining 70 percent would need to be invested in infrastructure improvements. "A €2 billion injection for a private project is significant. This package could positively shake up La Liga’s appeal even further," sports analyst Jozef Tokos told Economic Daily about the potential deal.

However, in the form of Real Madrid, Barcelona, and also traditional Basque representative Athletic Bilbao, La Liga leadership faces three prestigious clubs that do not support the current plan. "This kind of transaction makes no sense for the clubs. It only benefits CVC and its affiliated entities," said Real Madrid president Florentino Pérez recently in response to the emerging deal.

And Pérez came up with a counterproposal. For Spanish clubs whose liquidity is far from ideal, the Real president suggests a loan from major banks JP Morgan, HSBC, and Bank of America totaling €2 billion. These financial institutions would lend the capital for the next 25 years at an interest rate of between 2.5 and 3 percent. Just for context, JP Morgan also provided financing to top European clubs that earlier in the year made an unsuccessful attempt to create a breakaway Super League. La Liga itself, and especially its president Javier Tebas, has been a strong critic of the Super League project from the very beginning. For this reason, the relationship between Tebas and the hard-nosed businessman Pérez is anything but warm. "We don’t have insight into those negotiations, but if 39 out of 42 clubs agree to it, then maybe it’s not such a bad deal financially or overall. After all, clubs like Valencia, Villarreal, and FC Sevilla also have their own interests," added Tokos.