clock menu more-arrow no yes mobile

Filed under:

Real Madrid, Barcelona and Athletic publish letter to La Liga clubs presenting alternative to CVC Fund

The three clubs worked to find a different financial project than the one LaLiga presented alongside CVC.

The La Liga logo with the FC Barcelona and Real Madrid Club Badges Photo by Visionhaus

Real Madrid, Barcelona and Athletic Bilbao have published a letter, which they sent to the other clubs in LaLiga. In the letter, they present an alternative to the CVC project created by LaLiga.

The clubs will make a final decision about the CVC project on December 10th, a decision which will be crucial for the future of Spanish football. Real Madrid, Barça and Athletic Bilbao are still against that project for the reasons they published and explained on the following letter.

As published on
Dear clubs,

We would first of all like to reiterate that we are fully aware of the financial difficulties that the Spanish football industry is experiencing. The Covid pandemic has had a dramatic impact on our activity, forcing us to close stadiums and face an unprecedented decrease in our revenues, from which we have not yet recovered. Because of this, we are sure that Spanish football needs a rational and sustainable financial solution which will allow us all to return to normality and tackle the future with optimism. In this letter we propose what we consider to be the best solution.

Before that, we also want to remind you that our clubs, along with all of you, have tirelessly helped, since 1929, to create the history of LaLiga, which is today one of the world’s leading sporting competitions. Our commitment to the competition is unquestionable.

We must also point out to you that our clubs maintain their historic association structure, and are therefore owned by their members - approximately 300,000 of them - all of whom have the right to be heard and to vote. They are clubs whose ownership and management pass from generation to generation, that have never handed out any dividends nor have any economic purpose other than to be able to provide their teams with the best possible resources to be competitive on the pitch.

It is from the standpoint of our centenary commitment to Spanish football and its viability that in August this year we expressed our deepest opposition to the deal proposed by LaLiga with the private equity fund CVC, the so-called “LaLiga Impulse Project”, which has now been reformulated in terms that are equally ruinous for Spanish football and, furthermore, not free from serious irregularities (both in form and in substance).

At this very moment in history, when global financial markets offer unique opportunities to finance long-term projects in a sustainable way, we have a duty to oppose a deal such as the one proposed by La Liga with CVC, which would financially burden the future of our football.

Furthermore, CVC cannot be considered a strategic partner of Spanish football but, as everyone knows, a financial investor. Evidence of this is that CVC, consisting of a small group of financial executives, is involved in a wide range of sectors within our economy such as the energy sector, textiles, food industry, telecommunications, catering and infrastructures, among others. Similarly, the managers of CVC publicly revealed their intention to disassociate themselves from the LaLiga Impulse Project within a maximum period of “8 to 10 years” and to transfer their position to another investor - despite the fact that the mortgage on the clubs would remain in force for 50 years. They are not a strategic partner, they are a financial investor.

And, as a financial investor, the proposal to “propel” Spanish football consists, essentially, of seeking out and hiring specialists in the field to help LaLiga expand. It is obvious that LaLiga can - and should - make the necessary appointments to maximize its growth potential, but it must do so with its own resources, without renouncing its independence, without forfeiting full ownership of its business and without the clubs mortgaging their financial future.

On the other hand, we must not forget that Spanish clubs currently constitute one of the most important sports competitions in the world and, as a result, we have privileged access to very reasonable sources of financing in the global financial markets, under much more attractive conditions than those offered by private equity funds. It would be irresponsible for us not to explore the feasibility of rational and sustainable alternatives before taking any irreparable decisions.

Based on our quite recent experience in financing operations in this industry, and after conducting the appropriate preparatory work with our financial and legal advisors, we are in a position to present to Spanish football an alternative long-term, sustainable, rational and legal financial solution for everybody, a “Sustainable Project”, which, at least, deserves to be duly explored:

-The Sustainable Project would allow all LaLiga and Primera RFEF clubs to access the same funds offered by CVC, while assuming infinitely better costs and terms.

-The Sustainable Project would enable the operation to be structured with a real and total cost for the clubs in the range of 2.5%-3.0% per year and for a maximum term of 25 years.

-The comparison of the Sustainable Project with the terms of the proposal promoted by LaLiga with the CVC fund is simple:

- based on the data provided by LaLiga in “LaLiga Impulse Project” and always according to the terms of the terms of the so-called “base case”:

-the total financial cost of the LaLiga Impulse Project, which would be assumed by Spanish clubs over 50 years, would amount to 13.1 billion euros, in exchange for a total investment by CVC of 2 billion euros (which, in addition, would not be paid on the first day, but in installments over 4 years), and

-The total financial cost of the Sustainable Project, which would be assumed by the Spanish clubs for 25 years, would amount to 900 million euros, in exchange for a total investment of 2 billion euros by the funders (which, in addition, would be paid in full to the clubs in the first year, without any instalments);

as a result, according to the “base case” presented by LaLiga and CVC, the Sustainable Project would save Spanish clubs 12.2 billion euros, making it a proposal that is 15 times more economical and which, additionally, only includes commitments for 25 years, and not 50.

-The Sustainable Project also safeguards compliance with the applicable regulations and, specifically, with Royal Decree-Law 5/2015, as it is structured directly by the clubs without the direct participation of LaLiga. In this way:

-the direct ownership of the clubs over the audiovisual rights is not infringed, nor are the rights of any third party impaired;

-no accounting structures and concepts are applied for artificial purposes ( a point on which the proposal now put forward by LaLiga is far more irregular, if possible, than the one presented -and withdrawn- in August); and

-no participation in the management and governance of LaLiga is entrusted to any entity outside the world of football.

For a better understanding of the terms of the Sustainable Project, we attach the following as an Annex to this letter:

-The summary of the main terms of the Sustainable Project Term Sheet. This document was prepared by our financial advisors, with the help and indication of preliminary terms by a group of financial institutions of recognised prestige and experience in similar deals (Section 1);

a comparison of the financial impact of the Sustainable Project with regard to the deal proposed by La Liga and CVC, based on various financial scenarios (and, in particular, on its so-called “base case”) (Section 2); and

-The assessment of our legal services and legal advisors of some of the main flaws of the LaLiga Impulse Project, and the reasons why these flaws would not be applicable to our proposal (Section 3).

In conclusion, it is perplexing that, given the existence of viable, reasonable and sustainable financial alternatives like the one we present here, LaLiga has not promoted a competitive, open and transparent process with the objective of seeking to maximise the financial conditions for all clubs. We still have time to do so.

We appeal to all the stakeholders and decision-makers of Spanish football to reflect on this matter. It is essential that we act with common sense and explore all available alternatives (such as the Sustainable Project proposed here or any other framework that yields similar benefits), in order to allow the clubs to solve their financial problems in a rational and sustainable manner, without committing serious irregularities or harming the future of Spanish football for the next half century.

By working together, we offer you our experience and resources to bring the Sustainable Project , or any other operation that makes financial sense and respects the law satisfactorily, to a successful conclusion.

Kind regards,

Aitor Elizegi Joan Laporta Florentino Pérez

Athletic Club F. C. Barcelona Real Madrid C. F

Sign up for the newsletter Sign up for the Managing Madrid Daily Roundup newsletter!

A daily roundup of Real Madrid news from Managing Madrid