CVC looking to score La Liga goal after triumphing in F1

CVC looking to score La Liga goal after triumphing in F1

A sport in which viewership and ticket sales are dropping, but revenue continues to grow, that’s good business. HVAC he realized this in 2006, when he bought Formula 1 for $2 billion. If a race did not reach a good capacity figure, the fund was irrelevant, since the circuit concerned had to pay the corresponding costs in advance to participate in the World Cup, regardless of the public who would then populate the stands. And despite occasional audience losses, television deals have always ended up being renegotiated upwards. Indeed, the biggest contract ever concluded by the contest took place in 2016 with the channel Skywhich shelled out €1,200 million despite the category having amassed three years with declining following.

It is therefore not surprising that a year and a half before the British fund sold this championship to Freedom Media for 8,000 million dollars – debt included – the return he had already obtained in relation to his initial investment was 350%.

Prior to his move to F1, HVAC also did business in MotoGP, where he entered in 1998 with 71.5 million euros. It was precisely his involvement in motorsport that forced him to quit racing on two wheels, since the European Union deemed his presence in both events to be in violation of antitrust legislation. This did not prevent the firm from multiplying its initial investment by almost seven, since it sold its stake for 525 million.

Five years after his departure from the circuits, HVAC has chosen Spain to continue to receive the juicy dividends from its investments. The group injected nearly 2,000 million into the teams of the first and second division – with the exception of real Madrid, Barcelona there athletic club– in exchange for 8.2% of the commercial activity of The league. The aim is for clubs to take advantage of this money to foster new sources of income that make them less dependent on television rights. The usefulness that will be given to this money will be monitored, and the venture capital group will take care of offering advice if necessary to accelerate the recovery of the funds provided. In fact, there is already an approximate date.

“We will give up The league after just over five years have passed. There is no specific date, but in these operations the normal thing is to leave in 8 or 10 years”, announced Juan Arbide, general manager of CVC, a year ago.

At club level, the most notable operation took place last year, when Management of Ares became a shareholder of Atlético Madrid inject 120 million euros. The North American fund, which manages assets worth nearly $300,000 million, took over 33.96% of Atltico Holdcothe company through which miguel angel gil there Enrique Cerezo They have the titles of the Madrid group.

But Spanish football is not the only one on which the big investment companies have focused their eyes. A little over a week ago, the acquisition of a historic team from the king of sport, like AC Milan, was completed for 1,200 million. The Italian team’s new owner is downstairs red birdthan being a shareholder of the team with Main Street Councilorsa Los Angeles fund that has james lebron, Duck, Bono (U2) there Arnold Schwarzenegger among its investors.

In France, it is still HVAC who landed this year in force, after having bought 13% of a new commercial subsidiary of the French Professional Football League (LFP) for 1,500 million euros. In Germany, on the other hand, the refusal of several clubs to conclude an agreement with similar characteristics excluded the British group from an operation which also interested them. KKR there bridge stitch.

investor appetite

In the past year alone, venture capitalists have disbursed $22 billion in sports-related deals exclusively in Europe, according to PitchBook, while in North America $3 billion was spent acquiring minority stakes. Globally, the total transaction value was $50.9 billion.

The funds are beginning to find their way to the club capital of the Old Continent despite the fact that the current league format, which unlike the American one can lead to category downgrades, has always caused concern.

However, the sector has shown its economic potential after the harsh impact of the pandemic on its accounts. We must not forget that, for more than a year, stadiums and pavilions have been empty or with reduced capacitycollapsing the main source of income for the biggest competitions, after television rights. This strength has convinced the funds to spend hundreds of millions on organizations that remain reluctant to give them decision-making power, but see their money as an opportunity to diversify their sources of income.

And it is that the Covid-19, although it has not caused any debacle in the sector, has started new projects that require teams and leagues of over-indebtedness. Thus, some of the vetoes that weighed on this type of fund have been lifted. Especially in the United States.

big leagues

The NBA allows venture capital to take a minority stake in its franchises from January 2021. This has led to Bear Sports Partnerscompany with 3,000 million under management, to acquire 13% of the Golden State Warriors at the end of last year. Taking into account the market value that Forbes gave this team at the time of the transaction, the second highest in the entire competition, this stake would be worth $700 million. The firm is also present with a stake of nearly 17% in the capital of one of the Warriors’ rivals, the Sacramento Kings.

For its part, Blue Owl, through its fund Dyal HomeCourtowns shares in Atlanta Falconthem Phoenix Suns and kings.

These two funds have been the most active when it comes to investing in the biggest basketball league in the world, although they have done so under different conditions. While Arctos, a firm specializing in the sports sector and present in 16 teams, cannot enter the capital of more than five NBA teams, Dyal obtained the green light from the owners to invest in all the franchises he wanted. At the end of last year, the firm had spent 200 million in the league.

In the state of Texas, Sixth Street Partners bought 20% of the San Antonio Spurs earlier this year. Meanwhile, Michael Dell, founder of the tech company that bears his name, took another 10% in a deal that valued the team at $1.8 trillion. Sixth Street is known in Spain for having acquired 30% of the business of the new Santiago Bernabu over the next 20 years for 360 million euros and 25% of the television rights of the FCBarcelona for 607 million euros.

These funds are eagerly awaiting the renewal of television rights for the NBA. The current contract ends in the 2024/2025 season, and with disney As one of the favorite groups in the auction, the league aims to triple its annual revenue, from obtaining $2,600 million per year for its broadcasts to some $8,000 million.

In the American Football League (NFL, for its acronym in English), the right of veto over investment funds is maintained, but competition is facing a paradoxical situation in the years to come. Given that its 32 franchises continue to grow in value and are already valued at at least $3,000 million, it is increasingly difficult to find entrepreneurs who meet the necessary financial requirements demanded by the competition to own a business. of their teams. This dates back to this summer the sale of the Denver Broncos for $4,650 million and can lead the biggest competition in the United States to make room for venture capital in the capital of its franchises.

“Franchise values ​​have skyrocketed and capital structures in clubs have become more complicated. The idea of ​​having a fund, which would essentially be a passive investor in a club or clubs, is useful to facilitate sales .” clubs”, already advanced in 2019 Rob Manfredbaseball league commissionerMLB). The organization he leads anticipated the problem facing the organization. NFL and was the first to allow funds to enter its equipment. Its operating margins and its growth forecasts are lower than those of the NFL and the NBA and, at the moment, the Arctos fund is the only one to have invested in it, but over the past decade it has seen a revaluation that makes America’s once-favorite pastime a more attractive bet than the stock market. . Between 2002 and 2021, the MLB it was re-evaluated by 669%.



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