French football chooses CVC for its commercial company

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Paris (AFP) – French football has taken a big step towards the creation of its commercial company by entering Friday “in exclusive negotiations” with the investment fund CVC, which promises to raise 1.5 billion euros by acquiring 13% of the capital, a operation considered vital by the clubs.

After the Spanish Liga and the Italian Serie A, which announced similar agreements in recent months with the same shareholder, the French Ligue 1 has chosen CVC Capital Partners, a global juggernaut in sports investment, to support it in the future in its business activities.

This operation, approved on Friday unanimously by the Board of Directors of the Professional Football League (LFP), will allow it to value its future commercial company “at 11.5 billion euros”, it indicates in a press release, promising a final agreement “in the coming weeks”.

French football, severely affected by the failure of its broadcaster Mediapro at the end of 2020 and by the health crisis (stopping of competitions in the spring of 2020, stadiums behind closed doors the following season, etc.), is counting on this shareholder with strong backs and recognized expertise in making the sale of its audiovisual rights profitable, particularly abroad, an area where the French Championship is lagging far behind its European neighbours.

Jaume Roures at the head of the Sino-Spanish audiovisual group, Mediapro, during a press briefing in Paris, October 21, 2020
Jaume Roures at the head of the Sino-Spanish audiovisual group, Mediapro, during a press briefing in Paris, October 21, 2020 FRANCK FIFE AFP/Archives

The operation will also have the advantage of providing French football with an immediate windfall of new money, welcome after multiple loans made at club or League level over the past two years, with another 600 million euros in dreaded net losses this season.

Legislative framework

Since the vote in Parliament of the sports law, on February 24 at the very end of the legislature, the LFP has a legislative framework adapted to its project, which it wishes to set up quickly, for the next season.

Logo of the French Professional Football League (LFP) at the entrance to its headquarters on February 1, 2021 in Paris
Logo of the French Professional Football League (LFP) at the entrance to its headquarters on February 1, 2021 in Paris FRANCK FIFE AFP/Archives

It was thus able to speed up the process of designating its future partner by first registering four final offers (CVC, Hellman&Friedman, Oaktree and Silver Lake) on March 9, before entering into negotiations less than ten days later. exclusive with HVAC. The latter’s proposal stood out on all the criteria, convincing the LFP’s Board of Directors to reject the other offers on Friday, according to a source at the heart of the discussions.

The representatives of the fund will present themselves in the middle of next week to the Federation (FFF) and to a panel of club presidents, the same source specifies.

The headquarters of the French Football Federation (FFF), September 20, 2018 in Paris
The headquarters of the French Football Federation (FFF), September 20, 2018 in Paris Philippe LOPEZ AFP/Archives

In parallel, the authorities will complete the final details of the agreement by establishing a precise timetable for fundraising and a governance model; and negotiations will open between the clubs to decide on a distribution key, which could distinguish the locomotive of the championship (Paris SG), a handful of major teams, and the rest of the clubs.

For its part, the minority shareholder will be reimbursed from future revenues, but will not receive dividends over the next two seasons, the last of the current cycle of domestic TV rights, explains an actor familiar with the negotiations.

HVAC, well established

This upcoming agreement, major for French football disappointed by the recent elimination of its last two representatives in the Champions League (PSG and Lille), comes after two similar operations carried out in Spain and Italy, already with CVC.

Italian midfielder Marco Verratti and Brazilian striker Neymar, after the elimination of Paris Saint-Germain in the round of 16 second leg of the Champions League, beaten by Real Madrid (3-0), on March 9, 2022 at the Santiago Bernabéu Stadium
Italian midfielder Marco Verratti and Brazilian striker Neymar, after the elimination of Paris Saint-Germain in the round of 16 second leg of the Champions League, beaten by Real Madrid (3-0), on March 9, 2022 at the Santiago Bernabéu Stadium JAVIER SORIANO AFP/Archives

La Liga has reached an agreement for nearly 2 billion euros for 10% of its capital despite the opposition of the two leaders of the Championship, Real Madrid and FC Barcelona. Serie A also plans to raise 1.7 billion euros via three funds including CVC, an operation that has nevertheless stalled in recent weeks due to the reluctance of several clubs, according to Italian media.

Based in Luxembourg, CVC Capital Partners has $165 billion under management, mainly in private equity ($92 billion) and debt ($29 billion).

Its appetite for sport is no longer in doubt: in addition to these forays into football, the company injected 400 million euros into the Six Nations Rugby Tournament, after having held the majority of shares in the Formula 1 championship of 2006 to 2016.

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