Spain's top football league announced Wednesday it has agreed in principle to sell 10 percent of its business to private equity firm CVC Capital Partners for 2.7 billion euros ($3.2 billion), a welcome boost to clubs whose finances have taken a hit due to the pandemic.
The deal, the first of its type by a major European league, values La Liga at 24.2 billion euros and is due to be ratified by the La Liga and CVC boards later on Wednesday, a statement said.
It comes as Spanish clubs, like many across Europe, grapple with a huge drop in revenues as the pandemic forces matches to be played in empty stadiums.
"It is an ambitious investment plan which will give La Liga and its clubs the resources to continue the transformation into a global digital entertainment company, strengthen the competition and transform the experience for fans," the league statement said.
"The operation will be carried out through the creation of a new company to which La Liga will transfer all its businesses, subsidiaries and joint ventures and in which CVC will hold a minority participation of 10 percent."
Around 90 percent of the funds which CVC will invest will be channelled directly to La Liga's clubs, including lower tier ones.
- Pandemic losses -
That will give Spanish clubs more room to sign new players. La Liga in 2013 introduced so-called financial "fair play" regulations setting a maximum amount of money each club can spend on players and coaching staff each season, conditioned by income which is down due to the pandemic.
A May report by European football governing body UEFA predicted the continent's top-flight clubs are expected to suffer losses of more than eight billion euros due to the impact of the pandemic due to lower gate receipts, broadcast revenues and fewer sponsorship deals.
According to sports daily Marca, heavily indebted Barcelona could get 270 million euros as a result of the agreement with CVC while Real Madrid would collect 261 million euros.
The deal must also be approved by La Liga's clubs, which have so far not reacted.
It follows the collapse in May of plans by 12 leading football teams -- including Real Madrid, Barcelona and Atletico Madrid -- to create a European Super League.
The breakaway league fell apart after 48 hours following a huge backlash from fans, governing bodies and politicians.
- Appeal to Asia -
Spain’s top flight has long trailed England’s Premier League in its international audience but there has been a push to attract more consumers worldwide.
In recent years La Liga has opened offices in Shanghai, Delhi, New York, Johannesburg and Dubai. It now has representatives in over 40 countries.
La Liga has also changed some match times to earlier in the afternoon, so they air at an appealing time in Asia.
Its international audience in the 2018-19 season was 2.7 million viewers, with "El Clasico" matches between arch rivals Real Madrid and Barcelona one of the most watched games in club football.
La Liga said its deal with CVC was an opportunity to "develop a new economic model" which is not limited to "matches and TV rights".
A private equity consortium including CVC sought to buy a stake in the media division of Italy's main football league but the deal floundered earlier this year because major clubs including Juventus and Inter Milan opposed it, arguing the price offered was too low.
CVC has prior experience with investments in sports-related businesses.
The firm, which manages about $87 billion of assets, has invested in Formula One and in March announced a £365 million (about $510 million) deal for a 14.3 percent share in Six Nations Rugby.