Ligue 1, Bundesliga… Why the investments of the CVC private fund are worrying in the football world

German fans strongly criticized the arrival of private funds in the national league and obtained the abandonment of the project. But CVC already has agreements signed with other European championships, notably France. Sports economist Jean-Pascal Gayant explains to us the concerns regarding such contracts.



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Stuttgart supporters hold up a banner reading "No to investors in the DFL" on February 17, 2024. (UWE ANSPACH / DPA. MAXPPP)

A backpedal facing the slingshot. The German Football League (DFL), which organizes the Bundesliga, announced on Wednesday February 21 that it had abandoned a planned agreement with the private fund CVC, after protests from supporter groups against this project. In exchange for 8% of future television rights, the German League was to receive nearly a billion euros from private funds to help it market and promote the Bundesliga internationally.

Such an agreement exists in France, where the Professional Football League (LFP) sold 13% of the shares in the commercial company LFP Media to CVC. The private fund will receive the same percentage of professional football revenues. But doubts may arise about the real benefits of this agreement for the LFP. “It’s a really bad deal.”says Jean-Pascal Gayant, sports economist and director of the IUT of Saint-Malo, who explains why “this agreement is a burden that the League will drag around” for years.

franceinfo: Why do these private funds want to invest in sports championships?

Jean-Pascal Gayant: It’s quite simple. Investment funds must have an activity portfolio. We must diversify the risk and invest in different activities, including sporting events. The intuition is that sports is one of the sectors that continues to grow and for which there will be further growth. It is one of the strategic sectors from a financial point of view because it is considered promising.

A fund can buy a club but it is in fact more interested in buying the shares of a league. A priori, a league does not suffer from the uncertainty of who will be the champion and who will be demoted. Relegation can be a disaster for the club, when you have a league we don’t have this problem unless a Super League is created.

Will CVC sell its shares in LFP Media in a few years?

It all depends on market developments. But there is no reason to think that CVC will want to sell in two, five or ten years. Many specialists believe that they will do the same as with Formula 1 [le fonds a revendu ses droits en 2016 après les avoir détenus pendant dix ans]. He could do it again with the LFP but everything will depend on the valuation of the League’s commercial company. Perhaps in two or three years we will say that Ligue 1 is much less valued than we had anticipated, and CVC will not have an interest in selling but rather in making the investment grow by boosting exposure. of Ligue 1.

What is the interest for the LFP in selling part of its rights?

There was short-term interest because there was a need for money for French football around 2021. It was even vital after Covid-19 for some clubs, who were very bad from a point of view. financial. But from a medium or long term point of view, this is absurd. It’s a transfer of the family jewels. It was perhaps necessary in the short term but it is a really bad deal. What is all the more serious is that it is not a participation or a share of the results but a share of the income.

“If we assume that Ligue 1 is a championship that will continue to do well, CVC has made a golden deal by purchasing this stake which guarantees it at least 13% of revenue from television rights.”

Jean-Pascal Gayant, sports economist

at franceinfo

This is something that can be repaid in ten years and then it will be an annuity for CVC. It doesn’t make sense from the point of view of good management of a company or a sector. I find that quite dismaying on the part of the League and the club presidents who played an ultra short-term game.

Should French fans fear CVC?

In any case, we are committed and the fund will soon request payments. If the call for tenders for television rights to the championship goes wrong – which is starting to take shape – we will have a situation which will quickly become very bad for the French clubs and the League will have to reimburse CVC and will only have to distribute to the clubs a reduced portion of the amounts to be paid to CVC. We risk finding ourselves in the same situation as that of 2021. And that’s terrible, not only will we have only gained two years but the underlying problems will still be there.

This reminds us of the fiasco Mediapro, and then we risk having an HVAC fiasco. This agreement is a ball and chain that the League will drag around. I’m not optimistic about the future. International television rights for French football will not increase, particularly with the departures of Messi, Neymar and Mbappe. The LFP’s bet will be a losing bet.

A Senate information mission will be set up on this agreement between the League and CVC. Can political power succeed in calling into question this type of agreement?

It might be complicated. We are still within the law which recognizes private property, and then there is freedom of commerce and freedom of business. The LFP has entered into a contract with an operator who is certainly Luxembourgish, but who respects his commitments. The parliamentary information mission to the Senate will perhaps produce a vitriolic report on this agreement but I do not think that there will be any major changes. I don’t think we can expect a lot from them even if these kinds of fact-finding missions, and from the Senate in particular, are of great quality.

“I fear that the damage has already been done for the Professional Football League, which has become a little ‘enthusiastic’ about this type of setup without necessarily planning for the medium and long term, even though that is its vocation. first.”

Jean-Pascal Gayant, sports economist

at franceinfo

There may perhaps be pressure for CVC to sell its shares to the LFP. The problem is that the League does not have the money to buy it back today. It is not capable of repaying 1.5 billion, assuming that we remain on approximately the same type of valuation of the League.

How can we explain that in Germany, there was this awareness and this weight of German supporters to have the project abandoned?

The Germans have been able to learn lessons from what is happening elsewhere and in this country we actually have the famous 50+1 rule. [selon laquelle un même actionnaire ne peut détenir plus de 49% des parts d’un club, et donc en être l’actionnaire majoritaire], which already gives a slightly different state of mind. There is this awareness among German supporters of the need to be a little vigilant about who owns the clubs or the competition. There is also a question of supporters’ ability to express themselves and German clubs do not have the same problems as French clubs, they are financially much healthier.

What could be the consequence of a Super League on these agreements between private funds and professional leagues?

Everything can be called into question almost overnight, if one or more divisions of a European Super League are created. The underlying question is to know the place that we are going to leave to the national leagues. If the continent’s top clubs decide to devote most of their time to the continental leagues, this means that they will have less time to devote to their national championship.

UEFA’s objective with the Champions League and especially the Super League is to eventually play on the weekend because that is the time when there are the most spectators and the most exposure. televised, which is especially not what national leagues like La Liga, Serie A or the Premier League want. The creation of a Super League will be to the detriment of the national leagues. The only solution for me will be to move to championships with 12 or 14 clubs to keep dates well exposed. This would completely change the economic situation of the national leagues. This is also one of the reasons which saw the failure of the first Super League project.

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