Due to the popularity of soccer, clubs have multiple avenues of income generation: the sale of tickets and season tickets, sponsorships, the sale of shirts and official products, image and broadcast rights for matches on television, transfers of footballers, etc. Their relative weight varies depending on the structure of the club, its mass of fans, the value of the brand, the results … They are grouped into three main areas: income linked to match days, audiovisual income and income commercial. An ideal diversity that has its weak point in competition: not everyone can win, nor can it always be won. Not even the richest clubs with the most fans.
Therefore, income can fluctuate greatly depending on sports results. In short, chance – that the ball enters or hits the post, or that the star of the team is injured when it does not touch – has a very important impact compared to other businesses. Therein lies the magic of football, which allows Levante draw a crazy draw at home against Real Madrid (with an infinitely higher budget), despite finishing the game with one less player and Vezo as goalkeeper after the expulsion of Aitor Fernández. Nevertheless, the professionalization of club management and well-defined and consistent sports policies manage to keep chance at bay in many cases. Real Madrid is a great example of this, as has Levante in recent seasons.
The same happens with LaLiga, an organization that brings together the 42 First and Second teams, and whose modernization by the hand of Tebas is indisputable. Soccer has drastically reduced its debt to the Treasury, there is economic control, income has multiplied -especially from TV contracts- and stadium improvements have been spectacular in many cases. The Ciutat de Valencia itself is a great example of this. Against Real Madrid, he wore first-rate lighting and audiovisual staging on the return of his fans to the stands. Chapó by Quico Catalán and his team. Betting on the improvement of the experience of the fans in the fields is a sure value.
The agreement between LaLiga and the venture capital fund CVC It must be understood from two key premises. First of all, Tebas is determined to make LaLiga the best national championship in the world. Numerous steps forward have been taken and the Premier no longer seems as distant as it did years ago. In addition, the real impact that Brexit may have on European football in the medium term is still unknown. On the other hand, there is the terrible impact that the Covid pandemic has had on football, with the suspension and cancellation of the competition, the subsequent resumption of it without an audience, the downward renewals of sponsorship contracts, and television … football revenues falter, as explained in a report from Palco 23, prepared from the economic data made public by the clubs. As in the rest of the sectors, the economic recovery of football will take time and a lot of sacrifice. The salary cuts have reached the stars, due to the enormous weight that the salary mass of footballers has on the total fixed expenses of a club. The coronavirus ended a decade of strong sustained growth.
It is in this context, with exceptional problems that require equally exceptional measures, that novel financing formulas such as venture capital appear. It is the case of agreement orchestrated by Tebas with CVC, and which has received the approval of 38 of the 42 clubs that make up LaLiga. Joining interests usually allows greater bargaining power and obtaining more economic advantages for a group, even though there are sometimes conflicting interests within said group. The agreement between LaLiga and CVC allows the clubs that approved it to have 2.46 billion euros in an unfavorable situation through 40-year participating loans, as well as LaLiga to allocate another 107 million euros to the RFEF, the CSD or the Women’s Football. All in exchange for an 11% stake in a newly created company to which LaLiga will transfer all its non-audiovisual businesses (sponsorships, licenses, etc.). The clubs will be able to access the funds through LaLiga, through participative loans at 0% interest for 40 years. Provided that they are compatible with financial fair play and that they undertake to invest in strategic areas for product improvement, such as the club’s structure, digitization, internationalization, content creation and the sports project itself (signings). All in order to achieve a stronger league with clubs and thus be able to attract more fans and generate more income. Obviously CVC risks that money because it makes a very high valuation of LaLiga and its potential growth in the coming years. It is not an NGO and seeks its profitability. This is basically what has been explained of the matter. On paper it looks like a good operation in a time of crisis. Opportunities always arise from crises.
It is understandable that for the vast majority of clubs the agreement is good news. As it is also that for the richest clubs it is not, given its specific weight in the group, its social relevance, the ability to finance itself or choose or implement projects with a high capacity to generate income. As the Super league or the remodeling of the Santiago Bernabéu, with which Madrid expects to earn an extra 150 million euros per season once it is finished. No other club in Spain can aspire to that, so it is difficult that in this case Florentino Pérez or Quico Catalán, leaving Tebas on the sidelines, coincide in their interests. Everyone looks at their home and what is best for their family. And all three are pioneering figures in the modernization of Spanish football. Each one from their organization works to improve the value proposition and the product for their fans and customers.
And is that In addition to the pandemic, football faces an extra challenge: that of digital transformation. In the age of screens, football has some competitors who have taken the lead with the younger crowd. Something unpublished to date. Soccer was a kind of family tradition that was passed on naturally from father to son, marking them forever in many cases. Today the youngest know soccer, and they practice it in many cases, but they are not regular soccer consumers. And when they do, it is not glued to the television during the live broadcast. They do it through videos on demand, whether they are summaries of the matches, technical details, challenges of footballers on their social networks, compilations of great goals, dribbles … Almost always through a phone, tablet or computer, no from a television. Many are more attached to certain footballers than to a club, and they often know their idols more through video games than by following their actual matches. The big digital platforms – Facebook, Twitter, Instagram, TikTok, Twitch – are fearsome competitors, as are e-sports too.
Clubs, stars, LaLiga or the sports media themselves have a presence on these platforms to try to seduce an elusive audience, to which they do not understand or arrive well. Hence the dizzying relevance reached by some figures from that world who already flirt professionally with football at the highest level. The case of Ibai Llanos is the most significant, but not the only one. Soccer must maintain the essence that led it to be the king of sports, but at the same time it must attend to these new forms of consumption if it wants to perpetuate its position within the entertainment industry. And for this, all the organizations that comprise it must be made aware, starting with footballers, clubs and national leagues. The former begin to have it internalized, but there is a long way to go.
