Global Fútbol

Since 2013, clubs participating in Spain’s top two divisions of LaLiga Santander and LaLiga SmartBank have had to abide by Economic Control regulations, a stricter and a priori version of UEFA’s Financial Fair Play rules. In the view of Sevilla FC Chief Executive Officer José María Cruz, this is one of the primary reasons why Spanish football was well prepared to deal with an unforeseen supervening event like the coronavirus pandemic.

Although the pandemic halted the 2019/20 football season for three months, causing significant economic damage, Cruz believes that the financial limits imposed by UEFA and, more stringently, by LaLiga ensured that clubs had the capacity to endure some losses.

Speaking at the World Football Summit Europe conference, in a panel titled ‘A Global Outlook: What Lies Ahead for International Sports and their Administration’, Cruz explained: “We have been very lucky in Spain and in Europe because we were better prepared than in the past. If a pandemic like this had come five years ago, it would have been traumatic for the football industry. But, the Financial Fair Play at the European level from UEFA and the Economic Control from LaLiga, that has been functioning very well, has helped us.”

Expressing some optimism about the state of the football industry, the Sevilla FC CEO continued: “I have been reading in these last few weeks the preliminary figures of financial reports of some European clubs and the losses for 2020/21. I believe that that’s bad news of course, but I also believe that the football industry, at least in Europe and especially in the top five leagues, is presently a profitable business apart from this pandemic.”

Even though a few clubs have experienced losses, LaLiga teams overall actually posted a profit of €77m for 2019/20, the first season impacted by COVID-19 and the most recent season with audited accounts. That made LaLiga the only one of Europe’s five major competitions to turn a profit during the difficult 2019/20 season and the Economic Control mechanisms were key to this.

Losses are expected for 2020/21, the first full campaign to be played under the prejudicial circumstances of the pandemic, but the outlook for LaLiga is positive in the long term.

The benefits of working with CVC and investing in the future

There are still several challenges in the near future and these were also discussed during the World Football Summit panel. One of them is the challenge of trying to keep audiovisual rights revenues at the same level as recent years and Cruz shared his belief that this is a serious issue, while also expressing optimism over how LaLiga’s alliance with private equity firm CVC can help Spanish professional football to keep growing its revenues.

Cruz told the audience: “I am concerned about the future for football and TV as I believe the model will need to be changed in the future, but I hope that the special project in Spain between LaLiga and CVC will be finally closed and we can start with the project. It’s not easy to maintain the level of revenues coming from TV, especially from national rights, so this is a challenge we need to work on with LaLiga and with this new partner CVC. It’s important that the clubs can invest [the CVC funds].”

Only 15% of the additional income that clubs will receive from the deal with CVC can be used on signing players, meaning that most of the money will go towards investment in infrastructure, digitalisation and more. This will help Spanish football to bounce back from the pandemic even stronger.

One of the other panellists on this round table was Jordan Gardner, Chairman and Co-Owner at Danish club FC Helsingør. As an American investor in sport, he was asked for his expertise on the CVC deal and stated: “People make the mistake sometimes of thinking that groups like CVC are going to come in and buy clubs, but that’s not their modus operandi. That’s not what they do. I generally think it’s good for the sport. Those private equity groups are in it to make money in the long run and people have to understand that, but I think it’s something that is smart and makes sense.”

As LaLiga president Javier Tebas also explained during a separate appearance at World Football Summit: “People think [the CVC deal] is an operation solely for financing, but it’s not. This is a partnership to grow together.”