Bankers have begun marketing the €850m senior secured high-yield bonds that will help finance CVC's €2bn investment in Spanish football league LaLiga.
CVC is making a €2bn investment in the league which, as well as the bonds, is being financed through a €1.2bn equity commitment and €40m RCF, through the vehicle Loarre Investments. Loarre will also issue the new notes. Its investment entitles it to an economic participation of around 8.2% in LaLiga’s profits over 50 years.
Goldman Sachs is acting as global coordinator and bookrunner for the 7NC3 fixed and 7NC1 floating-rate tranches, which are expected to be rated Ba3/BB by Moody’s and Fitch. Meetings take place from May 6–11.
About 97%, or just under €1.8bn, of LaLiga's revenues during its 2021 financial year were generated through the sale of media and broadcasting rights.
The deal is following a similar format to previous football-related bonds, with the security package backing the notes including a pledge over the profits from the sale of broadcasting rights, advertising and licensing.
In January, Inter Milan brought a similar structure to the market. The club issued a €415m 6.75% February 2027 via a bankruptcy-remote special purpose vehicle holding intellectual property, media rights and sponsorship revenues.
But from a bond investor perspective, there are certain potential benefits to investing in a league, rather than an individual club, and several market participants said that the LaLiga deal would likely be an easier sell.
When Inter Milan brought its trade to the market, one concern expressed by investors was that revenues are ultimately tied directly to the success of the club and it is essentially impossible for investors to model for factors such as the chance of relegation. Exposure to an entire league, rather than an individual club, substantially lowers this “sporting risk”.
Of the 42 clubs in the league, 37 voted in favour of CVC’s investment, called "Boost LaLiga". In return, the football clubs got a chunk of money up front, 70% of which must be used on infrastructure and modernisation projects, 15% on signing players and 15% on reducing debt.