LaLiga & Spanish Football Leagues – League Analysis & Media Rights Structure

LaLiga’s credit issuance was an extensive document that highlighted Spanish football fans consider LaLiga to be critical for their viewership vs other tournaments. I think it said over 50% of fans consider it one of the most important tournaments and that it has about 2.8 billion viewers across 180 countries. What are your views on this? How do you think LaLiga’s viewership, fan engagement and popularity compare to those of other top leagues such as Serie A, Bundesliga, Ligue de Professionnel or the EPL [English Premier League]?

You mentioned the complexities that come with assessing the number of viewers and that the 2.8 billion is LaLiga’s total addressable audience base. What do you think is an accurate viewer figure? Is it one billion, or is it more conservative and in the hundreds of millions?

How well is LaLiga doing in non-European countries vs the French Ligue or Serie A? The company has potential in LATAM and Africa, where there might be some language familiarity and overall football popularity. Is it performing slightly better because it has a better roster of players, or how is it functioning in terms of viewership?

How is LaLiga faring with the in-stadium audience, viewership and ticket sales? I understand it’s the clubs who own the stadiums. I believe Bundesliga, which recently came up for PE investments, has some of the highest in-stadium viewership because its tickets are so cheaply priced. How does this work out for LaLiga?

PE has shown interest in acquiring portions of audiovisual rights across Bundesliga recently and we saw options come up for Serie A and Ligue de Professionnel. Why do you sense PE is showing an increased interest in acquiring these stakes? What might be its game plan there? Is there significant opportunity to increase the valuations of these media rights, and that’s why PE is looking at it, or is there a greater theme at large?

Stake investments are taking place in audiovisual rights and a previous Forum Interview [see Deutsche Fußball Liga – Bundesliga Media Rights Sales Structure & Monetisation Opportunities – 8 August 2022] highlighted opportunities to take investments in either domestic rights or in certain countries when it’s broken internationally. Where are there existing inefficiencies in media rights structures, which PE can utilise to increase the value? Where can they add value and clean up the entire process so they can increase the valuation on a yearly basis?

How do you assess any opportunities for PE to get stake investments, either in the sponsorship revenue stream or commercial and licensing? So far, we’ve mainly seen investments in audiovisual rights. I understand that, apart from audiovisual rights, sponsorship is one of the largest revenue streams for these leagues. I think both Bundesliga and LaLiga’s revenue is about 90% from audiovisual rights and 10% from sponsorship.

What was your initial take when the PE investment and subsequent credit issuance took place? As you mentioned, it seemed to be a good opportunity for PE, but it wasn’t really good for LaLiga. Why do you think this is the case?

Real Madrid, FC Barcelona and Atletico Bilbao have all been carved out of LaLiga’s deal with the PE firm. What does this mean? To what degree might this impact LaLiga’s overall media rights valuation? If a match is taking place between FC Barcelona and another team that is part of the project, how will the company handle that?

FC Barcelona recently gave a portion of its media rights stake to another PE fund. What exactly did it give up if it’s all still centralised with LaLiga?

What did you expect LaLiga’s reaction to be to FC Barcelona giving another PE fund a portion of its media rights stake? A complete majority would have made the entire deal go through much easier vs having to carve out and make options. I assume LaLiga obviously also didn’t want this because it would set a precedent for other clubs to negotiate further with it. It can’t afford to lose Real Madrid and FC Barcelona, so what’s its strategy going forward?

Nearly 90% of LaLiga’s revenue is from LaLiga Santander, so that’s the number one league vs LaLiga SmartBank, which is the second one. If I look at Ligue 1 and Ligue 2 in the French football league, while Ligue 2 isn’t as attractive, there is some interest coming in these teams. How is LaLiga’s second league faring vs the first and is there any opportunity to grow this second league out?

Media rights are 90% of LaLiga’s revenue stream. 93-94% of this revenue comes from LaLiga TV – the audiovisual holding corp under LaLiga that manages the clubs’ audiovisual rights. Of this entire portion, 60-61% is from Spain. Regarding distribution partner evolution, historically I believe for consumer households it was through Movistar, then Mediapro had it for Horeca and used to do this through its telcos. This is until the 2021-22 cycle. On 13 December 2021, a new five-season agreement was given to Movistar and Dazn, totalling about EUR 1bn per season – Movistar is EUR 520m and Dazn is EUR 490m. Overall, this would give them EUR 5bn over five years. I understand Mediapro has had some issues and we saw Ligue de Professionnel begin to suffer because no payments were going there for broadcasting. How do you view this shift towards using Dazn and Movistar vs relying on Mediapro? I understand Movistar was the same, but how do you see it changing now Dazn is in the mix?

You’re saying that the Movistar agreement had a 1% increase and seems very muted. We’re in a period of inflation and you also indicated the cost burden comes onto LaLiga and not the broadcasters. What substantial impact do you expect on LaLiga’s EBITDA profile? How incremental is this additional cost?

On the audiovisual rights, you discussed LaLiga’s relationship with Mediapro, which is responsible for developing and producing the content. Is this strategy also followed by Bundesliga, Ligue de Professionnel and EPL, or only by LaLiga?

The new Movistar deal is a EUR 520m per year, five-deal agreement but we only saw a 1% increase. You said you thought the domestic rights were overvalued. Is there any opportunity to increase this marginally to improve LaLiga’s domestic cash flows? Are there any opportunities to move beyond Movistar? What is the growth rate for increasing the domestic rights valuation within Spain?

Dazn has done fairly well when acquiring rights – it has Bundesliga in Germany and LaLiga in Spain, but paid EUR 490m for this. Interestingly, you mentioned Amazon, which has been really aggressively acquiring rights from the EPL, Champions League and so on. Why do you sense that Dazn was able to get this deal with LaLiga and how much did it overpay for it? Why didn’t Amazon try to increase the value, given it has the capital to do so?

Right now, for the domestic distribution, LaLiga is relying on Movistar and its OTT [over-the-top] is Dazn. Dazn is currently unprofitable and is having huge issues in figuring out the path to profitability. As we highlighted, Mediapro’s collapse was responsible for Ligue de Professionnel having to take on a huge amount of debt and amplified the negative financial aspects of that company. How much of a risk is LaLiga anticipating such a large portion of its revenues to come from the struggling Dazn? Do you sense this might become a real pain point for the company?

Regarding the non-domestic audiovisual rights, LaLiga’s credit issuance states that it works with 107 broadcasters across markets. Interestingly, if we take Spain aside, each of the other markets – the US, APAC, Europe, MENA and LATAM – only contribute about 6-7%, despite real opportunities in the LATAM market. Is there any issue in how LaLiga is approaching its non-domestic audiovisual rights strategy?

The new deal announced for the domestic market gave LaLiga about EUR 1bn-1.1bn per year. We established that 60% of the revenues for LaLiga TV come from Spain. Does this mean the value of non-domestic audiovisual rights is about EUR 300m-400m, or significantly higher? How should we assess the value of the non-domestic audiovisual rights? Let’s take a 2-3-year time frame, so how did it look in the previous cycle vs the new one?

What should LaLiga be doing to increase the value of the rights? We established there’s no opportunity to grow LaLiga SmartBank, there doesn’t seem to be a significant opportunity to grow the domestic rights, so the only real opportunity seems to be growing the non-domestic audiovisual rights. Now it has PE’s know-how and back-up, what strategies do you think LaLiga will implement to drive non-domestic audiovisual rights?

A huge portion of LaLiga’s cost base seems to be associated with audiovisual production. Interestingly, the margin profiles are very high and you mentioned the relationship with Mediapro. How good is LaLiga at flexing its cost base and costing strategy, given the revenues are very muted? Are there any opportunities for the company to push this down to ensure it has enough liquidity, or do you sense that, with all the new initiatives, we might see an increase in the cost base that’ll further stress its financial position?

LaLiga’s IP and sponsorship revenue stream comes under LGI according to the company’s rejig. The revenue contribution is very low at 4-5%. We highlighted opportunities to drive this, but there are complexities around maintaining that sponsorship base when you’re also dealing with the clubs. Despite this, LaLiga’s credit issuance states it has 82 sponsors. Who are these major sponsors? Is LaLiga struggling to get more attractive sponsors? 82 sponsors as only 4-5% of a revenue contribution seems very low.

You were correct about what’s happening in the crypto and NFT space. Bundesliga has started a partnership with OneFootball and I read this might help it get almost EUR 170m in a revenue uptick. Also, FC Barcelona sold 24.5% of its Barca Studios rights to Orpheus Media and Socios Co each. We are seeing movements towards this NFT realm as a revenue stream. Do you think LaLiga has enough social clout to allow it this amount of revenue? As we discussed, Bundesliga has far higher audience engagement. What real opportunities exist for LaLiga in this NFT realm?

LaLiga has created a D2C OTT offering with LaLiga Sports TV. What content can LaLiga Sports TV realistically provide, given a majority of the story and narratives belong to the players who are a part of the club? Is the proposition really viable? What content does LaLiga Sports TV actually have?

The company spoke about trying to build initiatives around e-sports, gaming and OTT. Do you think these initiatives can materially increase LaLiga’s value as a whole? Formula One Group has been doing similar initiatives and has done a very good job through its TV show, audience engagement platform, social media and so on. Are these initiatives working out for LaLiga? Can these materially impact the media rights valuation? Is the company on the right path to achieve this, or do you sense it’s just investor fluff?