The consequences of relegation from the Spanish 2nd Division and the opportunties for 3rd Division Club investment

Malaga FC this weekend was relegated to the 3rd division (Primera RFEF) joined by Ponferradina, Ibiza y Lugo.

10 years ago, Málaga FC were playing a Champions League quarter-final match against Borussia Dortmund. The full extent of relegation for the Costa Del Sol side will unfold in the coming weeks.

Loss of employees will be inevitable, local businesses will suffer and a fire sale of players will follow to reduce wage bills and pay down debts.

Only time will tell if Malaga FC can bounce back quickly or face a similar worst-case scenario as Hércules CF from Alicante City has experienced. Hércules FC famously beat Barcelona FC 2-0 at Nou Camp during the 2010 La Liga season, but now find themselves languishing in the 4th division.

Football is a tough business for many Clubs.

 

 

Primera RFEF  (Federación Española de Fútbol – Royal Spanish Football Federation)

Primera RFEF (3rd Division) is formed of 2 groups of 20 teams. The lower leagues were re-structured in 2021 and the Primera RFEF was formed to create more stability and revenue for the 3rd tier Clubs.

TV Rights revenue gap between the 2nd and 3-tier Clubs

To put it in perspective, one 2nd Division Club receives more TV rights money than the entire Primera RFEF league (3rd Division) (40 teams remember!)

For example, Málaga FC earned approximately 7.44 million euros in TV rights revenue for being in the 2nd division. The approximate revenue for the 40 Primera RFEF teams will equate to €4-5 million for the 22/23 season.

SD Amorebieta , located in the Basque Country were relegated from the 2nd division during the 2021/22 season and received €5,57 million in TV rights. The Club this weekend has been promoted back to the 2nd division at the first time of asking. It can be achieved if a Club is managed properly and the players are on-board 100%.

Fuch Sports & InStat

During the first Primera RFEF 2021/22 campaign, Fuchs Sports bought the TV rights for 9.5 million euros. However, the anticipated advertising revenue and subscriber numbers did not materialise and due to payment defaults, the RFEF had no option but to break with Fuchs Sports and accept a considerably lower bid (€4 million) from InStat TV, thus further weakening long-term revenue for 3rd division Clubs.  It will be interesting to review the financials for Instat TV for the 22/23 season and to monitor their continued involvement at lower league level.

 

 

 

Spanish Clubs for sale and investments

The Spanish football season has ended and many Club officials will be scrambling to balance books and seeking investment to survive and thrive for the upcoming season.

Sol Sports Invest (SSI) advise several investor groups interested in buying Spanish Football Clubs as well as with Clubs on the sell-side.

We are currently assisting a local 3rd Division Spanish Club offering investors up to a 40% stake within the publicly listed company and to be on the board of directors.  The Club narrowly lost to a top La Liga team in the Copa Del Rey (King’s Cup) this season (2022/23) and has had 4 promotions in 5 seasons since 2017. A well-managed Club of professionals with massive potential.

Contact us today for an investor deck and further details.

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