On Sunday, a dolorous Lionel Messi sat in front of the world’s media—and American teammate Sergiño Dest, dressed, for some reason, in a full basketball uniform—to explain how his 21-year partnership with FC Barcelona had come to an end. As had been reported last week, the greatest player to ever wear the club’s kit (or any kit, for that matter) was leaving not because he was in search of more money or a bigger stage—there are no bigger stages in team sports than Barcelona; and even though Barcelona’s valuation had increased more than 12 times over from Messi’s official first-team debut in 2004 to his final appearance in 2021, Messi had agreed to take a 50 percent pay cut to stay with the club.
No, the team’s captain and all-time leader in goals and appearances was leaving because Barcelona could no longer afford to keep him. It wouldn’t have mattered if Messi—in accordance with the wishes of certain contemptuous and contemptible corners of the sporting public—had offered to play for free this season. Barcelona, a nearly $5 billion business and one of the richest and most popular clubs in the world’s most popular sport, genuinely could not register him under league rules.
Messi’s tears on Sunday signaled the end of the most prosperous player-club partnership in soccer history: 10 La Liga titles, four Champions League titles, six Ballons d’Or, 672 goals, and 305 assists in 778 competitive appearances. But the press conference also closed the door on an even larger era: a period in which Spain was the center of the soccer universe.
From 2008 to 2012, the Spanish national team won two European Championships and a World Cup, all while being led by a generation of players who propelled its biggest clubs to unprecedented success. From 2006 to 2018, Barcelona and Real Madrid won the Champions League four times each, including a run from 2014 to 2018 in which there were more Spanish champions (five) than non-Spanish finalists (three). While Atlético Madrid nabbed an odd title or two, and Sevilla enjoyed enormous European success, the soccer world revolved around Barcelona and Madrid: specifically, their imported star forwards, Messi and Cristiano Ronaldo. Perhaps the two greatest soccer players ever, their rivalry defined the sport for a generation.
Unfortunately, the news from the past week portends a less fruitful future.
Messi made the loudest splash, because while it’s perhaps naive to expect star athletes to be one-club people anymore, nobody expected him to leave while he was still near the top of his game, and for a continental rival rather than a semi-retirement tour in a tax haven like Qatar or the U.S. Certainly Messi, who lived out an entire Bright Eyes album in front of a worldwide viewing public on Sunday, did not seem ready to leave. And regardless of partisanship, it will be positively bracing to see him take the field in anything other than the blue and white stripes of Argentina or the iconic red and blue of Barcelona.
But Messi’s departure is only the second most important ongoing La Liga story, from the perspective of the long-term health of the league and the sport at large. Tuesday morning, Real Madrid announced that it is pursuing civil and criminal legal action against La Liga president Javier Tebas, as well as Javier de Jaime Guijarro of CVC Capital Partners, a private equity group that reached a deal with Tebas last week to consolidate the league’s business interests into a joint venture among its 42 constituent clubs. If consummated, that deal would grant CVC a 10 percent stake in that venture (and an additional 10 percent stake in a newly formed commercial activities company) in exchange for some $3.1 billion in up-front infrastructure investment.
The loss of an iconic player is a shame, and the loss of league competitive prestige is troubling, but neither is an existential threat. Nobody really expected Spanish soccer’s sporting and cultural hegemony to last forever. These things are cyclical—financial booms and busts, as well as tactical innovations, have shifted the locus of European soccer power over the years from Italy in the 1990s to England in the late 2000s to Spain and back again. And more than that, players come and go. Most of the dominant Spanish side of a decade ago is retired now, and most of the players and managers who animated La Liga in the mid-2010s—from Neymar and Ángel di María to Pep Guardiola and José Mourinho—have left. Just this summer, the league has bid farewell to Sergio Ramos and Raphaël Varane.
The real crisis is not the departure of established stars, but the sudden involvement of CVC in a deal Real Madrid is resisting strenuously. Regardless of whether La Liga is actually sick or dying, this is the first vulture to start circling overhead.
The La Liga rules that forced Messi out of Barcelona state that clubs cannot spend more than 70 percent of their operating revenue on acquiring and paying players. This is effectively a salary cap, adjusted for the squishiness of international soccer finance and the financial realpolitik of a sport that sometimes gleefully embraces stratification between haves and have-nots.
Salary caps are meant to improve competitive balance by reducing the amount richer teams can spend on players, with the secondary bonus, for ownership, of reducing wages in absolute terms by putting a ceiling on player pay. La Liga’s spending rules, though, are also a bulwark against clubs going out of business. That prospect is unthinkable in North American sporting culture, with its league-based economic system, which hasn’t lost a Big Four club in more than 40 years. But European soccer teams—even big ones—go out of business frequently enough that there’s a term (“phoenix club”) for a new organization that adopts the colors of a previous team that’s gone bankrupt.
Real Madrid and Barcelona aren’t corporations as such; they’re membership organizations. These clubs are governed not by the sale of shares, but by dues-paying members who elect a board of directors and a club president. That model keeps the club safe from would-be owners like Arsenal’s Stan Kroenke, who’s content to keep the lights on and the media rights checks rolling in but cares little about the on-field product. But it also makes it difficult to keep up with the level of foreign-government-funded investment that has turned the likes of Manchester City and PSG into world beaters in the past decade.
Barcelona once prided itself on developing young players—Messi foremost among them—from within its own academy, rather than simply buying established stars like Real Madrid does. And during the booming 2000s, homegrown players like Messi, Xavi, and Iniesta became a PR shield for a team that filled out its starting 11 by leaning on competitors to cough up the likes of Dani Alves, Thierry Henry, and Zlatan Ibrahimovic. But in recent years, Barcelona has more or less dispensed with the pretense, splashing mind-boggling sums on whoever suited its fancy.
Then the pandemic came, shutting the gates at Camp Nou and tossing Barcelona—already flirting with financial crisis after a decade of expansion and free transfer spending—into panic mode. And because other clubs faced similar precarity, Barça could not divest itself of its Ousmane Dembélés and Philippe Coutinhos quickly enough to fit Messi on its books. So here Barcelona stands, more than $1 billion in debt, at the craps table with the deed to the family farm in its hand, as its most beloved son bids a heartbreaking adiós.
Even with Messi gone and debts soaring ever higher, Barcelona is still asset-rich. But it needs cash—or at least it wants cash, so it can start to undo its financial damage without selling off the entire first team for pennies on the dollar. And while the numbers are bigger at Barcelona than at other clubs, the same is true for many teams across the entire global sporting landscape. These are the financial conditions that led Barça, Real Madrid, and a number of other top European clubs to float the disastrous proposal for a European Super League four months ago. And these conditions make La Liga a prime target for private equity firms like CVC.
Private equity firms make their mint by buying stakes in long-standing, successful companies in moments of temporary distress. They promise an infusion of cash to settle debts and invest in infrastructure, and the management expertise to run the company more efficiently and responsibly in the future. Flipping houses, in a sense, on a global commercial scale.
The reality is somewhat harsher. Efficient and responsible management strategies are oftentimes a euphemism for layoffs and pay cuts, and the quality of the company’s products or services can suffer accordingly. If you’ve interacted with the American economy at all over the past 20 years, you’ve seen how this can end. Private equity firms have gutted entire sectors of the economy during the 21st century. Toys R Us, Knight Ridder newspapers, the Miami Marlins, even Deadspin—all were driven to insolvency or irrelevance not because of finicky millennial spending habits or the internet or a combination of worker greed and consumer apathy, but because they were strip-mined by private equity firms.
And lest anyone think CVC is in for undue suspicion because of the unsavory industry it’s a part of, consider a recent real-world example. In 2006, CVC itself bought a controlling stake in Formula 1. Over the ensuing 10 years, CVC wrung enormous profits out of the sport, tied the world’s top racing series to oppressive regimes in Bahrain and Azerbaijan, and drove hosting fees so high that it nearly forced cornerstone venues in Western Europe off the calendar. The firm eventually sold F1 to Liberty Media in 2017 for almost six times what it had originally paid.
Real Madrid president Florentino Pérez and his board aren’t Robin Hood. They were among the masterminds of the Super League, after all, and if they’re any less of cartoon robber-barons than CVC, it’s not by much. But at least they know that collectivizing La Liga and selling a 10 percent stake to CVC is the equivalent of the biblical Esau selling his birthright for a bowl of soup.
La Liga, which, it bears mentioning, is too big and too well-established to go under, brought in almost $6 billion in revenue in the 2019-20 season, a figure that PricewaterhouseCoopers estimated would have been 5 percent higher if not for the pandemic. CVC wants 10 percent of that pie in exchange for a $3.16 billion investment, some of which would take the form of loans. In other words, it wants the member clubs to pay it back for buying a stake in the league. Mephistopheles would’ve admired its audacity.
The creeping involvement of private equity is the real threat to La Liga, not Barcelona’s financial troubles or Messi playing in a different blue-and-red top a few hundred miles northeast. The tears of the greatest player ever are indeed a harbinger of a frightening new future, one that further divorces sports clubs from the players who give them value and alienates them from the fans who give them meaning. But the story—and Spanish soccer’s problems—are bigger than the tribulations of one player and his beloved club.