La law to democratize sport in France was adopted by the National Assembly on 24th February 2022. This text allows professional sports leagues de create a commercial society for management and marketing of exploitation rights for sporting events that they organize.
La law to democratize sport in France was adopted by the National Assembly on 24th February 2022. This text allows professional sports leagues de create a commercial society for management and marketing of exploitation rights for sporting events that they organize.
The procedures for creating the commercial company for the management and marketing sporting events provided for by article 51 of the law of February 24, 2022
Article 51 of the law aimed at democratizing sport in France modifies the article L.333-1 of the Sports Code, and inserts an article L.333-2-1 which now allows professional leagues to create a commercial company for the marketing and management of the audiovisual exploitation rights of their sporting events.
This provision was seen as a way to recreate a virtuous economic cycle for French professional sport after the Mediapro affair in 2020.
Professional leagues can now create a commercial company with the agreement of their delegated sports federation, in order to entrust it with the marketing and management of audiovisual exploitation rights.
Then, the professional league may transfer to one or more investors up to 20% of the capital and voting rights of the professional league. Thanks to this investment, funds can be raised immediately and will be destined for the newly created commercial company, the federation and the professional league.
« Section 1 of Chapter III of Title III of Book III of the Sports Code is amended as follows:
1° Article L. 333-1 is supplemented by nine paragraphs worded as follows:
“The professional league may, for the marketing and management of the exploitation rights of the sporting events or competitions it organises, create a commercial society subject to the commercial code, subject to the agreement of the delegated sports federation which created this professional league.
[...] "The statutes of the commercial company provide for the presence a representative of the delegated sports federation in the governing bodies of the company commercial, with consultative voice.
“The professional league cannot hold less than 80% of the capital and voting rights of the (...) ».
The list of persons who may not hold a stake in the capital and voting rights in the commercial company
A regulatory text was expected in order to identify the categories of people who cannot hold a stake in the capital or voting rights within this commercial company.
Le decree of April 28, 2022 relating to the categories of persons who may not hold a stake in the capital and voting rights within the commercial company of Articles L. 333-1 and L. 333-2-1 of the Sports Code was published on April 29, 2022 to meet this expectation.
This text creates a article R. 333-3-1 within the Sports Code prohibiting the participation in the capital or the holding of voting rights in the commercial company to the following persons:
- The sports associations and societies of the discipline concerned;
- Natural and legal persons controlling exclusively or jointly a sports company or exercising significant influence over it;
- Managers and employees of sports associations and sports companies in the discipline concerned;
- Professional athletes, professional trainers and sports directors of the discipline concerned;
- sports agents;
- Professional organizations of athletes, referees, coaches, associations and sports companies as well as their managers and employees;
- Betting operators;
- The natural and legal persons who are the beneficiaries of the exploitation rights marketed and managed by the commercial company, as well as the natural or legal persons who control them, exclusively or jointly or exercise significant influence over them;
- Natural and legal persons established in a State or territory considered as non-cooperative;
- Legal persons controlled by a natural or legal person established in a State or territory considered as non-cooperative.
The creation of MEDIACO by the LFP and the agreement with the investment fund CVC Capitals Partners
The LFP has signed a firm investment commitment agreement with the CVC Capital Partners fund based in Luxembourg for the creation of a commercial subsidiary, the company MEDIACO, in which CVC will hold 13% of the capital. The process has been validated by the general meeting of the LFP of April 1, 2022. This agreement allows the LFP to collect 1,5 billion euros, the payment of which will be spread over 3 years. From the summer of 2022, 40% of the total sum should be settled, i.e. 600 million euros, before the rest is distributed over the next two years.
Under this agreement, a sum of 1,130 billion euros will be paid to the Elite clubs. Paris Saint Germain (PSG) will receive the largest share (200 million euros), ahead of Marseille and Lyon (90 million euros each). Nice, Rennes, Lille and Monaco will get 80 million euros in the operation and the other Ligue 1 clubs will share 33 million.
Le Board of Directors and College of Ligue 2, organized respectively on March 25 and 26, 2022, unanimously validated the income distribution criteria and each Ligue 2 club will be allocated «1,5 million euros in 2022-2023 and the same amount again the following season". Finally the two promoted in Ligue 1, as well as the barrage if he beats the 18th in Ligue 1, will receive 16,5 million euros.
Another part of the investment will be dedicated to amateur football, to the repayment of the loan guaranteed by the State (PGE) granted to the LFP in 2020 to deal with the crisis caused by the Covid-19 pandemic (170 million), the constitution of a reserve fund (100 million) as well as the start-up of the commercial subsidiary (100 million).
CVC Capital Partners is one of the 10 largest private equity funds in the world:
On the same theme, see the following articles:
[10.12.2021]
