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French Football Farce #3 – Mediapro & LFP in standoff as survival of Ligue 1 is at stake

Speaking yesterday with L’Équipe, Mediapro CEO, Jaume Roures, confirmed the Spanish-based company was seeking to renegotiate its contract with the Ligue de Football Professionnel for the broadcast rights related to the 2020/21 Ligue 1 and Ligue 2 seasons after failing to make a scheduled payment on 6 October.

Roures explained during his conversation with L’Équipe that the company’s inability to make the payment on time was a by-product of the global economic downturn directly attributed to the coronavirus pandemic.

In a statement, the LFP confirmed that Mediapro requested a payment extension on 24 September. It also confirmed that it refused to grant such an extension and noted that its “priority is to ensure the payment to the clubs on 17 October.”

How the LFP plans to initiate the payment is unclear – having yet to provide details as to how it will manage this matter going forward.

In 2019, Mediapro widely outbid the competition in securing the 2020-2024 Ligue 1 and 2 broadcast rights by agreeing to pay roughly €1.15bn per year over the next four years – representing a near 60% increase in broadcast revenue.

The finalisation of the agreement brought with it serious questions as to how the Spanish company was going to finance such a considerable outlay. By extension, it remains unclear whether or not the LFP obtained the appropriate bank guarantees for the full amount of the contract.

Speaking with Get French Football News in May, OGC Nice president, Bob Ratcliffe specified that as far as he understood “guarantees were never asked for” by the LFP in advance of the contract execution. Get French Football News made several attempts to contact the LFP to confirm whether or not Mediapro provided bank guarantees, but the LFP did not respond to those requests.

Prior to negotiating with the LFP, Mediapro attempted to acquire the rights to Serie A. However, according to reports by Ansa News Agency, exclusive contract discussions between the league and Mediapro were eventually abandoned with Serie A president, Gaetano Micciche stating at the time that the financial guarantees provided by Mediapro were “unacceptable.”

Reports indicated that Serie A’s frustration stemmed from Mediapro’s parent company, Joye Media S.L. being unwilling to underwrite the entirety of the contract amount.

In April, Moody’s, a global credit rating service, downgraded Joye Media’s rating from B1 to B3. The company was listed under review for further downgrade citing concerns over Joey Media’s lack of liquidity and “sizeable cash outflows” pertaining the acquisition of Ligue 1 rights. In July, Moody’s extended that review and reiterated concerns over Mediapro’s “monetisation strategy to its rights to broadcast the League 1 rights in France.”

A B3 rating is reserved for companies Moody’s has “judged as being speculative and a high credit risk.”

Asked by Get French Football News if the failure to make the scheduled 6th October payment is a sign of the liquidity issue raised by Moody’s in April and July, a spokesperson for Mediapro refused to comment.

The Spanish company’s desire to renegotiate puts the LFP in an untenable position. Based on the most recently released financial statements, roughly 47% of Ligue 1’s revenue is derived from broadcast right with that number expected to have risen with the execution of the new four-year deal.  Without the anticipated payments, clubs are likely to struggle in balancing their budgets.

The fact that the transfer window has now closed and the numbers of fans allowed to attend matches remains limited because of the coronavirus pandemic, means clubs have no way of recovering any potential lost revenues associated with a renegotiated contract.

Mediapro’s failure to make the required payment could allow the LFP to annul the contract, but given the above-market price paid by Mediapro, it is doubtful the LFP would be able to find a buyer willing to match the contract.

The future of French football is once again on a knife edge.

K.T.

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