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European Football Investments: The Growth Story – Part I

June 8, 2024

European Football Investments: The Growth Story – Part I - SBI Barcelona

The magnet of European football has always attracted investments just the context has changed. From local ownership & investments, the game now sees influx of global investors particularly from the USA, especially so in the last five years. As the saying goes, ‘money attracts money’, European football is at the helm of attracting further investments as the revenues rise.

The cycle goes on.

In this part of the series, we will examine global investments, ownerships and the rise of the private capital in European football

The Takeovers

European football club takeover spree continues albeit at a slower pace in 2023. As per the UEFA European Club Finance report, a total of 23 European top-division clubs changed hands in 2023, down 51% from 2022. In the last 4 years, a total of 126 top division clubs in Europe has experienced takeovers

Further, of the 23 takeovers, 8 were linked with domestic investors and 15 were foreign investors of which 7 were US investors. In other words, 30% of the 2023 takeovers were done by US investors

European Football Investments: The Growth Story – Part I - SBI Barcelona

Begging the question, why has the takeover train slowed down? The report stresses multiple factors like economic situations, reduced availability of attractive clubs, rising interest rates, uncertainty due to promotion/relegation methods, higher valuation demands from sellers and so on could be the probable causes of lower number of takeovers in 2023

But that certainly has not put brakes on the train

Ownership

Broadly two types of ownerships can be ascertained amongst the 730+ top tier clubs across Europe. A whopping 372+ or 51% clubs are owned exclusively by private owners that includes domestic & foreign owners combined and 346 or 49% are government or association / foundation controlled.

20 clubs, listed in different stock exchanges, might or might not be a part of private ownerships

European Football Investments: The Growth Story – Part I - SBI Barcelona

Enter Private Capital

Pandemic changed shape of many industries in the business world and sports is one of them. Before pandemic, it was a rarity to see private capital being utilised in the sports domain although some sports leagues in the USA had eased regulations to allow their entry. After the pandemic, however, the situation changed drastically. The football industry (among other sports leagues) had plunged into an abyss of losses forced by closed stadiums, abandonment of games and so on

This led to the definite need to inject capital and one door led to another making way for the entry of private capital investors. They got attracted to the European football industry in the form of minority as well as complete club takeovers. These investors, mostly coming from the USA, have been the dominant force of takeovers that we see today

The ‘big five’ leagues were and still are the primary targets of the private capital investors. As per UEFA European Club Finance & Investment Landscape report, 39% (37 out of 96) of the clubs Big 5 leagues have ties with private capital investors, (INEOS investment of Manchester United will make it 38) either through private equity or venture capital investment, or via the backing of private debt firms. Some of the factors that make European football ideal for investors have been listed  

European Football Investments: The Growth Story – Part I - SBI Barcelona

Conclusion

Like all businesses, the business of football too needs investment to grow and unlock its potential. In the present context, the global football industry, especially European football is in the midst of a transformational period. With the increasing presence of private equity capital and the rise of multi-club ownership (MCO) structure, only time will tell how it shapes up in future.

We will evaluate these in the next part of the series   

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