The Political Economy of Football V2

Despite the COVID-19 pandemic, Chelsea have been spending big in this summer’s transfer window with their estimated outlay well over £200m. The authoritative Swiss Ramble has been looking at the financial implications and explains how the club will still be able to meet the Financial Fair Play (FFP) targets. The impact on Chelsea profit and loss account will be driven by two factors: (a) wages of the new purchases, which the Swiss Ramble has estimated as £42m for the last two years; (b) player amortisation, the annual cost of writing-off transfer fees, which is £53m. This adds up to annual £95m cost. Against that, Chelsea have sold players for £198m over last two years, mainly Eden Hazard £100m (excluding add-ons) and Alvaro Morata £50m, booking an estimated profit from those sales of £173m. The profit is so high, as most departing players were fully amortised in the accounts. In addition, Chelsea benefit from reducing their wage bill and player amortisation for those exits, even wh

Serie A was once at the top of Europe's leagues, but it has fallen behind in terms of revenue.  Hence the search for radical and innovative solutions that in effect involve selling the league to investors. No one can fault the determination of CVC Capital Partners , the Luxembourg-based private equity group, that has been trying for most of 2020 to buy a stake in Serie A.    By May, CVC’s dealmakers were in exclusive talks over a   €2.2bn deal   for a 20 per cent stake in a company that would manage the broadcasting rights in Italy’s top football league. It was close to making history, with the first-ever sale of a football league itself, rather than its clubs. But then things got complicated.   Rival private equity groups Advent International and Bain Capital   came along with competing offers, prompting  accusations  that club bosses had leaked information on CVC’s bid in order to drum up competition.  The rival offers matter because of the electoral minefield you have to navigat

Playing “behind closed doors”   protected   football’s big leagues against financial disaster by honouring multibillion- broadcasting deals . But that’s not enough The Premier League’s 20 clubs generated £683m in matchday income in the 2018-19 season, representing just 13 per cent of their total revenue. But the clubs have slim operating margins as a result of high player wage bills. Gate receipts are often the difference between making a profit or not. 'Our whole business model is built around having people in the stadium,' said Brighton and Hove Albion chief executive Paul Barber.  2,500 fans will be let in for today's friendly against Chelsea, drawn from season ticket holders. Some clubs are more at risk. Take Arsenal, which makes almost a quarter of its revenues from ticket receipts, more than any team in the league. Earlier this month, the north London club announced 55 job losses of non-playing staff in a cost-cutting move.

Individual and institutional investors are interested in buying Spanish clubs outside the top division, LaLiga, according to a group that advises on sport M&A. Goalnomics, which helps clubs and investors with management strategy and sales and acquisitions, reports enquiries from individuals and international private equity groups. The flurry of interest comes ahead of moves to restructure and professionalise the third tier of Spanish football.  The opportunity to purchase a club cheaply and plot a clearer path to promotion is attracting investors. Segunda División B, the sprawling third tier of Spanish football, is known as "el pozo" ("the well") because once you fall in, it is hard to escape.  Yet the teams within the once-undesirable division, which currently consists of 80 clubs divided in four groups of 20, are generating interest from international investors, according to a sports management group.

City Football Group is in late stage talks to buy French Ligue 2 side ESTAC Troyes for a price reported to be in the single digit millions of euros. Some clubs such as New York City and Mumbai City have been bought with the idea of breaking into lucrative markets and promoting City's brand.  Others are bought with the idea of spotting promising players.  They can ensure players gain experience of European leagues where the standard is high. CFG is also evaluating teams in Europe, Asia and Africa.

The American multi-millionaire who is hoping to buy troubled South-East London club Charlton Athletic is looking for a quick deal.   Thomas Sandgaard says that negotiations with Belgian owner Roland Duchatelet have gone very well so far and he is very positive.  He is flexible about how the deal is structured:  https://londonnewsonline.co.uk/thomas-sandgaard-aiming-to-quickly-wrap-up-a-deal-for-charlton-athletic/

 Danish-born multi-millionaire Thomas Sandgaard, now a US citizen, is interested in buying Charlton Athletic, if he can persuade current owner Roland Duchatelet to talk to him:  https://londonnewsonline.co.uk/exclusive-super-wealthy-danish-businessman-thomas-sandgaard-wants-to-buy-charlton-athletic/

The Swiss Ramble is now able to calculate Premier League television distributions, although he emphasises that these are estimates. As a reminder, in 2018/19 each club received equal shares for 50% of domestic TV £34m, overseas TV £43m and commercial income £5m. Each match broadcast live was worth £1.1m (on top of £12.2m for a minimum of 10 games), while each league position was worth £1.9m (merit payment). However, the story has changed with the new 3-year deal for the 2019-22 cycle, as the numbers have moved and there is a twist in the distribution methodology used for the overseas TV rights. This is important, as overseas is the area driving the growth in TV money. Total Premier League TV rights rose 8% (£0.7 bln) from £8.5 bln to £9.2 bln. UK domestic rights actually dropped 7% (£0.4 bln) from £5.4 bln to £5.0 bln, but this decrease was more than offset by overseas rights increasing by 34% (£1.1 bln) from £3.1 bln to £4.2 bln. As can be seen, the increase in PL overseas TV rights i