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Private equity firms warned to stay away from football

Private equity firms have been piling into football.  Spain's La Liga concluded a €2bn deal with CVC.  Private equity bidders are interested in France's Ligue 1.   Miami-based investment firm 777 Partners is busy acquiring football clubs and leagues.

The Lex column in the Financial Times argues that they are unlikely teammates: ''Squeezing cost savings from food delivery companies or heavy industry looks bad enough.'

However, it's not so much a question of reputational damage (which probably doesn't bother most private equity firms all that much), but the fact that in the view of the Pink 'Un clubs are bad investments.

The FT states: 'Football teams' propensity for losing money and a glaring lack of predictability have rendered them trophy assets.  Clubs should fit better with deep-pocketed tycoons than investment funds.'

On the predictability asset the top six in the Premier League look a good bet.   The EPL will earn broadcast rights of more than £10bn in the 2022-2025 financial cycle.   Chelsea are a risk, but a risk worth taking for those with deep pockets.   

Whilst admitting that Manchester United is an exception, Lex states that 'concepts such as financial discipline and dividends sit uneasily with a sport that spends 60-70 per cent of income on wages.'  Actually it's often a lot more in the Championship, but the financial attraction is capital appreciation.

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