The Political Economy of Football V2

T he soft drinks giant Red Bull has bought a stake in Leeds United, the club controlled by the private equity arm of the San Francisco 49ers. Red Bull — which already invests in  clubs in Leipzig, Salzburg and New York — is acquiring a minority shareholding and will also sponsor Leeds’ shirts next season.  There aren't exact numbers yet, but the shirt deal will be worth big money by Championship standards. But get ready for some reaction from Leeds’ supporters because Red Bull’s history in football — of rebranding teams and operating with a pretty ruthless commercial streak — has not won them many friends. The Athletic  has been told that Red Bull will not be given a seat on Leeds’ board as part of its share acquisition, and that changing the club’s name, shirt colour or stadium name will not be open to discussion in any respect.

Crystal Palace’s pre-tax loss in 2022/23 slightly widened from £24m to £28m, despite revenue rising £20m (13%) from £160m to a new high of £180m, though this was wiped out by operating expenses also increasing £20m (11%) from £180m to £200m, while net interest payable nearly doubled from £4.4m to £8.0m.   Profit from player sales was around the same as the previous season at just £331k.   Palace only made £10m from player sales in the last four years, which is rock bottom in the Premier League. The main reason for the revenue increase was broadcasting, which rose £15m (12%) from £126m to £141m, though there was also decent growth in commercial, which was up £5m (21%) from £22m to £27m. Match day also increased by £0.9m (8%) to £12.3m. Although Palace’s £28m loss is obviously not great news, this is actually not too bad for the Premier League, as some clubs reported much higher losses last season, led by Aston Villa £120m, Tottenham £95m, Chelsea £90m, Leicester City £90m...

The American businessman John Textor is reportedly selling his 45 per cent stake in Crystal Palace with a view to buying Everton.   The period of exclusivity for the troubled 777 Partners ends on 31st May. Textor’s Eagle Football owns a 45 per cent stake in Palace but he says he has now sought the help of investment banking firm Raine to find a suitable investor to purchase the group’s share in the club.  He is looking to sell after failing to take a majority shareholding in the club amid differing views over the multi-club model in particular, with Eagle Football owning majority stakes in Brazilian first division side Botafogo, Belgian side RWD Molenbeek and Ligue 1 club Lyon. Textor said in a statement on Friday that although he is “extremely proud” of his time at the club, “an integrated sporting model, such as ours at Eagle, is simply not a perfect fit for Crystal Palace”. He added: “Based on early reaction to the process we have begun with Raine Group, it’s obvio...

Amid plenty of concerns about Chelsea’s somewhat unusual recruitment under Behdad Eghbali and Todd Boehly’s ownership, it was fair to give them credit for two things. First, there was an obvious plan. Second, it appeared cohesive. Chelsea were signing younger players than any other club. They were signing them to longer contracts than any other club. And in Mauricio Pochettino, they appointed a manager whose managerial record suggested he was more effective at working with emerging youngsters, at Tottenham Hotspur, than he was working with established superstars, at Paris Saint Germain. It was joined-up thinking. This was, then, unashamedly a long-term project — not necessarily the type of approach you associate with foreign owners who immediately sink huge sums into a club they’ve just bought. That means, in the short term, things can be difficult, for two reasons. First, most obviously, you have to wait for youngsters to reach their peak age. Second, it’s about co...

Forest’s pre-tax loss in 2022/23 widened by £21m from £46m to £67m, despite revenue shooting up £125m from £30m to a club record £155m following promotion to the Premier League, as this was eaten up by operating expenses rising £135m in the top flight. In addition, net interest payable significantly increased from £1m to £10m, while profit from player sales dropped from £4m to £3m. Forest are no strangers to losses, as they have only reported a profit once since 2005 – and that was entirely due to a £40m loan write-off in 2017. Otherwise, the club has consistently lost money, amounting to £191m in the last 10 years, including £176m in the six seasons since Marinakis arrived.In fact, Forest’s £67m loss last season is the club’s highest ever, while they have lost £113m in the last two years alone. Forest’s losses would have been even higher without the owners writing-off £73m of loans in the last eight years. The largest write-off of £40m came in 2017 when Evangelos Marinakis bough...

Hanging over the brilliant success of Pep Guardiola’s side are the 115 charges issued by the Premier League in February 2023. The breadth of the alleged breaches of financial rules are like nothing seen before in English football and, if proven, promise to taint the empire built during the years of Sheikh Mansour’s ownership. City strenuously deny the alleged financial charges that spanned nine seasons of growth but must wait to clear their name in front of an independent commission expected to hear the complex case later this year. There are still no guarantees that a final judgment will come before the end of the 2024-25 season. City were alleged to have funnelled money into the club via inflated sponsorship deals with UAE-based companies, as well as hiding some costs by keeping salaries and image-rights payments off the books. UEFA did not need nearly as long in their own investigation when banning City from its competitions for two years and issuing a fine of €30m (£26m) ...

Like many others, I did not expect Crawley to win promotion to League One. After a seventh-place finish in the regular season, Crawley’s momentum in the play-offs has been key, with a huge 8-1 aggregate victory over MK Dons in the semi-final, the biggest EFL play-off win and the most goals scored by a side in their first two games in the play-offs. This was Crawley’s first time playing at Wembley and, after starting 2024 in 14th, their run of 10 wins and four draws in 21 games put them on course for promotion. All this is more remarkable on the back of last season, when Crawley finished 22nd and only just avoided a drop into non-League, a level they were promoted from in 2010-11. Back-to-back promotions then saw them reach the heights of League One the following season but being an established EFL club this high up the pyramid is a relatively new thing for a club that only reached the top tier of non-league football in 2005. The outcome at Wembley made Lindsey’s side the first since ...

Sports-business analysis website Sportico has released a list of what it says are the sport’s 50 most valuable clubs — calculating revenue streams based on figures published by club accounts, before then using “team-specific multipliers”. Unsurprisingly, the Premier League with nine clubs: Manchester United, Liverpool, Manchester City (sixth), Arsenal, Tottenham Hotspur (ninth), Chelsea, West Ham United (27th), Newcastle United (32nd) and Aston Villa (44th). According to Sportico, Manchester United are valued at $6.2billion, over $140m more than Madrid, making them the most valuable football club in the world. Forbes, incidentally, places Madrid higher, as well as Barcelona — it hasn’t put United top since 2018. United have struggled on the pitch since the departure of Sir Alex Ferguson as their manager — they are without a Premier League trophy since his final season of 2012-13, and are just eighth in the league table with three g...

The Chinese owner of Inter Milan is racing to refinance an almost €400mn loan by next week, as Pimco and Oaktree Capital battle for influence over the future of the newly crowned Italian football champions. Chinese retailer Suning Holdings, which has owned a majority stake in Inter Milan since 2016, needs to refinance a loan by Monday from Oaktree, one of the world’s biggest distressed debt investors. Suning is attempting to refinance the loan with US bond giant Pimco at an interest rate in the high teens. But the talks are being complicated by Oaktree, according to several people involved. Oaktree provided a €275mn emergency bridge loan in 2021 to Suning, secured against the retailer’s stake in Inter. This allowed its owners to inject more capital into the club, whose finances had been ravaged by the pandemic. The amount outstanding has since ballooned to about €395mn, due to the loan’s annual interest rate of more than 12 per cent. Oaktree anticipated that Suning would sell the c...

Blackburn Rovers are one of England's historic clubs and one time Premier League title winners, but the club's fortunes these days are far from easy. Rovers had to cut back on spending after an Indian government agency prevented Venky’s, the club’s owners, from remitting money to the club, while it queried the application of funds by one of its subsidiaries. As a result, Venky’s had to apply for special approval to send money, which was granted, thus allowing the owners to provide £11m of funding before Christmas to cover day-to-day requirements, including wages, utilities and suppliers. Rovers’ pre-tax loss nearly doubled, rising by £9.7m from £11.2m to £20.9m, despite revenue rising £4.4m (26%) from £16.6m to £21.0m, mainly because profit from player sales dropped £9.7m from £10.1m to just £349k. All three revenue streams increased. Match day led the way, rising £1.6m (50%) from £3.4m to £5.0m, but there was also good growth in commercial, up £1.3m (28%) from £4.9m to £...

Of the clubs owned by troubled 777 Partners, would be purchasers of Everton, Standard Liege are probably in the greatest difficulty.   They haven't had the best of luck with owners, having once had to suffer Roland Duchatelet and his 'network' of European clubs. This week, board member Jean-Michel Javaux confirmed he had offered his resignation, saying he hoped it would provide an “electroshock”. In a statement published on Facebook, Javaux spoke of the “critical financial situation of the club” and criticised 777 for its lack of communication in recent months, but added that he had been asked by Don Dransfield, CEO of 777 Football Group, to stay on in an interim capacity and help with “the transition”. “For months, we have sounded the alarm over the lack of information on the sporting project, the financial situation of the owners and their lack of attendance at the stadium,” Javaux wrote. “(Fellow board member) Pierre Locht, on multiple occasions, has highlighted th...

A survey shows that Swindon fans are unhappy about the state of the club on and off the field:  https://truststfc.com/2024/05/09/end-of-season-fans-survey-report/

Ed Sheeran is one of the most successful singer-songwriters of his generation. He also happens to be a diehard Ipswich Town fan. So when the Tractor Boys achieved back-to-back promotions to reach the English Premier League for the first time in more than 20 years last weekend, the Shape of You singer got in on the celebrations. Ipswich Town, like Sheeran, is a perhaps surprising success story. Despite being newly-promoted from the third division, the team finished second in the Championship, ahead of Leeds United and Southampton, both of whom were playing in the Premier League last year. Ipswich has spent just £8.6mn on new players in the past three seasons combined, Southampton forked out £204mn (albeit while still making a profit from player trading). The current Ipswich squad has a value of around £43mn, according to estimates from Transfermarkt, compared to more than £177mn at Leeds United. Based purely on money, Ipswich have massively overperformed. At the other end of t...

Defeat in Greece last night was a blow for Aston Villa, but exciting times lie ahead. Controlled by Egypt’s richest man, Nassef Sawiris, and US billionaire Wes Edens, co-founder of Fortress Investment Group, Villa is trying to break the grip that the six clubs have had at the top of the Premier League over the past decade. The club, which draws support from across the West Midlands, is fourth in the Premier League table, putting Villa on course to qualify for the Uefa Champions League ahead of Spurs.   Finishing in the top four guarantees a spot in Europe’s elite and most lucrative club competition and would mark a major step forward for the club, which is preparing to mark its 150th season anniversary. “We’re knocking on the door of the Champions League. That level is where we want to be and that’s where we want to stay,” Chris Heck (who runs the club’s business operations), told the Financial Times.   He previously held senior roles at the Philadelphia 76ers basketball f...

The Champions League continues to be a fantastic money-spinner for the elite clubs, even before the 21% increase in revenue next season when the new “Swiss model” will be implemented, so the gap with the “also rans” looks likely to further grow. Five clubs have earned more than €100m from this season’s Champions League, namely Real Madrid €133m, Paris Saint-Germain €121m, Borussia Dortmund €120m, Bayern Munich €119m and Manchester City €109m. They are closely followed by three clubs “in the nineties”: Barcelona €97m, Arsenal €93m and Atletico Madrid €92m. As would be expected, the two Champions League finalists have earned the most prize money: Real Madrid €66.5m and Borussia Dortmund €59.2m. The Spaniards have received more than the Germans, due to a far better record in the group stage, where they won all six games. They were followed by semi-finalists Bayern Munich €48.9m and Paris Saint-Germain €40.6m, then the quarter-finalists: Manchester City €38.5m, Atletico Madrid €34.2m...

The Everton Shareholders’ Association has demanded that Farhad Moshiri ends the “farce” of 777 Partners’ proposed takeover and recognises that the company is not fit to own the club. In a hard-hitting statement the group also accused Moshiri, the Everton owner, and the Premier League of showing a lack of respect to the club. It called for an immediate halt to what it describes as a “damaging process”. Moshiri agreed to sell his 94.1 per cent stake in Everton to 777 in September 2023 but the drawn-out deal has become mired in controversy amid revelations over the financial durability of the Miami-based company. While 777 has loaned Everton about £200million over the past eight months to cover working capital and costs towards the club’s new stadium at Bramley-Moore Dock, the American business has been the subject of numerous lawsuits. Last Friday 777, founded by Josh Wander and Steve Pasko, was accused of fraud running into hundreds of millions of pounds in a lawsuit lodged ...

At Birmingham City hopes had been high when ownership of the club effectively passed to Thomas Wagner’s Knighthead Capital Management in July 2023. This change was greeted with delight (and some relief) by Blues fans after the trials and tribulations experienced since Hong Kong businessman Carson Yeung took full control of the club in 2009. After he was arrested on charges of money laundering, Yeung resigned, but the club remained in the hands of Chinese owners. Last summer’s transaction was made with Knighthead’s UK affiliate, the wonderfully named Shelby Companies Ltd (SCL), with a reference to the family in the excellent Peaky Blinders, which is of course set in Birmingham. The club’s majority owners, including Birmingham Sports Holdings Ltd (BSHL) and Oriental Rainbow Investments Ltd (ORIL), approved the sale of 45.98% of Birmingham City Ltd and 100% of the St. Andrews stadium. Although this agreement does not give SCL a majority shareholding, with BSHL retaining 51.72%, th...

The Hollywood star Will Ferrell has acquired a minority stake in Leeds United, joining fellow actor Russell Crowe and golfers Jordan Spieth and Justin Thomas as investors in the Sky Bet Championship club. The 56-year-old, who has starred in films such as  Elf  and  Anchorman , has an estimated wealth of £127million and although he is now an investor, Ferrell will not be a decision-maker at the club. Leeds are owned by 49ers Enterprises, which took full control in July 2023 when it bought the club for £170million. Since then famous faces from the world of sport and entertainment have invested and taken what have been described as minority stakes. The Leeds United investment group, created by 49ers Enterprises, is split into two sections: general partners and limited partners. The likes of Peter Lowy, the Australian businessman, and Jed York, whose parents Marie Denise DeBartolo York and John York own 90 per cent of the San Francisco 49ers NFL team, are the gener...

All-star games, closed leagues and overseas matches may all be off the table for now, but the English Premier League is feeling more American by the day. On Monday, the majority of clubs voted in favour of drawing up full proposals for a hard spending cap that would be tied to the TV income of the league’s bottom club — a system known as anchoring. A formal plan could be put to a binding vote as early as next month. Spending caps have been one of the key structural factors in ensuring the financial success of US sports leagues. They prevent the wealthiest teams from simply amassing all the talent and blowing the competition away on the field, and help bake in margins by keeping a lid on costs. Incidentally, the Premier League’s two richest clubs by revenue — Manchester United and Manchester City — reportedly voted against the plan. If introduced to the Premier League, the short-term effects of such a cap may be limited. Analysis from football finance guru Kiera...

Alternative buyers for Everton could be found very quickly if the increasingly troubled deal with 777 partners fell through:  https://www.liverpoolecho.co.uk/sport/football/football-news/everton-takeover-alternative-buyers-could-29115644 777 partners have been accused of fraud in a civil filing in a court in New York:  https://www.bbc.co.uk/sport/articles/cprgxj4zlneo The complainant this time is London-based investment firm Leadenhall and the civil suit it has filed against 777 Partners, some of its portfolio companies, its co-owners Steven Pasko and Josh Wander, its close partner A-Cap and its boss Kenneth King runs to 82 pages. And there is a wounding zinger on each page. But perhaps the easiest place to start is simply to say this must surely be the end of 777’s almost eight-month attempt to complete its purchase of Everton, and very possibly the end of 777, too. The allegations are staggering, although to many they will not really come as a huge surprise. After...

Mike Ashley’s crusade against what he sees as a cosy establishment in the football-kit market is now into its third decade. His latest target is Newcastle United, the club he owned for 14 tumultuous years. In a claim filed at the Competition Appeal Tribunal (CAT) in March, Sports Direct argued that Newcastle’s decision to prevent it from selling the club’s kit for next season was “transparently designed” to reduce price competition to the benefit of the club’s own shops and to the detriment of consumers. The new arrangements are coming into effect after Newcastle signed a new £30 million-a-year kit contract with Adidas. Sports Direct argues that the club is abusing its dominant position by opting to sell the kits exclusively through its own retail operations and through JD Sports, Sports Direct’s arch-rival. Now the battle is heating up. Ashley’s first broadside was knocked back last month when the CAT rejected Sports Direct’s request for an injunction to force Newcastle to s...

Humphrey Ker, speaking on the eve of the release of the third season of  Welcome to Wrexham,  is candidly discussing the day when the Emmy award-winning docuseries will come to an end. “At some stage the documentary will go away,” Ker, the club’s executive director and star of the hit Disney+ series, admits to The Times . “That’s inevitable. It may not be next year — in fact, it won’t be next year — and it may not be the year after that, or the year after that. But at some stage, I think, there won’t be a season 12 of  Welcome to Wrexham.  And we will need to be able to stand on our own two feet when it comes. “We will need to retain the fans we have now because we have this extraordinary global fanbase and we want them to be as engaged when we are battling away at the top end of the Championship or the lower half of the Premier League without the documentary to create the ‘soap opera’ around it, which is a big part of what people love.” What we’re generat...

Chelsea’s issues around finding a front-of-shirt sponsor are set to resurface with no deal so far announced for next season, which sources say means they have missed the deadline for kit manufacturers Nike to include a new brand on the shirt. The club did not have a shirt sponsor for the first two months of the season while the Premier League assessed an offer from Infinite Athlete, a sports data company, under its fair market value rules. The Infinite Athlete deal for this season was eventually approved under associated party transaction rules at the end of September, as the sponsor has investment links to Chelsea’s owners Clearlake Capital and Todd Boehly. Chelsea’s previous deal with the telecommunications company Three was worth £40million a season. The value of the Infinite Athlete deal has not been made public, but was confirmed to last only until the end of this season. It is thought it will become a sleeve sponsor next season. The club’s continuing absence from the ...

Solihull is one of the most prosperous and sought after boroughs in England, although it also contains areas of social deprivation. More than a decade and a half since Moor Green merged with their fierce West Midlands rivals Solihull Borough, most of those affected have put the acrimony behind them. Those who set aside historic rivalries to back the merger are now long-standing Solihull Moors supporters and looking forward to a scarcely believable two trips to Wembley in six days, with tomorrow’s huge play-off final against Bromley, based in south-east London, followed next Saturday by the final of the FA Trophy, non-League football’s showpiece knockout competition, against Gateshead. From its controversial birth in 2007, a merger that followed two seasons of Moor Green playing home games at Borough’s ground, Solihull Moors has become one of non-League’s success stories. Promotion to the National League in 2016 was followed by a switch from the semi-professional roots of Moor G...

Football finance guru Kieran Maguire is very positive about the prospects for Ipswich Town in the Premier League, both for the club and the local economy.   The latter is sometimes overlooked, but a number of studies have shown that the impact can be considerable:  https://www.eadt.co.uk/sport/24291961.ipswich-town-kieran-maguire-promotion-mean-financially/ The three promoted teams this season have struggled, but I think that Ipswich are of a different calibre.  As Maguir e points out, there are really three divisions in the Premier League.  My guess would be that Ipswich will top the relegation league, i.e., be about 16th which would be a good platform for future progress and financial stability.

The US-based investment group 777 Partners says it has made a payment of around £16million towards Everton’s working capital amid fresh doubts over its ability to fully fund a takeover of the club.  The latest loan was paid on Tuesday, later than expected, and came as the company’s Australian budget airline abruptly ceased flying. In another development, Teneo, the UK advisers to 777 Partners, severed ties with the firm having gone without payment for work they had done. At the same time, it emerged that Teneo’s financial arm was advising Everton over the potential restructuring of debts due to the heavy burden it has incurred relating to the construction of a new stadium at Bramley-Moore Dock. 777 Partners have loaned Everton almost £200million for working capital and costs for the new stadium.   Contractors Laing O’Rourke confirmed they had received their latest payment and currently have around 1,000 people on site, with the project on schedule to be handed over ...

Swansea City have published their 2022/23 accounts, reports Kieran Maguire.  Revenue was £22m up 10%. Wages were £27m down 4%.  Underlying loss £22m down 9%. Player purchases £7m Player sales £6m Borrowings £11m down 68%. More here:  https://www.swanseacity.com/news/swansea-city-confirm-latest-accounts-3