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Success on a shoestring for Ipswich

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 the table, Birmingham City fans invaded the pitch last weekend for different reasons, after the team suffered relegation to the third tier. The club has not fallen so far down the football pyramid for nearly 30 years.

The two teams have something in common beyond the blue shirts. Both are owned by US institutional investors.

Ipswich was bought by ORG, a firm that invests money on behalf of Arizona pensioners, in 2021 for around £40mn. Earlier this year, the fund sold a 40 per cent stake in the club to a US private equity firm at a valuation closer to £250mn. That’s the kind of value growth that many investing in football pine for.

US hedge fund Knighthead Capital, which made big profits from its bet on rental car company Hertz, acquired Birmingham City last summer and brought in NFL superstar Tom Brady as an adviser and small shareholder. Their project to rebuild the club is a long-term bet, but it clearly is off to an inauspicious start and follows a year of upheaval.

The Championship is a difficult place to make money, and the average club finances are a mess. Many spend more on wages than they earn in revenue — something that has been happening for years. The lure of the Premier League encourages big, high risk spending, making England’s second tier the biggest casino, and one of the most exciting leagues, in football.

Like Luton Town’s fairytale promotion run last season, Ipswich proves that the Premier League dream can be achieved on a shoestring. Good coaching and luck still have a big part to play. Meanwhile Birmingham’s relegation shows that English football is a very unforgiving place, no matter who is sitting in the owner’s box.

 

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