The Political Economy of Football V2

Uefa’s profitability rules are stricter than the Premier League, as allowable losses are smaller, even though these have been increased in the updated guidelines, while clubs also have to contend with the new squad cost control ratio. The biggest change in the new (2022_ rules was the introduction of squad cost control with the ratio of player wages, transfers and agent fees ultimately being limited to 70% of revenue plus profit on player sales. All seven of England’s qualifiers for Europe are forecast to lose money at the operating level over UEFA’s 2-year monitoring period, covering 2022/23 actuals and the 2023/24 estimate, but there are large differences between them.   In particular, Chelsea and Aston Villa have significantly larger operating losses than the other clubs with £428m and £300m respectively. However, that’s by no means the whole story, as operating losses will be offset to some extent by profit from player sales. This is especially the case at Manchester City...

Watford FC have raised £3.7m+ from more than 2,400 investors through the Seedrs platform. The club believes this campaign can form a key strand of football’s future finance, where investors and supporters alike can share in a club’s future. Part of the funding will be channeled into recruitment to strengthen Tom Cleverley’s playing squad as Watford seek a return to the Premier League. Promotion into the Premier League has been known to result in a club’s valuation growing 2x to 3x within a few years according to data collected by Transfermrkt.

Revenue across the European football market grew by 16% to €35.3bn in the 2022/23 season (€30.4bn in 2021/22), according to the 33rd Annual Review of Football Finance published by the Deloitte Sports Business Group. The 2022/23 season played host to the winter 2022 FIFA World Cup and was also the first since 2018/19 unaffected by COVID-19 restrictions. The ‘big five’ European leagues - the Premier League, Bundesliga, LaLiga, Serie A and Ligue 1 - saw revenue growth of 14% to total €19.6bn, driven by an uptick in matchday revenue, new and improved sponsorship deals, and the utilisation of stadia beyond matchdays. Records broken across Europe’s ‘big five’ leagues in 2022/23 football season The Premier League once again dominated financially across Europe in the 2022/23 season, with clubs in the English top-flight registering aggregate revenue of £6.1bn – an 11% increase on the previous year (£5.5bn). This record-breaking season sees the league surpass the £6bn revenue mark for ...

The billionaire Friedkin family has entered exclusive talks to acquire Everton Football Club from British-Iranian owner Farhad Moshiri, in a significant step towards resolving the uncertainty hanging over the English Premier League side. The Texas-based Friedkin Group, which already owns Italian side AS Roma, had signed an exclusivity agreement and due diligence was under way, according to three people with knowledge of the matter. However, the Everton takeover process has been rocky and there is no guarantee of an agreement. A takeover would also require Premier League approval. “It’s absolutely not a done deal,” one person warned the Financial Times. Daniel Friedkin, whose net worth is estimated at $6bn by Forbes, owns Gulf States Toyota, a car distributor in the US south, and other business interests including film studios. He is known for his love of aviation, flying Spitfires and other vintage aircraft, and was Tom Hardy’s stunt pilot in the Christopher Nolan film Dunkirk. F...

After a relatively calm season, Fulham can look forward to a third consecutive year in the Premier League, which will go a long way to losing their tag as a “yo-yo” club. On the previous two occasions that they had been promoted to the top flight, they had immediately dropped back to the Championship, so there have clearly been signs of progress under Marco Silva. Things also look a little better off the pitch, considering the club’s most recent accounts from the 2022/23 season, when they finished in a very creditable 10th place in their first season back in the Premier League. In 2022/23 Fulham’s pre-tax loss more than halved from £57m to £26m, as revenue shot up £110m from £72m to a club record £182m following promotion to the Premier League, though profit from player sales dropped from £12m to £9m. Much of the revenue increase was eaten up by operating expenses rising £76m (54%) from £141m to £217m, as the club increased its budget in order to compete in the top flight. The ...

The Friedkin Group, the Texas-based owner of Italian side AS Roma, has emerged as the strong favourite to buy Everton.   The company’s chairman and CEO Dan Friedkin, 59, will now decide whether to proceed and purchase current owner Farhad Moshiri’s 94 per cent stake in the club. A decision on whether to complete the deal is expected to be made in the next 24 hours. It is understood that Friedkin must come up with an initial sum of £200million which will pay off a £158million loan and provide working capital of £30million for the club. The Friedkin Group acquired control of Serie A side Roma in 2020 in an acquisition worth an estimated $700 million (£553m at current exchange rate). Under Friedkin’s ownership, Roma won the Europa Conference League in 2022, with Jose Mourinho as manager, but lost in the final of the Europa League a year later. Forbes estimates Friedkin’s net worth to be $6.2 billion (£4.9bn). His studio produced ‘Killers of the Flower ...

There are many methodologies that value football clubs, but in general they cost more to buy that one might expect even making allowance for scarcity. There are many reports of exactly how much Sir Jim paid for his entry into Manchester United, but the understanding is that this was $1.350 bln for an initial 25%, followed by another $200m on deal completion to bring his stake up to 27.7%, which will be followed by a further $100m by the end of 2024, giving him 28.9% in total. On that basis, he will have splashed out $1.65 bln in total for 28.9%, giving an enterprise value for United of $5.7 bln or £4.5 bln (converting USD to GBP at 1.27). Chelsea United achieved a higher price than Chelsea, which was to be anticipated, given their advantages over the Blues in terms of history, brand and financial position, partially offset by the attraction of London to investors. The amount received for Chelsea was actually above expectations, as this was a forced sale to a strict deadline aft...

The billionaire owner of Aston Villa has called for an overhaul of the Premier League’s rule book on spending, complaining that the current system had turned English football into a “financial game”. Nassef Sawiris, Egypt’s richest man, said existing regulations governing what clubs can spend were preventing ambitious owners from challenging the established elite, and the system of penalties for breaking the rules lacked transparency. Sawiris, who owns Aston Villa alongside US private equity billionaire Wes Edens, also described the Premier League’s so-called profit and sustainability rules as “anti-competitive”, and said he was seeking legal advice on whether to lodge a formal complaint against them. “Some of the rules have actually resulted in cementing the status quo more than creating upward mobility and fluidity in the sport,” he told the Financial Times in an interview. “The rules do not make sense and are not good Sawiris said regulations limiting how much a club can lose o...

Everton Football Club’s creditors are battling to buy the Premier League side from its British-Iranian owner Farhad Moshiri, in the latest twist following the collapse of 777 Partners’ takeover deal. Stockbroker entrepreneur Andy Bell and property magnate George Downing are competing against US firm MSP Sports Capital to enter exclusive talks with Moshiri, said people with knowledge of the matter. While Bell, Downing and MSP are central figures because of the loans they have provided to help fund the club’s new stadium, the people told the Financial Times that Everton has received other investment proposals. BDT & MSD Partners, the merchant bank and investment firm, is ready to provide financing to the club as part of a takeover, said people with knowledge of the matter. The US bank has not agreed to back either of the creditors yet, those people said, but is willing to support the most credible buyer. US insurance group Advantage Capital Holdings, a big lender to 777, has ma...

Manchester City’s legal case against the Premier League’s associated party transaction (APT) rules will begin on Monday, June 10.  City are suing the league in an attempt to have the rules — which they claim are unlawful — abolished in a two-week private arbitration hearing. The regulations are in place to guard against clubs using sponsorship deals with companies linked to their owners to inflate revenue streams and allow more room for spending.   In February, Premier League clubs voted to toughen rules on associated party transactions. City now argue that they are the victims of “discrimination” in a 165-page legal document justifying their case. City are also arguing the league’s democratic system of requiring at least 14 clubs, or two-thirds of those who vote, to implement rule changes should be abolished to guard against decisions being made by “the tyranny of the majority”. It is arguable that many Premier League rules are not compatible with compeition law, spe...

Watford are offering fans shares in the club in a bid to raise money for transfers. This is despite boasting a pre-tax profit of £24.1m in the last financial year – the highest in EFL. The club are offering approximately 10% of the club at a value of £17.5million. The club statement is here: https://www.watfordfc.com/news/club/news-watford-fc-to-offer-ownership-to-fans Football finance guru Kieran Maguire is sceptical: 'I think Watford have been a bit disingenuous in their press release too. It says there was a pre-tax profit of £17.5m but this was because the Joao Pedro sale was accelerated into the 22/23 accounts as sold before 30 June. Without the player sales figures looking a bit hmmm. We had an experienced investor on our podcast recently who said clubs not in PL are worth 1.5-2x revenue. Watford revenue in 24/25 will be £30 million max, giving an enterprise value of £60m and an equity value of <£10m. £285m Enterprise Value for Watford looks toppy, especially with re...

Swedish-based Nordic Football Group have acquired a majority shareholding at Burton Albion from the long-serving chairman:  https://www.bbc.com/sport/football/articles/cq55y4l5exjo

Millwall’s season was overshadowed by the tragic death of owner John Berylson following a car accident. The American had been an exemplary owner, beloved by the fans for his leadership, passion and generosity. Millwall’s finances had been pretty good during his tenure, which we shall explore by looking at the most recent accounts from the 2022/23 season, when the club narrowly missed out on a place in the play-offs after finishing 8th. Millwall’s pre-tax loss slightly reduced from £12.6m to £12.2m, as revenue rose £0.8m (4%) from £18.6m to a club record £19.4m and player sales improved from a £0.1m loss to £2.5m profit. However, other operating income dropped from by £1.1m from £1.3m to £0.2m, while operating expenses increased £1.7m (5%) from £31.6m to £33.3m. The main driver of the revenue increase was broadcasting, which rose £1.1m (12%) from £9.1m to £10.2m, though match day was also up £0.4m (7%) from £5.8m to £6.2m. In contrast, commercial fell £0.7m (19%) from £3.7m to £3....

How did a team which spent two seasons in the Premier League, from 2017 to 2019, find themselves in English football’s third tier after a miserable campaign that saw them finish second from bottom? In July 2023, American businessman Kevin Nagle completed his takeover of Huddersfield, buying all of British retailer Dean Hoyle’s shares and ending the Card Factory tycoon’s 14-year spell as owner. That period had seen the Yorkshire club go through plenty of change. The team had risen back into the top flight for the first time in 45 years and, in 2017-18, retained their status under David Wagner with notable wins against Manchester United, Newcastle United and Crystal Palace along the way. Life proved far harder the following year and they finished bottom to return from whence they had come. On May 13, Michael Duff became Huddersfield’s sixth permanent manager since July 2022. The former Swansea City boss is charged with leading their journey back into the Cha...

Everton have confirmed 777 Partners’ proposed takeover has fallen through following the expiry of the purchase agreement. The Miami-based group’s deadline to complete the acquisition of Farhad Moshiri’s majority stake passed at 5am (BST) on Saturday, with the Anglo-Iranian businessman not minded to grant another extension. A club statement read: “The agreement between 777 Partners and Blue Heaven Holdings Limited for the sale and purchase of the majority shareholding in the club expired today. The club’s board of directors recognises the considerable level of financial support 777 Partners has provided the club over recent months and would like to take this opportunity to thank them for this. “The club will continue to operate as usual, while it works with Blue Heaven Holdings to assess all options for the club’s future ownership. There will be no tears shed over the collapse of the 777 deal, but attention immediately turns to what comes next for Everton. Like it or not, th...