With the Trump administration in the US threatening punitive tariffs against UK exports (the US is the UK’s biggest single country market at 22 per cent of exports), geopolitics become even more important in top flight football.
The UK government is attempting to facilitate investment
into one of the British economy’s most successful exports: the Premier League,
which broadcasts to 189 of the 193 United Nations member states. In May, the
Premier League said 1.87billion people follow the division worldwide and
900million homes globally are able to watch Premier League football. Little
wonder, therefore, that North American investors have taken a liking to a
product that attracts $450m (£355m) per season for the U.S. media rights
alone from NBC.
Only 20 years ago, there were no majority American owners in
the Premier League. Now nine of the top flight’s 20 teams are majority-owned by
U.S. investors: Manchester United, Arsenal, Aston Villa, Liverpool, Chelsea, Fulham, Bournemouth, Crystal
Palace and Ipswich Town. Those ownerships include some of the most
recognisable, and in some cases, divisive figures in English football — the
Glazer family, the Kroenkes, Todd Boehly & Clearlake Capital, and Fenway
Sports Group. That number is likely to increase, as Everton are
expected to be taken over by the Texas-based Friedkin family.
The search for
investors
Several of the non-U.S. owned Premier League clubs are
seeking external investment, with merchant bank Rothschild out searching on
behalf of Tottenham Hotspur, Brentford and West Ham United,
to varying degrees. The U.K. government has also tapped Rothschild, along with
the consultancy firm Deloitte, as part of its matchmaking process for British
sporting institutions. Introductions were made in partnership with Deloitte for
potential U.S. investors seeking to claim control of franchises within The
Hundred, the cricket tournament run by the England and Wales Cricket Board. As
for the Premier League, those deals may come down the tracks.
In an interview with the Financial Times earlier this year, John W. Henry, principal
owner of Fenway Sports Group, said sports ownership has evolved from “mom and
pop operations” to “tough, competitive businesses”. In the Premier League, U.S.
investment has been at the heart of that transition. We can largely boil it
down to two forms: family offices and institutional money but, in recent years,
as the cheques have become bigger, we increasingly see the two converge.
Shilen Patel, a Florida-based healthcare entrepreneur and
the new owner of the Baggies, acknowledged that “dividend might be a bad
word” in the lexicon of English football. He added: “The expectation is always
if the club is successful to reinvest. And I don’t think that that’s an unfair
expectation. The trade-off is you measure success by value; the more that you
can do, the more valuable you can be.”
Self-sustaining models
This is a consistent strand among many U.S. investors;
whether it be funds such as FSG at Liverpool or family offices like the
Kroenkes at Arsenal. These groups have largely pursued self-sustaining models,
or what the clubs might describe as a virtuous cycle, where the club’s revenue,
from growing media rights, untapped sponsorship opportunities, smart player
trading and enhanced matchday experiences, can be reinvested to develop the
playing squad, win more games and allow for incremental growth. Self-sustaining
models are also common in U.S. sport, where the Kroenkes own the NFL’s Los
Angeles Rams, MLS’s Colorado Rapids, the NHL’s Colorado Avalanche and
the NBA’s Denver Nuggets.
Ipswich Town
Given the huge increase in club valuations, it is little
wonder all manner of U.S. investors want a slice of the Premier League pie.
Take top-flight newcomers Ipswich Town: in April 2021, local businessman Marcus
Evans sold the club to Gamechanger 20, a consortium between a pension fund from
Arizona and a group of U.S. sports investors. The price was £30million for a
club then in the third division of English football. Ipswich secured promotion
to the Championship in 2023, after which Bright Path Sports Partners,
a private equity firm from Ohio, invested “up to £105million” for roughly 40
per cent of the club, valuing it in excess of £250million. And that was before
they were promoted to the Premier League in May.
But for every feel-good story like Ipswich, it is worth
remembering some realities. According to numbers compiled by football finance
expert Kieran Maguire for the BBC, Premier League clubs lost more than
£1billion in the 2022-23 season, while no club had wages at less than 46
per cent of their income and 14 clubs were at over 60 per cent.
Most Premier League clubs are losing money, while fans often
demand that their owners spend even more. Top-end Premier League clubs are even
more expensive and some may query the level of returns we can expect. This is
perhaps even more important now the potential pool of investors is diminishing:
Russian oligarchs are for now out of the question, Chinese capital has largely
withdrawn from English football and there are only so many sovereign wealth
funds with the means and desire to gatecrash the Premier League. All eyes on
the U.S. then?
The Premier League also has another advantage; a relatively
low entry point for would-be investors. Sportico, for example, value the
cheapest NBA team to be the New Orleans Pelicans at $2.72billion and the most
expensive to be the Golden State Warriors at $8.28billion.
Media rights
What U.S. investors are really hoping for is further growth
in the Premier League’s media rights. The Premier League may be a long way
ahead of its soccer rivals, drawing in £3.33billion ($4.21bn) per year in
domestic and global media rights, but this is dwarfed by the big American
sports — despite the Premier League having a much larger global
following.
U.S. investors are hopeful that greater investment in the
Premier League will come from media companies, particularly via
direct-to-consumer streaming, where platforms have spent billions acquiring
rights to content, but also in integrating means in which clubs can connect
directly with its global fanbase and monetise more effectively. There are also
thought to be ancillary opportunities linked to sports teams, including stadium
development, real estate, retail, technology and food and beverage companies;
digging into the idea of sport as entertainment.
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