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Relegation threat in Europe spooks US investors

European football clubs have been left on the sidelines of a deals boom that has highlighted soaring valuations for US sports franchises and underlined the challenges facing Europe’s team owners. Investors argue that a failure to get a grip on costs, as well as the constant threat of relegation, has kept a lid on European interest even as a flurry of deals in the US has underscored rising valuations in several sports.

Valuations of the top men’s football teams, which are concentrated in Europe, have stagnated at just 4.2 times revenue. M&A activity in European football has dropped sharply since a spate of record-breaking takeovers in 2022, according to figures from governing body Uefa.

Apollo Global Management agreed to buy a controlling stake in Atlético Madrid, Spain’s third-biggest football club, at a valuation of between €2bn and €2.5bn in 2025. The lower end of that range implies a valuation of 4.9 times its 2024 revenue.

According to the most recent figures from Uefa, more than half of Europe’s top-flight football teams reported operating losses in 2024, with an aggregate loss of €300mn. Transfer costs pushed overall pre-tax losses up to €1.2bn, while combined debt rose 10 per cent to €28.1bn.

Other experts also cite the divergence in the media rights markets in the US and Europe as an important reason for the difference in desirability to investors. US sports leagues have successfully negotiated steep increases in their media rights. The NBA’s latest set of deals, covering 11 years, resulted in income rising from $2.6bn a year to $6.9bn, driven by strong competition from traditional cable networks and streamers.

Meanwhile media rights for major European football leagues are either falling or showing signs of stagnation. Even the English Premier League, the most commercially successful national competition, only managed to secure a 4 per cent increase in its UK media rights, compared with eight years ago, when the rights were last renegotiated.

As well as the closed format of the competitions US sports teams share most central revenues equally, including income from TV deals, increasing their attractiveness to investors. “The league organisation, structure and revenue-sharing opportunities in the US vs anywhere else in the world are just very different,” said John Lambros, head of digital media and entertainment at Houlihan Lokey. “There’s lower risk and volatility in most US sports . . . no relegation risk and predictable media rights make revenues stable and foreseeable,” he added.

Football fans in Europe, however, are resistant to the closed-league model. The widespread anger at plans for a breakaway European Super League in 2021 was partly because the competition was designed so that founding member clubs could not be relegated.


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