Over the past decade American financing has reshaped global football in its image, with billions of dollars of investment, a fast-growing domestic audience and a generation of new players. While US owners of European football teams have faced protests from fans for years, friction is rising.
Some fear the sport is losing its way in pursuit of profit
and that outside money is distorting the game’s balance of power. And yet the
arrival of professional investors has so far done little to fix the game’s
parlous finances. Americans now own 117 European clubs, according to data from
CIES Sports Intelligence, including more than half the teams in the English
Premier League, more than a third of Italy’s Serie A and over a quarter of
Ligue 1 in France.
The effects are being felt both on and off the pitch. Clubs
are increasingly run with commercial success front of mind, aping the US sports
model, where team ownership has proved lucrative. This has led to a push to
tighten football’s financial rules, upgrade stadium infrastructure and find new
ways to generate revenue. “American
culture is make it big, more expensive, more exclusive,” Christina Philippou,
an expert on football finance at the University of Portsmouth told the
Financial Times. “That doesn’t necessarily work in the same way for football in
Europe, where it’s very much seen as a social asset and piece of heritage.”
It has been more than two decades since the Glazer family
bought Manchester United in a controversial leveraged buyout, the first big US
takeover of a European football club. The following years saw a trickle of
further investment. American owners took control of Liverpool in 2007, Arsenal
and AS Roma in 2011, and a handful of others.
By 2018, when Fifa announced that the US, Canada and Mexico
would co-host the 2026 World Cup, about two dozen European teams had been
bought by US investors. But in the years since, the number of US-owned
clubs in Europe has more than quadrupled. The largest ever club takeovers in
England, Italy, Spain and France have all involved US buyers. English champions
Arsenal, Italian title-winners Inter Milan and Atlético Madrid, Spain’s third
biggest club, are all US controlled. American ownership has increasingly spread
beyond Europe’s elite, reaching the Portuguese, Belgian, Brazilian and Mexican
leagues and into the lower reaches of English, Spanish and Italian football.
US owners are not a homogenous group. Some have a life-long
love of football and close family ties to Europe. Others are working within
tight fund mandates and must return money to their investors over a set
timeframe. Teams in the Championship, English football’s second tier, now count
Hollywood actor Ryan Reynolds, rapper Snoop Dogg and retired NFL star
quarterback Tom Brady among their shareholders, but also hedge funds, private
equity firms and US billionaires.
“US investors are the dominant buyers in global football
right now and US capital, much like it has in other asset classes, has
effectively become the price-setting cohort,” Michael Kuh, co-head of sport at
law firm Simpson Thacher told the Pink ‘Un. Professional investors have also
put their money to work in other ways, such as through minority stakes, joint
ventures, structured lending or revenue-sharing agreements.
Member-owned Real Madrid and Barcelona, Spain’s two biggest
clubs, are barred from selling stakes to outside parties, but have both secured
hundreds of millions of euros from US private equity firm Sixth Street. Real
Madrid’s president Florentino Pérez has also been pushing a contentious plan to
change the club’s rules to enable a stake sale to investors. Qatar-owned Paris
Saint-Germain and Abu Dhabi-controlled Manchester City both have US minority
shareholders.
Analysts and advisers say the influx of US money has been
driven by a range of factors, including a global boom in sport-related assets
and a tidal wave of US cash looking for a home. Gregg Lemkau, chief executive
of BDT & MSD, a US merchant bank that lends to several owners of European
football clubs, points to a growing number of billionaires looking to invest.
“There’s been an explosion of wealth. In the US, the number of teams in the
major sports leagues has barely changed over the past couple of decades, but
the number of billionaires has multiplied. It’s a simple supply-and-demand
story,” Lemkau told the FT.
Football’s relatively
lax rules on ownership have made it an easy place to park money. For example,
private equity firms are barred from taking controlling stakes in big US sports
teams, and there are strict caps on debt. Football has few such limitations.
Many see football as under-developed commercially. In recent years, clubs have
spent billions of dollars to bring their stadiums more in line with US
standards, with far more VIP seats and the flexibility to host music and other
sporting events, such as NFL games.
The cost of buying in has also played a part. Sports team
valuations in the US have soared in recent years, shrinking the pool of
investors able to buy into top teams. Football clubs, by comparison, look
cheap. NBA teams are now valued at more than 14 times revenue, according to
estimates from Sportico, compared with just 4.2 times for top European football
teams.
Gerry Cardinale, founder of private equity group RedBird
Capital and owner of Italy’s AC Milan, told the leading business paper that
while some established sports investors had bought into European football, some
more recent arrivals have simply been “priced out” in their home market. “In
the US, the entry prices have gone sky high. So people look at European
football and say: this is a chance to buy into a global entertainment and
economic opportunity at a discount,” he says. “The economic opportunity is
enormous because the sport still hasn’t been professionalised the way American
sports have.”
Some investors with existing holdings in US sports see football as a way to
future-proof their portfolios. American sports have a much smaller global fan
base compared with football. The LA Lakers have 25mn followers on Instagram; FC
Barcelona has 145mn. But football teams also have a fast-growing US audience.
Jon Miller, president of acquisitions and partnerships at US
cable network NBC, says that 35mn-40mn people in the US watched the Premier
League this season, and that 18 matches attracted a viewership of more than
1mn. That fan base skews young: 56 per cent of self-identified football
fans in the US are aged 18-34, according to YouGov.
The fast-growing US audience has contributed to a sharp
increase in the value of international media rights for some competitions,
bringing billions of dollars of additional revenue into certain corners of
European football. In 2017, the year before the successful World Cup bid,
US broadcasters spent $340mn a year combined for the rights to show Premier
League, Champions League and Spain’s La Liga matches, according to Ampere
Sports, a data and analytics company.
This year, they will
hand over close to $900mn for the same three competitions. For some European
clubs, all this has been a welcome financial boost. But it has also widened the
gap between haves and have-nots. The English Premier League now gets more than
half its annual broadcast income from outside the UK, with the US its single
largest overseas market. International rights generate more for the top 20
English clubs than for the Spanish, German, French and Italian leagues
combined.
Chelsea’s expensive struggles under private equity ownership
and Tottenham’s close brush with relegation this season have served as
reminders of how competitive and unpredictable football can be. Several
US-owned clubs in both Europe and South America have run into serious financial
trouble..
Despite the mounting challenges, optimists see this month’s
World Cup as the catalyst for a wave of fresh enthusiasm, as millions of
Americans tune in to football’s greatest showcase played on home turf.
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