The Political Economy of Football V2

The old joke that to make a small fortune you should start with a large fortune and invest in a football club is becoming even more true.   At the top level you need to be either a billionaire or a private equity firm.  The effects are trickling down to the lower reaches of the EFL and even to the non-league system.    I support a non-league club and the chairman rang up one day and asked if I could oblige with a few k. What has happened since the pandemic in terms of football finances has been subjected to the usual authoritative and forensic analysis of the Swiss Ramble from his Zurich lair.    It doesn’t make for comfortable festive reading but subscribe to his Substack page to get the full sp.   What is clear is that the big six are pulling away from the rest and the finances of the Championship are becoming even crazier, More cash is coming in but more is going out.    Alan Sugar once referred to the prune juice effect and ...

This week the FT revealed that Bayern Munich had recently held talks with private equity firm EQT about a possible stake sale. While those discussions appear to have fizzled out with the departure of Bayern CFO Michael Diederich, it is nonetheless a sign of the times. German football is largely immune to foreign ownership. The 50+1 rule prevents the majority of clubs from being controlled by anyone other than members, while more general hostility to private equity (expressed through fan protests) has derailed past efforts to bring investment in at the league level. Bayern already has a group of private minority shareholders. Adidas, Audi and Allianz each own just over 8 per cent of the Bavarian side. Members are guaranteed control of at least 70 per cent, leaving 5 per cent for the club to play with. Selling such a little slice at a valuation of about €4bn would have brought in around €200mn, a nice boost to the coffers as the German team looks to keep up with its w...

John McEvoy and the Storch family, two wealthy American bidders interested in buying Sheffield Wednesday, have joined forces to strengthen their chances of acquiring the club. Administrators Begbies Traynor have received offers worth a minimum of £30million from at least two prospective bidders, including the one backed by McEvoy and the Storch family. California-based billionaire McEvoy is a minority shareholder in NHL team Nashville Predators and MLB side Colorado Rockies.   The Storch family, whose net worth amounts to more than £1billion, were linked with a bid for Plymouth Argyle, the League One club, in the summer. Insiders believe that the new owners may not have the keys to Hillsborough for another six weeks even though the administrators took charge of the club on October 24 after gaining control from the outgoing chairman Dejphon Chansiri. Wednesday’s administrators, Begbies Traynor, said initially that they would not consider offers beyond December 5, but th...

Germany’s leading football club Bayern Munich held talks this year with EQT over selling a minority stake to the private equity firm, in a deal that would have reignited a heated national debate over the merits of private capital firms investing in football. Negotiations fell apart when Bayern’s chief financial officer Michael Diederich, EQT’s contact at the club, left in the summer to become co-head of Deutsche Bank’s corporate banking business, according to three people familiar with the matter. German football fans have historically been highly critical of outside investment into the sport, with widespread protests prompting the country’s football league last year to call off talks over a potential private equity investment. With a few exceptions, clubs in Germany are subject to the ‘50+1’ ownership rule, which stipulates members must hold majority voting rights, in effect blocking commercial entities from gaining control.   The rise of RB Leipzig, a German club whose r...

Real Madrid’s 2024/25 accounts cover a season which was very much a case of “close, but no cigar”, as they finished runners-up in La Liga and were defeated in the final of the Copa del Rey and the Supercopa de Espana, losing out to their great rivals Barcelona on all three occasions. They were also eliminated in the quarter-finals of the Champions League by Arsenal, which would be good result for most clubs, but actually represented their worst performance in this competition for five years. Despite the less successful season, Real Madrid managed to increase their pre-tax profit by €11m (57%) from €20m to €31m.   Revenue continued to grow, rising €112m (10%) from €1,073m to a staggering €1,185m. This meant that the club broke the one billion Euros barrier for the second season in a row, a feat that no other football club has yet achieved.   In addition, profit from player sales increased by €11m (52%) from €21m to €32m. The latest positive result means that Real Madrid h...

Wrexham, the struggling football club catapulted to global fame after it was bought by the Hollywood duo Ryan Reynolds and Rob McElhenney, has received £18 million in taxpayer funding. The Championship club was awarded the non-repayable grants to refurbish its stadium and the surrounding area despite the sizeable wealth of its owners. The amount of money received by Wrexham in state aid vastly outstrips public spending on any other football club in England and Wales. A year after the actors’ purchase of the club, it was awarded £3.8 million by Wrexham county borough council, the first of two grants. A second payment of £14 million was awarded in September. The grants, which were first reported by The Guardian, are for the redevelopment of the club’s Racecourse Ground. This includes the construction of a Kop stand, floodlights and pitch to make the stadium suitable for international football and rugby matches. In recent years, both the council and Welsh government have her...