The Political Economy of Football V2

The Swiss Ramble was invited to give a presentation at the FT Football Business Summit on the increasingly popular model of multi-club ownership.   For some reason this contribution was not publicised by the Pink 'Un. It is the most thorough data-based treatment I have seen of the motivations for multi-club ownership and the advantages and drawbacks of the model.   Of itself it is a reason for subscribing to the Zurich-based football finance guru's Substack page. My only additional comment would be don't forget the wood for the trees.  I would argue that globalisation is alive and well in football and one thing that a globalisation model encourages is holding assets in different countries, albeit that the junior subsidiaries lose out. The Swiss Ramble states: ' One of the best known examples of multi-club ownership is City Football Group, largely owned by Abu Dhabi United Group (ADUG). They first acquired Manchester City in 2008, but have significantly expanded ...

City Football Group (CFG), the holding company that oversees the multi-club ownership group spearheaded by Manchester City, recorded a £122.2million pre-tax loss in the 2023-24 season, taking CFG’s combined losses since its 2013 founding to £972.8m. By contrast, across the same period, Manchester City recorded a pre-tax profit of £103.4m. CFG’s losses have now cleared £100m in each of the last three seasons, though a £30.3m income tax credit reduced last season’s net loss to below that marker. John MacBeath, a board member at CFG, stated at the end of 2013-14 season that the board “expect the group to be profitable within the next three years.” CFG has yet to make an annual profit or come anywhere close to doing so. Last season’s result did at least represent a stabilisation of sorts, with the pre-tax loss reducing by £4.7m (four per cent). CFG’s pre-tax loss for 2023-24 came despite new record income for the group of £933.1m. CFG’s revenue, unsurprisingly, is principally attribu...

After Brazilian football team Botafogo clinched a sensational league and cup double at the end of last season, its owner John Textor didn’t waste an opportunity to troll his naysayers.  On social media the US businessman and serial soccer investor posted a photo of himself kissing the Copa Libertadores trophy, alongside a WhatsApp message from a detractor. “You don’t understand anything in football and [sic] waste of time to talk to you. And you will lose everywhere you go,” it read.  Tagged in the screenshot was Paris Saint-Germain, whose Qatari president Nasser Al-Khelaifi has clashed with Textor, who is also the owner of Olympique Lyonnais in France and no stranger to public dust-ups.  Yet Botafogo’s success, less than three years since being rescued from financial ruin by its American benefactor, was more than just a personal triumph for Textor. It also provided a showcase for the wave of recent investments into Brazilian football, which has attra...

Hours after Olympique Lyonnais was barred from signing players and provisionally demoted to the second tier of French football due to its financial difficulties, owner John Textor sought to reassure fans that all was well.  “This is not a club in trouble”, the American entrepreneur said at a press conference, pointing to a range of planned fundraising initiatives from across his network of football clubs. “Whatever was broken about our finances has already been fixed, and we don’t need help,” Textor insisted, as one of the biggest clubs in France was embroiled in a fight with national regulators that is testing the limits of the multiclub model now pervasive across football. More than 300 teams globally, including 13 per cent of those overseen by Uefa, are now part of such multiclub groups, according to figures from the organisation, which governs the sport in Europe. There were fewer than 40 in 2012. The multiclub template has been adopted by owners including by Abu Dhabi-owned ...

Kieran Maguire reports that City Football Group Ltd, which owns Manchester City, New York City etc, had record revenue of £877m in 22/23 and lost £127m before tax. Manchester City contributed £713m of the revenue and made £80m profit before tax. CFG have now made total losses of over £1.4bn. Many other clubs are seeking to emulate the CFG model, but they have first mover advantage.

Amid the fanfare of Michael Edwards’ appointment as Fenway Sports Group’s (FSG) chief executive of football on Tuesday was an acceptance that Liverpool need to change.  A new era without Jurgen Klopp will now be crafted by Edwards, Liverpool’s former sporting director, and included in the plans are the ambitions to invest in a partner club. The multi-club ownership model is coming to Anfield, with Edwards believing Liverpool have little choice but to expand if they are to “remain competitive” in the Premier League and beyond. It is a clear shift in strategy for Liverpool, a club that has so far gone it alone in contrast to many of their big rivals.    Well over half of the 20 English top-flight clubs now have relationships with at least one other European club and the pattern has been extended in the past 12 months. It has long been mooted that FSG was open to buying another football club to run alongside Liverpool. There were links to ...

The surprise story in European football this season has undoubtedly been Girona, who have featured prominently at the top of La Liga, battling with the traditional elite like Real Madrid, Barcelona and Atleti in only their second season back in Spain’s top flight.   I watched Real Madrid beat them 4-0 on television on Saturday, but that could just be a blip. The club’s own aspirations after promotion were relatively modest, as summarised by chief executive Ignasi Mas-Bagà, “The goal was non-relegation. That has been the target since we arrived. Leading the table is like a dream for us. But it’s not an obsession. The focus is long-term stability.” This reaction was understandable, given that Girona’s promotion in 2021/22 was only secured via the play-offs after the club finished sixth in the Segunda division. In fact, this was only the second time that the club from Northern Catalonia had reached La Liga, having spent two years in the top flight after promotion in 2016/17. ...

One of the most important trends in the world of football is multi-club ownership. According to UEFA’s latest benchmarking report, at the end of 2022 there were more than 180 clubs worldwide that were part of a multi-club investment structure, involving 6,500 players. This is nearly twice as many as four years before, while the number has increased fivefold since 2012. Even that rapid growth is almost certainly understating the reality, as CIES Sports Intelligence identified more than 250 teams involved in multi-club ownership in March 2023. The growth has been driven by a combination of macroeconomic factors and global investment trends. Financial weaknesses and inequalities in the game, exacerbated by the impact of the COVID pandemic, have resulted in buying opportunities. The perceived under-valuation of the assets, i.e. football clubs, has attracted the attention of US-based investors, with 27 multi-club investment groups (a third of UEFA’s total number) originating in Americ...

Is multi-club ownership really such a positive thing? And as so often, it is a question the game has never really faced up to, preferring to stand by and do nothing for years before finally stopping to wonder if it is now so widespread that they might as well just legitimise it. The arguments in favour of multi-club ownership are clear. As well as the Red Bull empire, you could just look at the success of the City Football Group.  It's a road Chelsea are planning to go down. City are at the top of the tree, Premier League champions for four of the past five seasons. But Melbourne City (men and women), New York City, Mumbai City and Yokohama F Marinos have won league titles as part of the group and Girona, Troyes and Montevideo City Torque have won promotions, all of them benefiting from a shared network of players, coaches and scouts as well as data, knowledge, infrastructure and strategy. With the investment of Brighton & Hove Albion owner-chairm...

City Football Group Ltd (CFG), which owns Manchester City (MCFC) and many other football clubs, publishes 21/22 accounts. CFG revenue £705m up 13% partly due to end of lockdown. 86% of revenue from MCFC. Operating losses pre player sales £182m, of which £22m from MCFC. CFG total losses since it was formed in 2013 £1.33 billion, group has substantial cash reserves, partly due to taking out a $650m loan in the year, perhaps to fund more Club acquisitions or infrastructure projects. Commercial and matchday rise in income more than offset broadcasting money fall. Wages up £31m to £488m, of which 73% borne by MCFC. Senior management pay more than doubled to £11.8m. Player purchases for CFG £191m, of which £149m were by MCFC. Player sales £95m (£86m by MCFC).

Why is Joe Ravitch, the co-founder of Raine, handling the sale of Chelsea for Roman Abramovich? According to the Financial Times, Ravitch won the billionaire’s trust while on holiday in the Caribbean around a decade ago.   The meeting was made possible through an old contact from Ravitch’s days as an attorney in Moscow in the early 1990s, while working for Boris Yeltsin’s Russian Federation. Ravitch went into banking, working in London, Hong Kong and New York, while the contact Tenenbaum became one of Abramovich’s “closest associates”, according to Chelsea’s website, and a board member of the club. That meeting got Raine in the door, consulting on commercial strategy and the potential for modernisation and expansion of Chelsea’s  Stamford Bridge , which lags behind the capacity of major rivals. When bidders looked at Chelsea in 2018, Raine put a value on the club for Abramovich, who resisted the urge to sell. In the view of the Pink Un unique, longstanding bo...

City Football Group, the parent company of Manchester City, has raised $650m in one of football's biggest ever debt deals.   The loan will become due in July 2028 and exceeds the €525m debt financing arrangement between Goldman Sachs and FC Barcelona. CG intends to use the money to fund infrastructure projects such as a new stadium for its MLS franchise New York City FC. The seven year loan was underwritten by Barclays, with HSBC and KKK Capital helping to arrange and distribute the debt.   CFG has also organised a revolving credit facility worth £100m.  Raising debt is thought to be a cheaper route to cash than selling equity. The money will help prop up the lossmaking group whose finances have been hit hard by the pandemic. CFG's annual revenue dropped to £544m in the financial year ending June 2020, down almost 14 per cent because of lost ticket and broadcast sales,  The group's annual net loss widened to £205m from £84m a year earlier. CFG majority owne...

City Football Group has linked up with Club Bolivar in La Paz, the world's highest altitude capital city:  https://www.cityfootballgroup.com/information-resource/news-and-press-packs/club-bolivar-joins-city-football-group-as-first-partner-club/ Club Bolivar are regarded as the top club in Bolivia and have won 29 league titles. Apart from the elevation of the relationship, it also a new concept for City Football Group, a partner club.  Club Bolivar will have access to the expertise built up on and off the pitch by CFG over the last seven years.   It is not anticipated that they will swap players for several years. For CFG, it will be an opportunity to learn more about South American football. Under its Global Football Division, CFG is hoping to sign up many more clubs for such partnership relationships across the world.

City Football Group is in late stage talks to buy French Ligue 2 side ESTAC Troyes for a price reported to be in the single digit millions of euros. Some clubs such as New York City and Mumbai City have been bought with the idea of breaking into lucrative markets and promoting City's brand.  Others are bought with the idea of spotting promising players.  They can ensure players gain experience of European leagues where the standard is high. CFG is also evaluating teams in Europe, Asia and Africa.

City Football Group, the owners of Manchester City, are considering investing in a Russian club:  https://www.si.com/soccer/manchestercity/news/man-city-owners-hold-negotiations-with-russian-club-over-potential-takeover-cfg-impressed-by-popularity-of-the-sport This follows the news that an investment had been completed in Belgium, with the purchase of Second Division side Lommel S.K.

City Football Group is considering adding to its global portfolio of clubs by acquiring French Ligue 2 side AS Nancy. Talks have taken place, but there has been no final decision. Nancy would be their ninth club: CFG looks at Nancy Nancy is the second largest city in Lorraine in North-Eastern France and the metropolitan area has a population of around 435,000, making it the 20th largest urban area in France.

Getting a toehold for soccer in India has been not been easy, given the popularity of other sports. City Football Group, the leading global soccer business, has got involved, but what are the prospects for I-league clubs, now seen as a second tier behind the ISL? Read more here: Indian football's new deal The article asks: 'Will this be open season for mergers and takeovers? And is this the only way clubs in the I League, now relegated to the second tier in the country behind the ISL and forever struggling for finances, survive?' '“Either you need strong Indian backers such as the Jindals, Goenka or Tatas or you need CFG and their like,” says an ISL franchise official who did not want to be named because he is not authorised to talk to the media."' The sub-text here is about far Indian football needs to globalise to succeed, but it has to do so in a way that retains domestic support and roots.

Writing in the Financial Times Tom Braithwaite puts a sceptical view about the acquisition of a stake in City Football Group by Silver Lake under the headline 'Silicon Valley is inflating the football bubble.' Silicon Valley gets accused of lots of things, but this must be a first. He questions the statement by Silver Lake boss Egon Durban that CFG is 'an impressive global platform of marquee football clubs across five continents.' OK, most of them are second or third rank, but with capacity for growth. He then goes on to assert that the fan base for Manchester City is 'thin'. It is true that at one time City was very rooted in Manchester and didn't have the global following of United. Indeed, it probably didn't have much of a fan base in Guildford where you could encounter United fans who had never been to Old Trafford. But City is catching up. The argument that media executives prefer Liverpool, Tottenham Hotspur, Chelsea or United doesn't...

Following the sale of a stake in City Football Group to private equity group Silver Spring, CFG have acquired a 65 per cent stake in Mumbai City Football Club. The club plays in the Indian Super League. Mumbai City was owned by actor and producer Ranbir Kapoor and his business partner Bimal Parekh. They will retain a 35 per cent share in the club. Football is eclipsed in popularity in India by cricket, but there is thought to be considerable growth potential. CFG chief executive Ferran Soriano said that the objective was to unleash the power of Indian football: CFG's objective

Manchester City's parent, City Football Group, has sold 10 per cent of the group for £389m to American private equity house Silver Lake in a deal that values City Group at £3.75 billion, more than a billion higher than Manchester United which has a market capitalisation of $2.8bn. CFG has a stake in seven clubs across the world. CFG is now valued at $4.84bn, a record for a sports group. Kieran Maguire of the PriceofFootball comments, 'Valuation seems very high given that City Football Group losing £1m a week over last couple of years. Silver Lake would not be putting in this amount of money unless very confident that City would be subject to avoiding a Champions League ban, but reports suggest that City are on better terms with UEFA.' Silver Lake reckon that even if City were given a Champions League ban for breaches of financial fair play rules, they would still be worth the valuation. Maguire added, 'Reports that money will be used to expand City group globally ...