The Political Economy of Football V2

Writing in The Times, Michael Mortitz argues: 'What would you pay for a £583 million business with few growth prospects and £81 million of ebitda, the slippery benchmark used by buyout firms to value prospective investments? In most industries it would be between ten and fifteen times or, in this case, £800 million to £1.2 billion.' 'If, however, you are putting a football team on the block and you are a group of absentee owners, as is the case with Manchester United and its dividend-rich Glazer siblings, you would encourage rumours that the business is worth £6 billion.' One of his key arguments is that the club 'is operating in a market where television coverage is saturated and where the era of bidding frenzies is over.'   This overlooks the global revenues that could be obtained from streaming.  There is also capacity for further growth in the US. Then there is the revenue to be derived from non fungible tokens and the like.   One day fans will wake u...

Peter Varney thinks that the Big Six are going to become a Big Four of Liverpool, Manchester City, Manchester United and Newcastle.   Liverpool and Manchester United will be Saudi Arabian or Qatari owned by the end of the season:  https://www.petervarney.com/post/six-becomes-four I wouldn't write off the London clubs so easily.   The capital, a world city, has a special appeal for players. Chelsea have new owners with deep pockets; Tottenham Hotspur have the best stadium in the land with great revenue potential; and Arsenal look like succeeding on the pitch.

 The authoritative and thorough Swiss Ramble provides a forensic analysis of the finances of Bristol City:  https://swissramble.substack.com/p/bristol-city-finances-202122?utm_source=substack&publication_id=1203438&post_id=87343314&utm_medium=email&utm_content=share&triggerShare=true&isFreemail=true He notes, 'Losses are nothing new for Bristol City, who have only posted a profit once in the last decade (£11m in 2019, thanks to £38m profit from player sales). In that period, the club has lost a hefty £146m, including £77m in the last three (COVID-impacted) seasons. Bristol City’s revenue is one of the highest in the Championship – if you exclude the clubs that benefit from Premier League parachute payments, whose revenue is normally twice as much.  For many years Bristol City have been dependent on funding from owner Steve   Lansdown, which the club described as “critical”. I estimate that the owner has put in around £232m to date, which i...

The entire board of directors at Juventus has resigned, including president Andrea Agnelli and vice-president Pavel Nedved. The Italian Serie A club’s board stepped down en masse “having considered the centrality and relevance of pending legal and accounting issues”, it said in a reference to an ongoing police investigation. Prosecutors in Turin have since last year been exploring allegations of false accounting and irregularities in the transfer and loans of players. They are investigating the possibility that Juve, who are listed on the Italian stock exchange, presented false accounting information to investors and produced invoices for non-existent transactions  Juventus have already made a huge €254m loss in 2021/22, the highest ever reported in Italy.  They have lost half a billion euros over the last three years. Shares in the club fell 6 per cent in early trading in Milan.

Paris Saint-Germain are targeting a valuation of €4bn as they hold talks with investors on a 15 per cent minority stake, including two US-based funds:  https://www.ft.com/content/5fc68e1a-769f-4b55-b6f7-ffceb31f23e9?shareType=nongift This would exceed the price at which Chelsea was sold and could boost sale prices for Liverpool and Manchester United.

The authoritative Swiss Ramble reviews the latest accounts of Rangers:  https://swissramble.substack.com/p/rangers-finances-202122?utm_source=substack&publication_id=1203438&post_id=87157076&utm_medium=email&utm_content=share&triggerShare=true&isFreemail=true He comments: ' It is worth noting that Rangers small loss is one of the best performances of the leading European clubs that have reported 2021/22 figures to date. In stark contrast, large losses have been posted almost everywhere else, e.g. PSG £327m, Juventus £225m and Barcelona £157m (excluding their famous economic levers).' 'Rangers’ strategy of investing in the squad has had “clear effects on our financial statements” in recent years, with their pre-tax losses adding up to nearly £100m in the last decade. Obviously, the huge deficits in 2020 and 2021 were exacerbated by the pandemic. That said, the £2m loss in 2021/22 is the club’s smallest in the last 9 years, as the club has pushed for ...

Claims that Manchester United could be worth $7bn have been greeted with scepticism by analysts.  United's shares rose sharply last week and were trading at around $21.50, valuing its equity at $3.5bn or over $4bn including debt. However, a valuation of $4bn to $5bn for a business that is losing money and in need of capital investment looks hard to justify.  Modernising Old Trafford might cost as much as $1.5bn.  Competition has got fiercer in the Premier League with Saudi backing for Newcastle United and the rise of Manchester City. Nevertheless, competition could drive up the price.  The Saudi government has given the green light to its investors to bid.  There will be plenty of interest from the United States. The Ineos owner, Sir Jim Ratcliffe, has repeatedly stated his interest in buying the club and has already explored the possibility of a takeover with two of the Glazer family, describing them last month as the “nicest people” and “proper gentlemen”, bef...