The timeshare ‘business’

Private equity firms, many of them from the US, have been monitoring the English soccer market for months. They seek, as an investment opportunity, to buy shares in clubs, whether they are in the Premier League or the English Football League (EFL), which groups clubs in the three lower categories, because they are convinced that it is safe . destination for the return of your investments. For the interest of these funds and venture capital companies is the intention to apply a strategy that already works in the United Kingdom with the City, through the holding City Football Group. A multi-club timeshare model to promote the exchange of footballers and development strategies for young projection players. Always make it profitable with profit as a clear goal.

This atmosphere of intense ‘business’ and a lot of negotiations around the Premier and the English leagues, especially with clubs in financial trouble, comes when the Prime Minister’s government Rishi Sunak has issued a draft of the so-called ‘white paper’ on football governance, a document that sets out the government’s plan to create an independent regulator, as well as introducing a licensing system that could prevent the participation of clubs with most debt. . The Westminster government says the current distribution of TV revenue is inadequate and the EFL is pushing for 25% of the £3.5bn (€4.2bn) the Premier League makes annually in TV rights . The difficult distribution of money from television rights is behind all the new investment fever coming from the United States.

In the midst of all this movement is when the Premier League, which has opposed this government regulation, has announced threats of punishment for Manchester City, for breaching financial ‘fair play’ and dubious charging City Football Group, the holding company that owns City with a majority stake in Abu Dhabi United Group, and a reference for future owners. The Premier’s strategy now is to negotiate. Try not to lose total control of your competition, while agreeing with the Government on how to implement the regulation, but agree under its conditions.

The ‘Wrexham effect’

If US investors are looking at second-tier clubs, those in the EFL, it is because these more modest clubs will become more valuable if the Premier League ultimately shares a larger share of their profits on television. It is also not unreasonable to think and it may not be a coincidence that all this interest in the US has also been sparked by the ‘Wrexham effect’, as the actors Rob McElhenney and ryan reynolds They will buy a Welsh club, one of the historic ones in the United Kingdom that came to a smaller extent, now in the English fifth division. His ability to market Wrexham as a global brand through his own documentary series on Disney+ has become an example of how to increase the popularity and value of a club in a short period of time, from a low purchase price (2, 5 million euros) compared to the investment involved in buying Premier League clubs.

But what capital funds are now looking for is also to create a multi-team structure, like City Football Group, owner or shareholder in 13 clubs around the world. It is one of the goals already announced by Newcastle, which was bought by the Public Investment Fund of Saudi Arabia, along with RB Sports & Media and PCP Capital Partners. At the recent Business of Football Summit in London, Newcastle co-chief executive Amanda Staveley said the option to control multiple clubs would allow them “more opportunities to work to grow Newcastle and our brand”.

Examples

The Newcastle trials are another example of the current trend. I would copy the City model, but so did Brighton’s owners recently with Belgian SaintGilloise, Brentford with Danish Midtjylland, or Nottingham Forest with Greek Olympiakos, who share owners. Across Europe, more and more clubs are involved in such cross-ownership.

And with increasing commercialization and the lure of television rights, English soccer presents an increasingly lucrative opportunity, but one that could lead to future conflicts to maintain the balance of any competition.

For now, what seems clear is that the football industry is being transformed by the huge economic interests it provides to investors and its mandatory and necessary regulation is many steps behind.