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U.S. investors seek edge in European soccer


Liverpool’s Curtis Jones celebrates scoring their side’s second goal of the game during the Premier League match at the King Power Stadium, Leicester. Picture date: Monday May 15, 2023.

Tim Goode | Pa Images | Getty Images

For U.S. investors looking to score an investment in a European soccer club, some of the focus is shifting toward the clubs with lower valuations and typically not in the marquee tier of the sport overseas.

Some investors, particularly in the U.S., are shifting toward a so-called multi-club model, or investing in smaller clubs with lower valuations, as they try to take a piece of the international sports market at smaller deal valuations.

This comes as deep-pocketed investors — from top U.S. private equity and venture capital firms to global rivals like sovereign wealth funds — have intensified competition.

“In terms of private equity and high net worth individuals, soccer is more of a global sport than almost any U.S. sport,” said Charles Baker, co-chair of law firm Sidley’s entertainment, sports and media group. “There are huge populations that can be accessed — in both the regions they play in and the world.”

That global nature of soccer fans — and the growing popularity in the U.S. — often translates into higher revenue opportunities from broadcast media rights deals to merchandising.

The owners behind clubs including Manchester United, Chelsea FC and Newcastle have seen revenue multiples step up, and in many cases valuations have doubled, PitchBook noted in a report that concluded most clubs would sell at a premium.

Deal valuations across the top five European soccer leagues have exploded from more than $70 million in 2018 to roughly $5.2 billion in 2022, according PitchBook. Meanwhile, more than one-third of the clubs in the so-called “Big Five” leagues in Europe are backed by U.S. investors, including private equity and venture capital firms.

The spike in 2022 came from a consortium led by U.S. investor Todd Boehly and private equity firm Clearlake Capital acquiring the English Premier League’s Chelsea for more than $5 billion, as well as Redbird Capital Partners and Elliott Management’s takeover of Italy’s AC Milan for nearly $1.3 billion.

“These recent transactions have set a precedent in terms of club valuation but also prompted many owners to consider selling to [private equity],” according to an analyst report from PitchBook.

Some firms, like Sixth Street Partners, have found different outlets into taking a stake in European soccer, particularly in Spain’s LaLiga. The firm acquired a stake in the Spanish broadcast rights of FC Barcelona, the former longtime home of superstar Lionel Messi, and also paid about $380 million for a stake in Real Madrid’s stadium operations.

The shift is happening as soccer clubs have been looking for fresh capital following the distress stemming from the earlier days of the Covid pandemic. Revenue decreased as coronavirus restrictions kept fans out of the stands and costs rose, which led to an opening for more U.S. investors to take a stake in the increasingly popular global sport.

Last month, U.S. investor Fenway Sports Group sold a minority stake in Liverpool FC to Dynasty Equity, in a move to help it pay down debt stemming from the pandemic and costs from upgrading the team’s home field and buying high-profile players.

Various English Premier League clubs have been reportedly open to discussions with buyers, including recently Sheffield United and Manchester United.

Dwight McNeil (L) and Demarai Gray of Everton during the Premier League match between Manchester United and Everton FC at Old Trafford on April 08, 2023 in Manchester, England. The club’s shirts are sponsored by online casino Stake.com.

Tony Mcardle – Everton Fc | Everton Fc | Getty Images

Multi-club moves

This has led some U.S. investors to find creative ways into the European sports market.

Lower tier leagues like England’s Championship League and League One are attractive plays at smaller valuations, and each have teams open to buyers and investors, noted Neil Barlow, an attorney at Clifford Chance.

“One thing to be mindful of is relegation — it’s taken PE firms and other financial buyers a bit of time to get more comfortable with that. At the same time, they understand the upside of promotion,” said Baker. In soccer, teams face relegation to lower leagues if they have a disappointing season.

Irwin Raij, also co-chair of law firm Sidley’s entertainment, sports and media group, said the firm has seen plenty of investors with business plans to take lower tier teams to a higher level through investment. “It sounds easier than it is to implement. We’ve seen interest from a broad variety of investors in that space,” Raij said.

There’s also rising interest in other teams across Europe, letting U.S. middle-market investors snap up multiple teams and move toward a so-called “multi-club” model.

Valuations across these teams are typically in line with each other. It also allows for a model in which players can be transferred throughout the various clubs owned by the same investor, building up their talent and potentially being sold to a higher league — similar to the minor leagues in the U.S.

Through this method, investors “can find synergies between comparable clubs,” either on the same continent or across the globe, while also leveraging governance, technology and data sharing between the clubs, Barlow said.

“It’s a strategy a lot of other U.S.-based investors are circling around deploying,” Barlow said.

Ilkay Gundogan (C) of Manchester City lifts the UEFA Champions League trophy after the team’s victory in the UEFA Champions League 2022/23 final match against Inter at Ataturk Olympic Stadium.

Anadolu Agency | Anadolu Agency | Getty Images



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