Private Capital in European Football
It was great to read the latest article by PitchBook Data looking into Private Capital in European Football. (Nicolas Moura, CFA., Charlie Farber, Oscar Allaway)
Here is what we have learnt from recent deal-activity within the European Football market;
💰 Dealmaking has increased significantly over the last 5 years. With transactions values ranging from €66.7 million in 2018 all the way €4.9 billion in 2022. Some noteworthy transactions include Newcastle United Football Club for €350m and Chelsea Football Club for €3Bn.
💰 We should expect to see more USA involvement across the European Football Landscape. More than 34.7% of the Big Five clubs have US-based private capital participation at the ownership level.
💳 Over 35.7% of clubs have some sort of Private equity, Venture capitalist and private debt participation at the club ownership levels both in minority or majority stake positions. With the financial needs of clubs continuing to grow one can only expect this % to increase drastically over the next couple of years.
📈 Increase in investment in football clubs by PE firms has been down to a few of the following reasons: Has potential for organic growth, high barriers to entry and has the opportunity to improve management and manage the cost structures at the relevant clubs. The risk/reward element of the industry has also been a reason for the increase in attraction as the intrinsic value of a football club is highly dependent on how well the club performs on the pitch.
🏘 Multi- club ownership is continuing to rise. With the likes of 777 Partners having interests in various clubs across the globe and other dedicated sports funds continuing to take up clubs in various leagues across Europe. But with UEFA rules forbidding two clubs from competing in the same tournament if they are majority-owned by the same shareholder, this provides future limitations for multi-club owners across Europe.
With potentially more transactions in the future as they estimate that M&A deal activity could reach €10bn in 2023 if the current deals go through ( Manchester United, Everton Football Club, FC Internazionale Milano)
It would be interesting to see how this significant increase in private capital continues to benefit the footballing industry. However, it will be important that UEFA continue to monitor the situation and ensure that football across Europe remains protected and sustainable for all parties.
