Internazionale Milano, popularly known as Inter Milan, became champions of 2024’s Serie A, the top flight of Italian football. While the tournament ended on the last week of April, in May, the club hit the news again, as its ownership got transferred to the American investing firm Oaktree Capital Management.
Inter became the seventh Serie A club under American ownership, showing the rising domination of US investors in the European football circuit. Is it that dominating? The answer is yes, given the fact that individuals and business groups from the world’s largest economy also own nine of the English Premier League’s 20 clubs.
And talking about the English Premier League (EPL), we don’t need to remind our readers how popular and prestigious the English football tournament is.
Also, PSG secured its spot in the Champions League semi-finals against Barçelona in April 2024, it not only brought joys for the club’s Qatari owners, but also to the minority stakeholders, who are, once again, Americans. So be it France, Italy or United Kingdom, the trend is clear: American investors have found a new investment opportunity in the form of football.
Analysing things
Perhaps the main driver is money. In the case of Inter’s acquisition, Oaktree “assumed the ownership” after the Italian club’s Chinese owners, Suning, missed the deadline to repay the €395 million (£336.5 million) that Oaktree had loaned them in 2021. Most of the American investments in the European football circuit have been in the form of direct investments into shares (buying part/all of a club) rather than completing the move through cash payment.
The pattern has been observed in the purchases of Chelsea in England, Atletico Madrid in Spain, AC Milan in Italy, and Wrexham in Wales.
“American investors are the majority in the British Premier League ahead of the British. And the second in the Italian Serie A after the Italians. And in the French Ligue 1 after the French. In Spain, they are in Mallorca, even though barely five of the twenty clubs in La Liga are in foreign hands. The major exception among the big leagues is Germany with all teams in German hands except for RB Leipzig, owned by the Austrian company Red Bull,” said La Vanguardia in its report.
Most of the elite European football clubs are seeing a rise in their brand values, leading to increased interest from American investors thinking they can buy now, hold for a few years, and resell the club for a profit. The sale of Chelsea has been a very good case study here, highlighting the capital growth that European football clubs have undergone.
In 2003, Chelsea was bought for £140 million (£247 million in today’s money), a relative drop in the ocean compared to the £4.25 billion American businessman Todd Boehly and his Clearlake Capital consortium parted with to buy the club in 2022. The sale included £2.5 billion for the initial purchase and a further £1.75 billion of investment for the benefit of the club.
The only downside of this tale has been Manchester United, Liverpool, Arsenal and Tottenham Hotspur, where their American owners underwent a financial loss in the 2022–2023 seasons. Take United for example. Its owners, the Glazer family earned the ire of the club’s supporters in the last few years, due to the team’s lacklustre performances season after season (United used to be a dominating force in both English and European football a few years back), coupled with administrative instability and poor player transfer seasons. Things went so bad that the Glazers had to sell some 27.7% stakes of the club to iconic British billionaire Sir Jim Ratcliffe earlier in 2024.
“European football is not a very profitable business. While the Premier League generates more revenue than any other football league in the world, the financial state of its teams is generally poor. Football clubs tend to be reliant on cash injected by their owners to run,” explained Steven Vass, the senior journalist of Conversation UK.
However, one way to navigate through the above scenario is by controlling costs. This particular opportunity is what draws American investors to get involved in the European football circuit. Talking about Europe’s biggest football leagues, a Statista study found that during the 2021-22 calendar, “English Premier League clubs generated more revenue than all Bundesliga and La Liga clubs combined, with a total revenue of around 6.44 billion euros. This has been forecast to rise to 6.66 billion euros by 2023/24. Meanwhile, Ligue 1 generated the least revenue out of the big five leagues, with a total revenue of just over two billion euros.”
Now the study’s observation is not surprising. Take the Premier League as a case study, where apart from its nail-biting matches and global fan base, clubs also put an equal focus on their balance sheets and brand values, while using their history and prestige as the cash cows. These clubs have always set the standard for commercial success, especially on the revenue generation parameters. We have Manchester United, Chelsea, Arsenal and Liverpool as the success stories.
The only other European league which gives some competition to the Premier League is Germany’s Bundesliga, as it has combined a rich tradition of competitive football with a robust economic model. The league is also known for its world-class facilities, fan-friendly policies, vibrant supporters and strong corporate partnerships.
Talking about Spain, another European football giant, La Liga has emerged as the home of some of the most iconic clubs (Real Madrid, Athletico Madrid and Barcelona) and players. La Liga’s global appeal and marketing strategies (take note of the promotional of the iconic Lionel Messi vs Cristiano Ronaldo rivalry) have ensured the tournament’s place among the top revenue earners.
It’s a cash cow
In February 2024, UEFA (Union of European Football Associations) came up with a report that pegged European football’s financial power at a record 24 billion euros ($25.75 billion). Breaking down the study further, the Associated Press found these mind-boggling numbers below:
The 20 Premier League clubs’ total revenue of 6.5 billion euros ($7 billion) in 2022 was almost equal to the next two richest leagues combined Spain’s La Liga and Germany’s Bundesliga. Each of them had about 3.3 billion euros ($3.54 billion).
The Premier League clubs combined had as much revenue as all 642 clubs in the 50 countries outside the big five leagues of England, Spain, Germany, Italy and France. Total revenue topped 26 billion euros ($27.9 billion) in 2023, fuelled by broadcast deals, commercial sponsorships and ticket sales.
American investors were involved in seven of the 15 foreign takeovers at top-division European clubs in 2023. Nine of the top-20 earning clubs in Europe were English, including Brighton which had an income of 264 million euros. That was just 13 million euros less than Serie A champion Napoli.
The 20 English clubs collectively ranked number one in Europe for most revenue, most domestic broadcast rights sales, most UEFA prize money from European competitions and most matchday ticket revenue. Spain ranked second in most metrics. The average revenue of a Premier League club is 323 million euros, which is almost 10 times over the average club in the seventh-richest league, the Netherlands.
Premier League clubs had almost 2 billion euros of commercial revenue including sponsorship, stadium use, merchandise sales, and international tours of a record 7.8 billion euros total across Europe in 2022. That was a 14% collective rise in 2021.
Some 17 out of the 20 main sponsors of Premier League clubs were from outside England and eight had headquarters in Asia. UEFA also noted German clubs have the highest median income of commercial income due to their ability to excel at working in local markets. Not to forget that the apex European football body has created a new ranking table for revenues just from kit sponsorship and merchandise sales, an index which gives a solid reading of a club’s popularity. Barcelona led that list with 179 million euros followed by Real Madrid and Bayern Munich.
English giant Liverpool was at number four, the best among the English clubs with 132 million euros. Manchester City was sixth among the English and number 11 overall, earning 73 million euros.
Understanding the American mentality
Many American investors come to European football having already made other sports-related investments. Take Todd Boehly, co-controlling owner and chairman of Chelsea, for example. He also owns several American baseball and basketball sides, which helps him to share resources from crossover investments, including marketing, contacts and ideas, which should lower costs for clubs/franchises.
Russian oligarchs, Gulf nations and Chinese billionaires have been heavy investors in European football clubs over the last 20 years. However, things are changing now. Due to geopolitics and sanctions, Russian oligarchs are cutting down their investment commitments in the European football circuit, and to fill that gap, US private equity players are stepping in.
“Transnational investors, driven by financial returns in a sport fast converging with the entertainment and digital sectors, are transforming the game into a big bucks global industry. Television helped make top football clubs rich, but streaming could bring them untold riches,” Conversation reported back in 2021, while making a correct assessment of the trend.
However, the investors also need to take note of the fact that the European clubs need to keep up spending (in terms of buying players) alongside their competition to avoid the risk of falling down the leagues. The situation here is very different from the US sports, where closed leagues (no promotion/relegation) decrease the risk attached to having a bad season.
Jaume García Villar, a specialist in sports economics and a professor at Pompeu Fabra University, told the La Vanguardia that the American interest is due to “European soccer, its leagues, being the most globally appealing spectacle overall despite other specific events, such as the Superbowl, potentially having higher audiences.”
American entrepreneurs have different interests compared to Chinese and Arabs, giving rise to new risks. For example, uncertainties arise regarding the purpose of their investment and their time horizon. For these investors, they don’t enter with short-term profit objectives, which could lead to “decapitalising” the value of the players by selling them. Their ultimate goal is to ensure long-term profitability, where the focus is not on selling the club but on reaping the investment’s benefits.
While the Arabs use such investments as having a “toy” for increased social visibility. The Chinese, on the other hand, seek short-term returns, leading to a decapitalisation of players. American investors believe, as per La Vanguardia, that football will likely continue to have high economic growth potential in the coming years, “leveraging their experience in the sports industry, even if in other sports, as an additional advantage. They are looking for medium-term profitability.”
Exploring the downside
However, European football, as already stated, is already known for its fierce competition and it acts like a risk factor for the American investors. Injecting money into a club to achieve success may not necessarily result in recouping the initial investment, but that too on an immediate basis.
“Unlike the North American model of closed-league sports competitions, which ensures all teams a minimum income, European soccer does not operate in the same way. Relegation in European soccer implies a significant drop in revenue,” La Vanguardia stated.
Also, the clubs are more than sporting teams for their fans. Clubs like Manchester United, Chelsea, Real Madrid etc. have occupied special places among their fans’ hearts, so much so, that these supporters consider themselves equal stakeholders of the clubs. For them, supporting their teams and flocking to the stadiums acts like emotional investments. So, if the club does not perform as per their expectations, the owners will immediately come under the firing line (like Glazers’ of United). In that way, operating these teams amid fan hostilities makes things further risky for the owners. A bad press is always an investor’s Achilles heel.
The American investors are placing their money on both big and small clubs. And the phenomenon is having a positive impact. How?
In the words of Jaume García Villar, a specialist in sports economics and a professor at Spain’s Pompeu Fabra University, who decoded Johan Cruyff’s signing by FC Barcelona in 1973, found an expenditure of sixty million pesetas.
“Updating that figure with the evolution of inflation shows that the cost of this transfer is lower than the market value of the top 500 players today. Previously, in European football, the sporting component and its connection to the club’s territory prevailed, but it has changed with globalisation, technological advances, and more. The globalisation of European competitions themselves has increased the financial needs of clubs in order to attract talent to remain competitive, which requires significant economic investments,” he said.
The great exception, however, is Germany, along with Athletic Club, Barcelona, Osasuna, and Real Madrid in Spain, which are still in the hands of their members. These are the only ones remaining in La Liga who are not becoming a corporation with investor-shareholders as a sports anonymous society.
“In the German case, however, those who have been the club’s partners up to now maintain control with the 50% plus one rule. This makes it possible to maintain territorial connections while also partially opening the door to the presence of national or foreign investors.
Recently, they have prevented the entry of the CVC fund into the German league,” said La Vanguardia, while adding, “The danger for German teams is being relegated in European competitions due to a lack of economic injection, which is not happening at the moment. Their road ahead is still to be seen. But while so-called state-owned clubs like PSG seem to be at a standstill alongside the Arab decision to strengthen their national leagues after successfully organising major events like the last World Cup in Qatar or the Spanish Super Cup in Saudi Arabia, the made-in-USA model is taking over European football as it did with other mass sports competitions like motorcycling, now in the hands of the American group Liberty Media after acquiring Dorna, the Spanish company that owns MotoGP. And Liberty already controlled Formula 1.”
Meeting fans’ expectations
One of the immediate targets (for the American investors) post the club takeover, is optimising efficiency, by cost-cutting and trying to find new commercial opportunities. There are chances that such moves will clash with the views of fans, who have a lot more power in Europe than they do in the United States.
“There are many commercial opportunities to be found in European football, including increasing the variety and availability of merchandise. But European sports culture is much less commercial than in the US and many fans can be put off by the commodification of their sport,” La Vanguardia explained.
“This can impact match day ticket sales directly, while also affecting sponsorship and broadcasting income. Sponsors try to avoid controversy that can be bad for their own sales, and broadcasters prefer full stadiums and atmosphere as it is good for their product,” the media outlet continued.
In February 2024, fans’ protests forced the German Football League to abandon plans to sell a stake in its media rights business to a private equity firm. As protests intensified, one of the two leading candidates for the investment contract, US private equity firm Blackstone, withdrew from the process citing uncertainty and an unstable environment.
“American investors that are looking to buy European clubs are also discovering that there are bargains to be found. Since the turn of the century, a number of European clubs have gone into administration, including Serie A’s Fiorentina in 2002, Portsmouth (then in the Premier League) in 2010, and French side Bordeaux in 2021. This means some clubs can be picked up at relatively low prices compared to their counterparts in the US. This difference in value is particularly stark in women’s football. The latest National Women’s Soccer League franchise in the US, San Diego Wave, sold for $120 million in March. By contrast, one of the most illustrious clubs in women’s football, Olympique Lyonnais Féminin, was valued at just $5.1 million in 2023,” La Vanguardia concluded.