Last week, PSG signed its ticket to the Champions League semi-finals against Barça. Joy for Qatar, its main shareholder, but also for investors from the United States.
Surprise?
Soon, instead of calling it football (from the original English football), perhaps we will end up calling it soccer, like in the United States… Alas. And the big picture of the owners of the main football clubs in the main sporting competitions, today, is clear: local owners are now often the exception, with the Americans taking over the ownership in many of the main leagues.
Not the Chinese.
Not the Arabs.
The reality: PSG’s minority owners are Americans and, what’s more, in Europe the majority of investors are from the United States. “It is an issue with undoubted unknowns for the future,” summarizes Fernando Lera, director of the Spanish Society of Sports Economics. Because they are going more. And for more.
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 France’s Ligue 1 after the French. In Spain they are in Mallorca, and only five of the twenty La Liga clubs are in foreign hands. The big exception among the major competitions is Germany with all the teams in German hands except in the case of RB Leipzig, owned by the Austrian company Red Bull.
Jaume García Villar, a specialist in sports economics and professor at the Pompeu Fabra University, explains that the American interest is due to the fact that “European football, its leagues, are the most global spectacle that exists as a whole beyond the fact that “Other specific events, such as the Superbowl, may have larger audiences.”
Your critical point? According to Lera, it is that the large American investment “includes timeshare formulas, an approach that neither the Arabs nor the Chinese follow. “It is a risk for European football, especially if the investors come from the field of venture capital funds without much experience in the sports field and forgetting the European idiosyncrasy,” he concludes.
American businessmen seek interests other than those of the Chinese and Arabs and with them new risks arise, it is reported. For example, if you have doubts about the objective of your investment and your time horizon. It is not the same – it is explained – to enter a club with objectives of short-term economic profitability – which can lead to decapitalizing the value of the players, selling them – as long-term profitability, in which the important thing is not both selling the club and having benefits from the investment.
“In the Arab case it has been more about having a toy with which to fundamentally have social visibility. In the case of China, its owners have generally sought short-term returns and it seems that there has been a decapitalization of players, for example in Spain in Valencia or Espanyol. In the case of American investors, it is combined that they believe – and it is expected – that football can continue to have a high potential for economic growth in the coming years, and that they think that their experience in the sporting field, even if it is in other sports, It gives them an additional advantage. They are looking for profitability in the medium term,” says Lera.
Problem: in sport in general and in football in particular there are risks in the competition and recent examples (such as that of the English Chelsea) in which money is injected into a club to achieve sporting success and that this sporting success manages to recover the investment initially, it doesn’t happen. And if in the North American case the sports competitions are in the form of a closed league, which allows all teams to guarantee a minimum income, in European football this does not happen and a demotion in the category implies a significant drop in income.
The examples of the landing of funds from the United States, however, are plenty: the company Arctos Partners is in PSG, owned by Qatar, as it is in the Golden State Warriors of the NBA, in the Boston Red Sox of baseball or in the Aston Martin team in Formula 1 and Liverpool in the Premier after taking control of Fenway Sports Group. RedBird Capital Partners took over AC Milan and the 777 Partners fund has shares in Sevilla and Everton. The League, for its part, reached an agreement with CVC Capital Partners, a British venture capital entity, for the exploitation of part of the television rights.
The American investment phenomenon occurs in large and small. In big ones like Manchester United, PSG or Roma, but also in more humble ones, with the very close example of Mallorca.
And it brings changes: the signing of Johan Cruyff in 1973 for FC Barcelona meant spending sixty million pesetas. “Updating that figure with the evolution of inflation, it turns out that the cost of this transfer is lower than the market value of the top 500 players today,” highlights García Villar. And he continues: “Before, in European football, the sporting component and its connection with the territory in which the club was located predominated, but it has changed with globalization, technological advances and so on. The same globalization of European competitions has caused the financial needs of clubs to increase in order to attract talent to be competitive, which requires large economic investments,” he explains.
The evolution of the clubs’ budgets, which have grown very, very markedly in recent years, indicates this. And the fact that Athletic Club has won the Copa del Rey this season forty years later is seen as an exception. For years it has been difficult to see any of the clubs other than the two or three big clubs win La Liga, as was the case in the final decades of the 20th century.
Because even a humble team like Almería is in Saudi hands. Or the Granada in the Chinese ones, to give more examples.
The big exception is Germany. And Athletic Club, Barcelona, ??Osasuna and Real Madrid in Spain, still in the hands of their partners, the only ones still in La Liga who are not involved in becoming a company with investor-shareholders as a sports corporation, which does happen in the rest.
In the German case, yes, those who until now were the members of the club maintain their control with the rule of 50% plus one. This makes it possible to maintain a territorial link while opening the doors – although not completely – to the presence of national or foreign investors. And lately they have prevented the CVC fund from entering the German league.
The danger for German teams is to be relegated in European competitions due to lack of financial injection, which is not happening today. His road ahead remains to be seen. But while the so-called State-clubs like PSG seem to be experiencing an impasse in parallel to the Arab decision to strengthen their national leagues after managing to organize relevant events such as the last World Cup in Qatar or the Spanish Super Cup in Saudi Arabia, the made-in-USA model is It does with European football as it has already done with other mass sports competitions such as motorcycling, now in the hands of the American group Liberty Media when it buys Dorna, the Spanish company that owns MotoGP. And Liberty already controlled Formula 1.
