Foot: AC Milan, Angers, Chelsea, Red Star, Toulouse... Why US investment funds are on the rise in Europe

Foot: AC Milan, Angers, Chelsea, Red Star, Toulouse… Why US investment funds are on the rise in Europe

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Five billion euros for Chelsea, about 10 million for Red Star, 20 million for Toulouse FC, the acquisitions of European clubs multiply. Their common denominator? Being transferred to the American flag after acquisitions by investment funds. AC Milan, which belonged to the Americans of Elliott Management since 2018, formalized, on Wednesday, June 1, its passage under the cut of the RedBird fund.

In the game of numbers and debt cancellation, clubs are traded like Panini cards. But the arrival of these individual owner funds could redefine the rules of the game and revive the specter of a lucrative Super League in Europe.

“Initially, some American franchise owners got into football: the Glazer family at Manchester United, John Henry at Liverpool, Frank McCourt at Marseille. But what’s new is that now we see investment funds appearing.”, analyze Luc Arrondel, CNRS researcher and specialist in football economics.

Behind the technical term, investment funds are collective investments that collect and invest the money of its members for profit. The objective of the investment fund is clear: to make money.

“The fundraising at Sportech represents 27 billion euros worldwide, including 12 in the US, 6 in Asia and only 3 in Europe in 2021, even if this is 3 times higher than in 2020.

Mark Wyatt, Director of Corporate Finance at KPMG

during a round table of the Sponsora organization on investment funds in May 2022

Europe is a promising market: with the inflation of the price of players, the exponential increase in television rights and the capital gains obtained during the resale of certain clubs, the probability of making a profit is high. Enough to arouse the interest of these investment funds at a time when European clubs, weakened by Covid-19, need liquidity.

The fund 777 Partners, based in Miami, thus bought the Red Star on May 11. clear lake Capital, a private equity firm, owns 60% of chelsea after its acquisition for five billion euros. A Toulouse, it is the RedBird fund that has been at the helm since 2020. TFC General Manager Olivier Jaubert summed up the expectations as follows: “The starting point is RedBird’s desire to invest in football in Europe with clear criteria: it needed a financially healthy club, a dynamic metropolis, quality infrastructure and an efficient training center. (…) Today the funds do not enter football to lose money.”

If these actors are unknown in Europe, they are not in the United States. These mutual funds are already ubiquitous in baseball, football (NFL), basketball (NBA), and Nascar (motor sports). But in the United States, the economics of sports are highly regulated. A law requires private equity firms to own no more than 20% of the capital of a single club in these leagues.

Therefore, it is tempting for these funds to invest across the Atlantic. “These groups also believe they have specialized sports promotion skills that could be used in various markets, explains Victor Matheson, a football economist at the University of Holy Cross in Worcester, Massachusetts (USA).

“There are synergies between these sports. For example, John Henry owns Fenway Park, a baseball stadium in Boston. He can use that stadium and its advertising and promotional networks to host exhibition games with Liverpool.”

Victor Matheson


RedBird, which entered the capital of Toulouse FC in May, also has in its portfolio the New York Yankees baseball team, the Dallas Cowboys in American football, the women’s American football team and participations in the NFL and the Women’s NBA. Its arrival in Europe is therefore not a surprise and is part of this diversification.

Either investment funds everyone has a pecuniary motivationthese last operate under ddifferent strategies. Some invest in timeshare of big clubs (Chelsea)in troubled clubs (Toulouse) Where within small clubs (Red Star, OCS Angers)haswith the desire to resell them by realizing a capital gain. Finally, some invest in leagues. In May, CVC invested 1.5 billion euros in Ligue 1, or 15% of the shares, with the certainty of making a profit. “You buy shares to be entitled to a part of the income generated by the commercial company, it is mathematical and very interesting for these funds”, Luc Arrondel testifies.

Faced with the staggering prices of European clubs and leagues, investment funds tend to outweigh personal fortunes. A change of style that does not leave fans indifferent.

“In some cases, the owners are more for glory and titles than money. Roman Abramovich is definitely one of them. He ran the team more like a toy than a business. If you’re a fan, you certainly expect.” to have this kind of owner, willing to overspend on his team.”

Victor Matheson, economist at the University of Holy Cross


However, an investment fund can be an interesting economic windfall for European clubs. “If it was only detrimental, why would the clubs accept? The clubs are in financial difficulties and it can help them revive. In Toulouse, for example, we can see that it works. They will go back to Ligue 1, touch TV rights, maybe sell some academy players… Instead, in Bordeaux it seems that King Street is only looking for profitability. The situations can be very different”, adds Luc Arrondel.

However, these investment funds could change the structure of European football. Future Chelsea owner Todd Boehly owns the Dodgers (football) and this year renegotiated the NFL’s television rights to the tune of $10 billion a year. His arrival in Europe is not linked to chance.

“Americans are not here to lose money. I think they have in mind the creation of a Super League, which is very similar to how team sports are managed in the United States, and that would be accompanied by a renegotiation of television rights.”

Luc Arrondel, sports economist


Another consequence, “ohn could have an Americanization of European football with much more planning and dthe salary and benefit sharing negotiations that take place at the beginning of each season between the owners and the players” explains Luc Arrondel. Until now, in Europe, it is the players who capture most of the income generated by football. Investment funds could change the balance on the spot.

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