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It’s set to be a packed weekend for sport, with European club football returning after the international break, Formula 1 hitting the grid in Singapore, and the Minnesota Vikings lining up against the New Orleans Saints in London for the start of the NFL’s international series.
Off the pitch, things look just as busy, with a number of new football investment deals in the offing in Italy, England, Germany and beyond.
In this week’s Scoreboard we have a double dose of European football, with a look at how the recent turmoil in currencies and interest rates might alter the outlook for US investors looking to park their dollars on this side of the Atlantic. We also explore the latest round of talks between private equity investors and the Bundesliga, which is struggling to gain fans outside Germany and in the market for help.
Do read on — Josh Noble, sports editor
Can anything slow down the flurry of investment in European football clubs?
Farhad Moshiri, the British-Iranian owner of Everton, is in advanced talks to sell the English Premier League club to American real estate investor Maciek Kaminski. Meanwhile, Bloomberg reported this week that Watford, a club one division below the top flight, is weighing up an equity raise, while US investor Bill Foley is reportedly hoping to seal a deal for AFC Bournemouth in the coming days. And it seems that every club that isn’t yet part of a multi-club group is toying with becoming one.
What the latest talks show is that investors aren’t just eyeing up the biggest global brands, following the £2.5bn auction of Chelsea FC and €1.2bn sale of AC Milan this year.
The wave of investor interest in European clubs appears undimmed by general market and economic strife. In the UK, the slide of sterling against the dollar is adding to the firepower of US bidders.
“The weakness in the pound isn’t the determining factor, it’s another checkmark in the short term [and] positive for US buyers in the UK,” said Gordon Saint-Denis, head of sports finance at private credit asset manager Monroe Capital. “Wealthy individuals see the long term appreciation: these teams tend to go up in value, principally driven by the increase in media rights.”
However, even if US investors are buoyed by a favourable exchange rate, interest rates — and therefore borrowing costs — are rising. That puts pressure on investors who rely on debt to fund their investments. And there are signs that deals could be getting trickier to complete.
People close to the Everton process said talks had been complicated by the recent financial market instability in the UK, while the €800mn acquisition of Olympique Lyonnais by Crystal Palace co-owner John Textor and Authentic Brands founder Jamie Salter has been pushed back.
Lyon said it is awaiting confirmation that existing lenders will keep financing arrangements in place upon the change of control. The club expects “all lenders to agree before closing”. Further to that, Textor and Salter’s Eagle Football Holdings is awaiting “definitive financing documentation” for the debt it has agreed to fund the takeover. The deal was due to complete on Friday.
Even so, one asset manager with holdings across sport remained bullish this week. “It’s an attractive asset class,” he said. “We like the direction it’s going, it’s less correlated [to other assets such as stocks] and it’s recession resistant.”
As markets and economies get choppy, investors will soon find out how uncorrelated their sports holdings really are.
German Bundesliga puts private equity back on the agenda
The Bundesliga is talking to investors again. A year after clubs voted against a private equity deal that would have netted them about €300mn, a much bigger idea is under discussion. Now they are talking about creating a media business that will own TV rights both at home and abroad, with a target valuation of up to €18bn — a similar sort of figure to CVC Capital Partners’ deal with Spain’s La Liga.
Why now? Well German football is losing the global battle for eyeballs. The Premier League and the Champions League are way out ahead. And for those still not full of football, there’s always La Liga.
Can money fix the problem? Those pushing the plans in Germany certainly think so. They want to see more teams hitting the road in the summer, more representative offices in new markets, and a direct-to-consumer streaming platform to give people instant access to matches.
But it looks like an uphill battle. English football and Spanish football have one big advantage: language. They’ve also been pushing their product overseas for years, giving them a long head start.
Plus they can offer something German football has been lacking — an exciting story to tell. Bayern Munich have won the last 10 Bundesliga titles. Despite a patchy start to the season (they currently sit fifth in the table), Bayern remain heavy favourites to make it 11. Spain may lack big clubs, but at least it has a couple of them.
Fresh money might help Germany address the lack of competition if the smaller clubs get a boost to their spending power, but that’s an issue that could easily become a sticking point in negotiations.
And if you are a football fan, in say Cincinnati or Shanghai, how much time and appetite will you have left after you’ve had your fix of Premier League, Champions League and La Liga excitement?
This creates another potential crunch point for the talks. Overseas expansion sounds great — but where? Clubs like Bayern have their eyes on the US, with its huge media market, growing appetite for football, and the pending World Cup in 2026. But English and Spanish football are already big there. Some investors think better opportunities lie elsewhere — in Asia or Africa, where the language factor is less relevant. But that’s a much longer-term play, and potentially a tougher sell to clubs.
The Bundesliga is a premium product, which helps explain the breadth of interest. But it doesn’t look like an open goal for investors.
There is less than a month to go before our Business of Sport Summit in New York on October 24. Milwaukee Bucks owner Marc Lasry and Philadelphia 76ers owner Josh Harris will be among those offering their insights. As a Scoreboard subscriber, you can claim your free digital pass using the promo code Premium22 and purchase access to our VIP in-person discussions and drinks reception. Register for your pass today.
German financier Lars Windhorst hired an Israeli private intelligence company that orchestrated a clandestine campaign to oust the then-president of Hertha Berlin football club, according to a lawsuit reported by the FT this week.
Sports streaming service DAZN completed its acquisition of smaller rival Eleven Sports this week. We reported it was in the works back in July.
Accusations of cheating continue to send aftershocks through the world of chess, after champion Magnus Carlsen ended a 53-game winning streak by losing to a US teenager at a tournament in St Louis.
Tim Williams, former chief financial officer of Inter Milan, is back in football. He was appointed this week as chief executive of Oxford United following a stint at investment company Tifosy. The English League One side also announced this week that two Indonesian investors had taken control of the club. One of them — Erick Thohir — was the owner of Inter between 2013-16.
— Warren Sharp (@SharpFootball) September 25, 2022
The National Football League is back, which means that even by the end of Week 3 some fan bases are already wishing for do-overs. That was the case for Buffalo Bills fans in their Sunday night loss to the Miami Dolphins, in which wide receiver Isiah McKenzie made a strategic error to run down the field with the ball instead of going out of bounds to restart the clock. As time expired, Bills offensive co-ordinator Ken Dorsey was caught on the broadcast in his own emotional fumble, which he later said he would “learn from”. Catch (or not) the fallout here.
Scoreboard is written by Josh Noble, Samuel Agini and Arash Massoudi in London, Sara Germano, James Fontanella-Khan, and Anna Nicolaou in New York, with contributions from the team that produce the Due Diligence newsletter, the FT’s global network of correspondents and data visualisation team