In the world of sports investments, U.S. investors are setting their sights on European soccer clubs, but there’s a twist: many are now targeting clubs with lower valuations, often situated outside the top-tier of European football. This shift in strategy reflects the increasing competitiveness among deep-pocketed investors and the desire to seize opportunities in the global sports market without breaking the bank.
The phenomenon is often referred to as the “multi-club model,” where investors opt for smaller clubs with more accessible valuations, aiming to carve out a slice of the international sports market at a fraction of the cost.
Charles Baker, co-chair of law firm Sidley’s entertainment, sports, and media group, explained, “In terms of private equity and high net worth individuals, soccer is more of a global sport than almost any U.S. sport. There are huge populations that can be accessed—in both the regions they play in and the world.”
The global appeal of soccer, coupled with its growing popularity in the U.S., translates into significant revenue opportunities, spanning from lucrative broadcast media rights deals to merchandising.
However, as the popularity of European soccer has surged, so have the valuations of the clubs. According to PitchBook, deal valuations across the top five European soccer leagues skyrocketed from over $70 million in 2018 to approximately $5.2 billion in 2022. Notably, more than one-third of the clubs in Europe’s “Big Five” leagues now boast U.S. investors, ranging from private equity firms to venture capital investors.
The monumental spike in 2022 was driven in part by high-profile acquisitions, such as U.S. investor Todd Boehly and private equity firm Clearlake Capital’s purchase of the English Premier League’s Chelsea for over $5 billion. Additionally, Redbird Capital Partners and Elliott Management’s acquisition of Italy’s AC Milan for nearly $1.3 billion contributed to this trend.
These landmark deals have set new benchmarks for club valuations, prompting other club owners to contemplate selling to private equity firms, as noted in an analyst report from PitchBook.
While some U.S. investors target soccer clubs directly, others have adopted creative approaches to enter the European sports market. For instance, Sixth Street Partners secured a stake in the Spanish broadcast rights of FC Barcelona and invested approximately $380 million in Real Madrid’s stadium operations.
This strategic shift comes as many soccer clubs seek fresh capital following the financial distress caused by the early days of the COVID-19 pandemic. Reduced revenues, resulting from pandemic-related restrictions on fan attendance, and escalating costs have created opportunities for U.S. investors to participate in the burgeoning global soccer industry.
Several English Premier League clubs, including Sheffield United and Manchester United, have reportedly been open to discussions with potential buyers, further fueling U.S. interest in European soccer.
Additionally, U.S. investors are eyeing lower-tier leagues like England’s Championship League and League One, where clubs with smaller valuations offer attractive investment opportunities. These leagues present opportunities for investors to capitalize on the potential for clubs to rise through the ranks, although the risk of relegation remains a factor.
Irwin Raij, co-chair of law firm Sidley’s entertainment, sports, and media group, noted that investors have shown interest in taking lower-tier teams to higher levels through strategic investment, although implementation can be challenging.
Moreover, there is growing interest in acquiring multiple teams across Europe, forming a “multi-club” model. This approach allows for synergies between clubs, the potential transfer of players, and leveraging governance, technology, and data sharing to enhance performance.
As larger private equity firms pursue top-tier clubs, middle-market firms aim to secure funds for multi-club strategies, paving the way for an evolving landscape in the European soccer market.
One such U.S. firm, 777 Partners, exemplifies this strategy by purchasing a majority stake in the Premier League’s Everton for approximately $685 million. 777 Partners has steadily built its portfolio with investments in various European soccer clubs in recent years, including Sevilla FC in Spain, Genoa C.F.C. in Italy, Red Star FC in France, and clubs in Brazil and Australia.
As the appetite for European soccer among U.S. investors continues to grow, the market remains dynamic, with new strategies and opportunities emerging to shape the future of the sport on both sides of the Atlantic.
