Is it worth investing in football clubs

12/31/2022

2 minutes read

2022.12.31 01:27

Budrigannews.com – Europe’s soccer head honchos are subbing themselves off the pitch. If they sell all or some of their teams, the owners of Manchester United (MANU.N), Liverpool, and Paris Saint-Germain will make a decent profit, but the new owners might not.

In November, the Glazer family, who own Man United, and Fenway Sports, who own Liverpool, put the storied clubs up for sale while leaving the option of keeping a stake open. According to the Financial Times, the Qatari owners of PSG wanted to sell 15% of the French champions.

Considering Chelsea FC’s value in a recent sale, the sellers will probably realize a nice return on their investments. A consortium drove by American tycoon Todd Boehly purchased the London club for 5.7 times the income it produced in the monetary year that finished in 2021.

If you were to apply that to PSG, Man United, and Liverpool—all of which, according to Deloitte, had comparable sales that year—each of them would be worth nearly 3.7 billion pounds. That is a significant improvement over the owners’ takeover prices of 790 million pounds for Man United, 300 million pounds for Liverpool, and nil for PSG, despite the Qataris’ subsequent infusion of substantial funds.

Billionaires or cash-rich U.S. private equity firms are the most likely buyers. In recent years, the rise of the dollar against the pound and euro has allowed trophy hunters in the United States to literally get more for their money. Additionally, they might consider European soccer clubs to be less expensive than American sports franchises.

According to Forbes, recent deals valued the NBA’s Utah Jazz and NFL’s Denver Broncos at more than 9 times revenue. Owners of Man United, Liverpool, and PSG might hope that their teams will eventually be worth this much.

It’s hard to understand why that would occur. Sky and BT (BT.L), two European media and telecoms companies that have supported the sport for years, appear less willing to pay up. Streaming giants have tried their hand, but it is unlikely that they will help: Ted Sarandos, co-chief executive of Netflix (NFLX.O), recently stated that he does not see how streaming live sports can be profitable.

The clubs also come with the following: The Man United stadium needs to be updated; Bloomberg reported that PSG might look for a new one. The widespread issue of rising transfer fees and player salaries, which consume the majority of revenue, is common to all three. To put it another way, the current owners may receive the best possible returns.