There are several reasons to buy a football club. Some do it for the passion of the sport, some do it for financial investment reasons, but what is needed to make a club an ideal investment? BetVictor reveal all in this huge academic study.
The study includes:
- The UK’s most investible clubs and what makes them ideal investment targets
- The types of football club owners
- The value of a club’s audience, infrastructure, and digital footprint
- Search data for each division across five global regions
- Club valuation rankings
- A master table ranking clubs on all the criteria in the study
Partnering with Dr Rob Wilson of Sheffield Hallam University, who specialises in the finance, economics, and governance of sports teams, BetVictor have been able to measure the potential viability for a potential investment or buyout considering financial viability, sporting merit, digital footprint, and local indices. They have also compared each club’s commercial potential for hypothetical buyers.
English football is considered a growth market for investment, American ownership is becoming more and more apparent in the game today. The recent acquisition of Chelsea by Todd Boehly for £2.5bn shows that the golden years of football growth are far from over.
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This study reveals, not just the big players and the assets that catapult their value sky high, but how clubs below the Premier League are being sized up by potential investors throughout England and Scotland.
The UK’s most investible clubs
Using the data from the study, the top three most investible clubs in the UK are:
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- Arbroath- Scottish Championship: Formed in 1878, 10th oldest side in Scotland, Arbroath represent the best potential investment opportunity out of the 114 clubs analysed in this model. The clubs ranks 1st for digital footprint and infrastructure and 4th in utilisation. its circumstances represent an interesting proposition for a would-be owner; their degrading infrastructure and lack of stadium utilisation could offer steady returns if properly managed at a cut rate price.
- Cheltenham Town- League 1: Moving further south, League 1’s Cheltenham Town are club with one of the healthiest wages to turnover percentages in the entire pyramid, and a utilisation score that places them in the bottom 22% of clubs for stadium utilisation, suggesting that future revenues could rise further with the right strategy. Last season’s promotion shows a club on the rise, on and off the field.
- Grimsby Town- National League: Despite falling into the National League, Grimsby Town boast of the biggest fanbases across both their present division and League 2. Their recent fall has not stopped a hardcore fanbase following their side up and down the country. Their present-day infrastructure requires a large upheaval, but a potential investor could use that aspect to pick an outfit that boasts a loyal, regional fanbase ripe for growth at a fairly low investment.
The four categories of potential owners:
- Fan Ownership: This is a rarity and has never been tested at the highest level in the UK, but the German 50+1 rule gets positive reviews. This ownership can be problematic when it comes to trying to push revenue growth and profit however. Portsmouth FC are the only wholly fan owned side in the English Football League.
- Profit Maximisers: These owners tend to be associated with American ownership, where revenue generation takes centre stage. These owners will look to run the club as efficiently as possible so they can extract long term value, this type of owner keeps the club competitive without being the absolute top team. Manchester United are a great example of this kind of ownership, as the current owners have extracted significant value during their tenure.
- Equity Fund: A new kind of owner in football, major funds and private equity investment is creeping into the buying game. These owners place business at the heart of their investment, demonstrating cost control, governance reform and revenue generation. These owners will always have an exit plan in place to take their profits. Burnley FC were recently acquired by ALK Capital, a US investment equity fund.
- Foreign Ownership: Characterised as trophy hunters, these investors have deep pockets and invest heavily into the club to win regardless of cost. This behaviour is more common with overseas investments, they operate within financial regulations but have plenty of money to spend. Manchester City and Newcastle United are two examples of this, with Manchester City enjoying plenty of success since their takeover.
What is the Premier League worth?
- An established Premier League team is worth a lot, each club receives at least £84m per season, in addition to a possible £44m as of the 2020/21 season depending on where your team finishes in the table.
- The Premier League has the highest revenue of the five biggest European leagues at £5.13bn.
- At the end of the 20/21 season, 20th placed Sheffield United received £91 million alone, for potential investors that kind of cash injection makes for an appetising proposition.
- According to Deloittes’ Football Money League (2020/21 accounts), Leeds United became the 23rd richest side in the World – not bad for a team that had been outside the world’s richest league for 16 years, with an estimated investment of £100m from their current owners.
Infrastructure- Set up & condition
- A club has a web of infrastructure that needs to be utilised, maintained, and upgraded.
- Physical elements such as the stadium, training pitches and facilities, the canteen, the corporate facilities, and the youth set-up all need to be considered. Some clubs’ assets are modern and up to standard, whereas some are in need of innovation and investment.
- Clubs with limited assets could be acquired for a much smaller investment than a club that has world-class facilities.
- Using Manchester City as an example, the Etihad campus has had over £700m invested since 2008. The club was bought for £81.6m, it is now valued at more than £4bn.
Audience- Utilisation
- Maximising your audience is a primary indicator of commercial and domestic success when it comes to UK football clubs.
- Matchday revenues are a significant driver of commercial revenues for clubs outside of the Premier League.
- For prospective buyers, underutilisation of matchday revenue could be an attractive prospect. Winning the loyalty of the local fanbases with on-the-field successes and shrewd investment could lead to significant returns from matchday spend alone.
- Many clubs have large stadiums that do not capitalise on their capacity, if an owner manages to turn the tide and bring fans back to the games, it will benefit the club greatly in terms of income.
- Capacity stadiums, alongside fan engagement and satisfaction, should be core, short and long term aims of any prospective owner.
Digital Footprint- Set up & condition
- Online visibility is seen as new market capital for many executives. Positioning your brand at the forefront of the digital world means that your brand is seen by millions of potential fans, and therefore customers, all over the world. Utilising social media platforms like Twitter, Facebook and TikTok allows football clubs to have a constant presence online and even interact with their fans.
- Manchester United benefit greatly from this, with their popular international talents and huge fan base, they are always topping search trends and remaining relevant in the news- despite the club’s lack of recent success.
- Leicester City have found a following in Thailand due to the domestic relations of their ownership. And Tottenham and have seen huge growth in South Korea due to their star player Son Heung-Min who is from this country.
- TV rights in North America, the Middle East and Africa are also aiding in helping clubs grow in popularity, as UK football is now broadcast in more countries than ever before.
Sources
- Companies House
- ClubELO
- CIES Football Institute
- Deloitte Annual Review of Football Finance 2021
- English Indices of Deprivation
- Football Manager 2022
- Google Search Console
- House of Commons Library
- Markham Multivariate Model
- Office for National Statistics UK Census
- Scottish Index of Multiple Deprivation 2020
- All EPL, EFL, League One, League Two, SPL, Scottish Championship club websites
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