At the end of May, a group of US investors paid £4.25 billion (EUR 5 billion) for English football club Chelsea, more than double the previous record, followed just a week later by another US consortium, which paid USD 4.5 billion. (EUR 4.4 billion) to pay the Denver Broncos US soccer team. The series also saw Olympique Lyonnais being acquired by entrepreneur John Textor in June for a valuation of €798 million, unheard of for a French club, and AC Milan going under the company’s banner. American investment company RedBird Capital, for 1.2 billion euros.
“There is no other media content that has the value of sports†
“There are really many factors that work in the same direction”explains Salvatore Galatioto of the consultancy Galotioto Sports Partners. first engine, “there is no other media content that has the value of sports“, one of the few programs that is still almost completely consumed live, the consultant underlines. From the $110 billion offered in March 2021 to the mighty NFL’s 11-year broadcast in the US market alone, to the $6.2 billion released to the Indian cricket league IPL over five years, rebroadcast rights flared up in mid-June.
Streaming Giants and Traditional Channels
In both cases, the streaming giants, long gone, have joined the traditional channels. Moreover, in the United States, as is the case elsewhere, “Sports betting will help the publicSalvatore Galatioto predicts.People will watch more games” and “it will increase the value of the content.” In this context, “Acquiring a team is a good way to capture some of this value”adds David Gandler, co-founder and director of the online television platform fuboTV.
And as the cake gets bigger, the number of slices stays almost the same. In the past 20 years, the four major US leagues have integrated only two new franchises. This is all the more true as some of the best assets in the world, most notably FC Barcelona and Real Madrid, will always be inaccessible due to their capital structure. However, on the demand side “you see more money flowing from institutional investors”essentially funds, David Gandler describes, “While previously it was mainly families or wealthy individuals”.
†We can change wives, we can change friends, but we can’t change clubs.”
In addition, the single-shareholder model, which was historically dominant in the United States, is no longer as popular. ‘There are many people who come together to buy clubs’, explains Pascal Rigo, an entrepreneur who recently became a minority shareholder in the Paris FC football club (2nd French div.), which lowers the entrance fee and increases the number of potential investors. †We limit the risk.” For him, the sport doesn’t have to be an entertainment like the others, with a loyalty potential that even Disneyland or the biggest stars of the song can only envy. †We can change wives, we can change friends, but we can’t change clubs.”slips, with a smile, Pascal Rigo.
A separate object, sport is also a so-called defensive value, ie not very sensitive to the economic cycle. In 2008/09, Rob Tilliss, of the specialist investment bank Inner Circle Sports, recalls the estimated values of the four major American major leagues fell by just 2%,”when it was one of the worst economic crises in history† Despite the current economic slowdown, he no longer believes in a drop in team prices this time. David Gandler, who has also become a minority shareholder of Paris FC, is even seeing momentum extend to other sports, from pickleball, a growing alternative to tennis in the United States, to rugby, European basketball and Asia.
In addition to rational criteria, “the glamorous side” of professional sports also attracts investors, according to Pascal Rigo. And then, he continues, “there is a phenomenon that resembles the train do not want to miss”† More than making a profit once you’re in control, the goal for buyers is usually to generate a return on investment on resale. †But you have to stay for a reasonable time”, warns Salvatore Galatioto, who speaks of 5 to 10 years, “sometimes more”. †Trying to do the somersault in two years might not be the best ideahe concludes.