Chelsea, Denver or Lyon… Billions Rain on Sports!

In the sports world, records are shattered as a result of a fever of purchases that is pushing up team prices, momentum fueled by the explosion of television broadcasting rights, the influx of new investors and a certain amount of craze.

At the end of May, a group of American investors paid £4.25 billion (£5 billion) for English football club Chelsea, more than double the previous record, followed just a week later by another US consortium that paid $4.5 billion. to the Denver Broncos American football team. The series also saw the acquisition of football club Olympique Lyonnais in June by entrepreneur John Textor for a valuation of 798 million euros, unheard of for a French club, and AC Milan, another football club, under the banner of American investment company RedBird Capital for 1 .2 billion euros.

Streaming Giants and Traditional Channels

“There really are a lot of factors pushing in the same direction,” said Salvatore Galatioto, of consulting firm Galotioto Sports Partners. First motive, “there is no other media content that has the value of sports”, one of the few programs that is still consumed almost entirely live, the advisor underlines. From the $110 billion offered in March 2021 to the mighty NFL for eleven years of broadcasting in the US market alone, to the $6.2 billion released in mid-June for five years to the Indian cricket league IPL, shooting television broadcasting rights upwards.

In both cases, the streaming giants, long gone, have joined the traditional channels. In addition, in the United States, as has been the case elsewhere, “sports betting will help the public,” Salvatore Galatioto predicts. “People will watch more matches” and “it will increase the value of the content,” he adds. In this context, “acquiring a team is a good way to capture some of this value,” adds David

Gandler, co-founder and CEO of online TV 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 so because some of the best assets in the world, especially FC Barcelona and Real Madrid (famous football clubs), will always be inaccessible due to their capital structure. On the demand side, on the other hand, “you see more money flows from institutional investors,” essentially funds, David Gandler describes, “whereas previously it was mostly families or wealthy individuals.” In addition, the single-shareholder model, which was historically dominant in the United States, is no longer as popular. “There are a lot of people who come together to buy clubs,” explains Pascal Rigo, an entrepreneur who recently became a minority shareholder of the Paris FC (2nd French division) football club, which lowers the entrance fee and the population of potential investors. “We limit the risk,” he says.

Nor should the sport be an entertainment like the others, with a loyalty potential that even Disneyland or the song’s biggest stars can only envy. “We can change women, we can change friends, but we can’t change clubs,” Pascal Rigo slips out with a smile.

“glamorous side”

A separate object, sport is also a so-called defensive value, ie not very sensitive to the economic cycle. In 2008-2009, Rob Tilliss, of the specialist investment bank Inner Circle Sports, recalled estimated values ​​of the four major US major leagues by just 2%, “while it was one of the worst crisis economies in history. Despite the current economic slowdown This time, he no longer believes in team prices falling. 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 US) to rugby and basketball, European and Asian.

In addition to rational criteria, “the glamorous side” of professional sports also attracts investors, according to Pascal Rigo. And then, he continues, “there’s a phenomenon akin to not wanting to miss the train.” 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 five to ten years, “sometimes more”. “Trying to fall in two years is probably not the best idea,” he concludes.

Thomas URBAN/AFP

In the sports world, records are falling as a result of a fever of purchases pushing up team prices, momentum fueled by the explosion of television broadcasting rights, the influx of new investors and a certain amount of craze. , a group of American investors paid 4.25 billion pounds sterling (5 billion euros) for the English club…