Column: Football offers unrivalled brand loyalty, no chance of defection, predictable and recurring revenues and new ways to leverage value - Private Equities lust for European football is here to stay

24 February 2021

test
Photo: PA Images A group of Manchester City board members, executive directors and the Mayor of Manchester in the stands before a charity match at The Eithad Stadium in September 2019. Just a few months later American private equity group Silver Lake bought a stake in the club. According to Dr. Dan Plumley and Dr. Rob Wilson from Sheffield Hallam University we should expect many acquisitions like that one in the following years.

You have got it all wrong if you think that Private Equity showing up in European Football is a matter of potential bargain deals and replacing cash with cheap debt on the balance-sheets of clubs.

According to Dr. Dan Plumley and Dr. Rob Wilson from Sheffield Hallam University the private equity industry have spotted quite a few of the key elements in the football industry essential to how and where they invest.

”Clubs are essentially recession proof assets. Sport is an inelastic product, not a luxury but a necessity for many...This provides private equity and its supporting cast with a longer game to play in the sporting investment stakes,” they write.

Private Equity might take a different approach going into the industry, where “…the appeal of leagues over clubs is a longer-term approach to growth as they are less volatile performance wise.”

One thing could cool down private equity’s future interest in the industry: regulatory bodies that will lay down commercial frameworks that will govern the future of their sports.

Dr. Dan Plumley and Dr. Rob Wilson, Sheffield Hallam University contact@offthepitch.com

Private equity is the new kid on the block in the football investment market. Recent private equity success has been high profile in several sports including Formula 1, rugby union and tennis but some of the more recent ripples have been felt in European football.

American outfit Silver Lake acquired a 10 per cent stake in the City Football Group for €500 million in November 2019 alongside Elliot Management’s €400 million loan-to-own acquisition of AC Milan in 2018. That’s not to mention the increase in private equity lending to clubs short on cash, due to the Covid-19 pandemic.

Do you want to read this article?

Get instant access by signing up for a 7-day free trial

No credit card, no commitments and it will expire automatically.

You will receive a link that activates your trial in an email.