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Way back in nineteen ninety seven, an Egyptian businessman named Mohammad al faya Ha bought Southwest London's Fulham Football Club. He paid about nine million dollars for it, and that was a big deal because at the time most football clubs across Europe were largely still owned by local business people and in the case of the German league of
the Bundesliga, also owned by fans. Now flash forward through the decades to today, and many football clubs, including big winners like the UK's Manchester City and the French club Paris Saint Germain, are owned by foreign investors from the US, China and of course the Gulf States.
We've got hedge funds, who've got private equity, We've got billionaires.
Owning a football club is kind of cool, right, It's a status, it's a trophy asset.
Bloomberg reporters Giles Turner, Annieerna Garcia Perez went looking to find exactly who owns what in one of the world's most popular sports. I'm Weskasova today on the Big Take. Why are so many outsiders paying big money for football clubs? And can they make any money doing it? Giles, why did you decide to do this story? What made you want to look into this?
We really wanted to look at this topic in the framework of what type of investors are coming in and buying these football clubs. It seems to be odd for a sport that's so global. The first foreign investor into European football was back in nineteen ninety seven, when when
Fulham FC was sold to Muhammad al Fayed. We started to chart first of two thousand and five, which when the Glazer family first port My United all the way to now how the different types of investors have changed in terms of you know, who owns what football club? And this is a time at the beginning when hardly anyone had any ownership in football clubs. And then what we've seen is this steady increase, first for American investors,
but also Chinese and for the Middle East. You had rushed at oligarchs, but also different types of investors as well. Now we've got sports groups your home chunks with lots of different types of clubs. We've got hedge funds who've got private equity, We've got billionaires, we've got Gulf states. In the past, you know, it was just sort of your local big businessmen who wanted to own this football club for a bit of local power and a bit of kudos, you know, take his friends to the game
every Sunday and show off. And now it's completely changed. It's soft power, it's politics, and it's also about trying to make some money as well, hopefully at the end of it.
And the line that really stuck out to me in the story was that in two thousand and five there were no foreign investors in the Italian, German and Spanish leagues and that's certainly not the case anymore.
No, and it's changed for each league as well. The UK the Premier League, that's been the one that's had the most foreign investment, and that kind of reflects, I guess, the UK attitude towards foreign investment. And the other end of spectrum, you've got the Bundesliga. You know that that's the German league. They've been really fighting foreign investment. A lot of those clubs are owned and run by essentially
fan groups. You have a huge say in how these clubs are run and there's a result they've done, you know, pretty well in fending off any type of investment from US or anywhere else. And as you say, Italy and Spain, they've kind of been a little bit slower, but still some of those big clubs, especially in Italy, such as AC Milan and Intermland, you know, two of them are the most famous Italian clubs, ones owned by US investments.
Milan reports that they'll be sold to the American investment firm Edbud Capital Partners for one point two billion euros.
One owned by a Chinese conglomberate.
Now China's retail giants sooner has An announced it is buying a sixty nine percent of state in the Italian football club inter Milan. The deal is worth two hundred and seventy million euros worth three hundred and six million US dollars.
And so even in those leagues have seen a significant change ownership in recent years.
How'd you go about trying to find out the ownership of all these clubs? Because it's not always apparent, is it.
Let me tell you, it's an incredible pain to do this. Okay, I thought it'd be pretty easy, but trying to find out who owns or used to own, you know, an Italian football club back in two thousand and five. People didn't actually care so much about it back then because it wasn't a topic. The same sort of people, the same sort of local investors, be owning the same football club, passing it down through families for years and years and years.
So the results was far more important who was going to play it on the Saturday, more important about who owned it because you probably knew the most important person in your local town, so you knew it wasn't a topic. And also back then, if something did change, it might have been a little stake here and there.
You didn't. As Giles says, these investors are coming from all over the world to buy up these clubs. Could you give us an idea of where they're from? Who are the biggest owners of these clubs?
As Giles was mentioning, we've seen this evolution where it used to be the local businessman who owned the club, and then later on, maybe twenty years ago, we started to see examples of Richmond, but it was foreign rich men that were starting to come in and buy the clubs. Roman Avaramovich, the Russian Taekoon that had to sell the club last year after he was included in the sanctions list and international sanctions list because of Russia's envision on Ukraine.
Roman Abramovich, the owner of Chelsea Football Club, has been sanctioned by the UK. Effectively, for Chelsea Football Club, this is a huge blow. It basically means that it can play players, but it can't engage in the transfer windows, can't buy or sell players. If you're a season ticket holder, you can go to the game, but you can't buy new tickets to go to another game, so season tickets holders can go.
He bought Chelsea in the yearly two thousands, so he was one of the first movers in that regard. We saw that pattern repeated in other leagues as well later on, and they were coming from very different places. In Spain we had Hicks, we had Valencia owner for instance, it's a Singaporean businessman, so we had very different backgrounds. But it was this idea of foreign wealthy individual buying into the club. And more recently we started to see investment
funds and sovereign funds. In the case of sovereign of course it's the Middle Eastern funds and with Men City and Peri Center, Men being the two most well known examples of Newcastle more recently as well. And yes we're seeing in European football high interests from investment funds on buying at least, if not a whole club, at least a stake in the club.
So foreign investors are moving in to buy these teams. Why is that? It used to only be local people who were interested and now we have a lot more interest. Why do they want these teams?
The investment regional is different depending on the profile of the investor. Is not the same for a billionaire or a sovereign fund than it is for investment funds. And the reason for that is that, for instance, for billionaires or millionaires or sovereign funds, is more about the soft power. Owning a football club is kind of cool, right, It's
a status thing, it's a trophy asset. So it's a mix of that and maybe that you can make as a result of your ownership of that club, because I mean, during the game you are a meeting with other people that come to the game or come close deals with you or talk business. So that's that's a good way in Then for investment funds, that's different because they're in the business of making money. Ideally, and how to make
money on football. Well that's still I guess the big question mark and what everyone is trying to figure out.
So the reason why people want these teams, I think there's three buckets. It's soft power, it's money, or it's fun. And I think the soft power we've spoken about the Gulf investors for example, you know you've got Manchester City owned by every Debbie, paris Age mountained by Guitar Newcast and by Saudi Arabia. I mean this is all plays in soft power. The North of England is in areas quite deprived. The UK government has made a big effort
to try and improve those areas and it's failed. It's much better when you get a foreign invested the company and spend their own money rather than the government's money. And that's what's happened in Manchester and that's certainly what probably will happen in Newcastle after the break.
How do fans feel about outsiders buying their favorite teams? Giles? When you talk about soft power, what is it that these Arab states can get out of this investment.
They get a lot of I think political kudos and also appreciation for what they're doing. Most of the times when we write about them, and you saw that with the Qatar World Cup, they've got a lot of criticism for the human rights record and a lot of the focus wasn't on the football, it was on how we see those countries being run by the people in power.
Iry T twenty two World Cup has kicked off in Kata. A lavish opening ceremony was followed by the opening match between the hosts and Ecuador. It's the culmination of a twelve year build up. There's been marred by controversy over the initial bid, human rights concerns and the environmental impact.
If you own some of the world's biggest and best known football clubs, you're moving that conversation away from your humans rights record into first of all, simply how good is that club doing? But also what Abi Dabi has done through the City Football Group in Manchester, spending a lot of money on the local community, redeveloping large areas of the city when the local UK authorities and government simply didn't want to do that and claim they didn't have the money to do that.
For examples, in that area of East Manchester, as you well know, was basically derelic before the purchase here by the Abbadabi United Football Group now belonging to a city football group. We're looking at six thousand homes being built at one point three billion dollars of investment.
And that kind of buys them a lot of goodwill. The other reason, obviously, is fun, and there's plenty of very richep who like earning sports teams. You get in the US, you get it anywhere.
Really.
We've also seen investment from China in football clubs. Is that also an example of soft power?
I think it's quite different from the golf investments. China was far more chaotic in how it invested in football teams. Part of it was soft power, and part of it was simply the volume of money China was making it a time, but also tried to make its ownly really successful as well by luring foreign players over This is the men's league, and it failed miserably in that attempt as well.
In the case of the Chinese, there was a time when they as Gels, was saying they had a lot of money, so they went on a buying spree of foreign assets, and sometimes it was very far from what the core business the company was, and football was no exception. Into this, and for instance, we had examples of Chinese conglomerates that we're buying takes in football clubs in Spain or also in Italy, and then they failed to invest in the clubs after buying the stakes or taking control of the clubs.
Didna Giles has mentioned the fans kind of being angry mostly over a team that isn't performing well. But how do fans feel in general about their local team being owned by people from another country.
Well, actually, I think it depends on how well the team is performing. If the team is doing well, having all of a sudden someone else coming in and taking it over, it can face backlash. For instance, in Sevilla, a US fund called seven seven seven Partners bought a stake and tried to team up with other local investors and have control in the board, and a lot of the fans pushed.
Back answer, that's football fans chanting. Sevilla is not for sale.
And part of the reason for that is because the club was doing well at it's in European competition, so they didn't want foreign investors to take control of their much love club. But then in other cases, if the club is desperate because cron owner is not investing money, or it has been in place for some time and it's not able to say promote the club or do changes that bring some joy to the fans. Eventually, the Coron owners face this opposition from fans, and they tend
to welcome fans. Tend to welcome someone who may come over and invest in the club because at least they see it there's a chance to win something or do better. Yeah.
I mean a bit controversial this tape, baby, but the fans don't really matter, and it rens right as long as you as long as you win, obviously the fans love you. But even if you lose, I don't think these owners either realize or particularly care. They're not going to say that publicly, right, But let's take the Glazers again. When they arrived when they bought Manchester nineteen two thousand
and five, I mean there were riots in Manchester. They went to see the club, expected to be congratulated, and I think they had to escape out of some sort of back room because then the police turned up, because
you know, if things got so terrifying for them. Twenty years later, they're trying to sell the club, but there's a big possibility they might decide to carry on owning the club with a separate investor because two of the family members still love the club and they love coming over to watching matches, and they have weekly briefings understand
from the club itself about the tiniest marketing metrics. They've got no idea there's regular protests about them, or if they do, they just don't care because they don't read the press that we read owning a club and owning something incredibly powerful.
The Germans seem to be doing things in a different way with the Bundesliga. Can you describe how that works?
So how that Bundesliga works is that you've got something called a fifty plus one rule. What that really means is that a outside investor can't own a majority of the club, or are the most they can own it's
forty nine, okay. So a lot of these clubs in Germany are actually just local sporting clubs, right, Just as much as you go down downtown and you've got an area that has your squash club, your football club, and your tennis club, it just so happens that the football club is a huge organization that tens of thousands of people go what weekend and to keep that what they've done is they've made sure that the local fans have a say via the directors into how the club is to run,
and they're never going to be influenced by a large outside investor coming in a whole lot. There are, obviously, with all these things, exception to the rule, but as a whole that's how the Bunniestig goes run and that's how it's managed to keep up foreign investment.
When we come back, is a football club a good financial investment? We've been talking about how a company or a sovereign fund would want to buy one of these football clubs as an investment, but do they make money? Is this a good place to invest your money?
That's the question that everyone asks themselves before getting into clubs. There are ways actually to make money investing in football, but owning a club is not necessarily one of them, or the most obvious one. But instead, for instance, giving money to the clubs in exchange of revenues on the broadcasting rights Sixth Street has done with for instance Barcelona.
That's a way to make money, or buying a stake on the revenues of again the broadcasting revenues of a league, like CBC has done with Spain and Friends, that seems another way that will probably play out well. Owly, a club is not particularly an easy way to make money because it's not about buying the club. It's then about investing to perform in the pitch, and again that depends
on the club that you're buying. If you're buying it in the second division, then maybe there's this play of investing so that it gets promoted and then selling it off to someone else willing to buy it. But when you're buying a club that it's in decent shape, it's a very expensive investment because, of course the expectation is that it's going to play European competition, not only play, but like do well enough to get at least to the semi finals ideally of course even better if it wins.
But essentially it's a very very difficult investment. That's why a lot of funds what they're trying instead of buying just one club is buying small sticks in multiple clubs and create like a network of clubs so that the economics of that please better for them as an investment.
I think it runs totally right, like football is not a lucrative investment, and I think that's the mistake investors outside the year and make when they try and make money out of football teams. In the US, teams are mostly the media assets, right. You've got fixed and very lucrative broadcasting income, You've got real estate, and you've got brand value. I mean, they're so fixed that you can move a team from one city to the other and you can still make money from day one after you
move in, which is insane. That doesn't happen in football and Europe. And I think the mistake people make when they come and invest is that these football clubs are not media assets, even though most of the income comes from broadcasting rights are and said, a lot of the money comes from just doing one in a tournament after you've done well the previous year your local league, and the time difference is huge. Your players could get injured,
who knows what could happen to your rivals. They could improve, you might end up struggling with relegation, which obviously isn't an issue in the US. And I think that's why they're inside. The clever investors are trying to buy stakes in the actual broadcasting rights of European football leagues rather
than the teams themselves. And we've seen certain investors who used to think about buying teams now terrified it doing that and only fixated on trying to get these TV rights because that's what their rule money is.
So where do you see this going. You've tracked all these teams, You've seen how foreign owners are coming in and then selling. Do you think that this trend will continue and that we're going to see more and more foreign ownership of football clubs?
I mean, as long as they believe that someone else will come and buy after they hold it, Yes, and ideally at a higher valuation. Yes. But there are a few things that could change how things are working. One of them is if the leagues or gets more serious about the way sovereing funds in particular invest in these clubs. They have more capacity to sign players because they have more revenue from sponsorship, but the sponsorship is coming from another company own also by the fund, so there are
question marks around whether that's fair competition. There are also question marks around whether leagues and UF are going to get tougher in terms of what kind of network you can own, because it's very clear that you cannot have stakes in two clubs playing in the same league. But then it's a bit more blurred lines whether you can have two teams or sticks in two teams if they are minority. Sticks in two teams, say playing European competition,
because there's a chance if we against each other. The concept of multiplabs itself even if your teams are not going to play against each other. Because of the implications they have on the transfer of players. It's starting to raise some questions among some of the of the leagues. If they become tougher in that space, there's a chance it becomes less attractive for specific bucket of investors.
The problem is that investors only remember the winners. Only many people remember Ellis Short, who was a US private equity investor and he was one of the first way into UK football. And he bought Sunderland, which is this pretty small town and he brought that in late two thousand and eight and he spent two hundred million pounds on the club and it got relegated twice and then he sold it for fifty million. Right, it's not a great investment, and he admits that. But you only remember
the people who made millions in the Glazers. They made millions from Manchester United. If they do sell it with the value they think it's worth, it could be worth more than the Denver Broncos. But also makes a good point about regulation European rate. You know, your football regulators are stuck because they want to keep European competitions as these flagship competitions that everyone wants to buy media rights
to and everyone wants to come and watch. But at the same time, if it's just a race of whoever has the most of money, eventually you get a point which has Manchester City seem to have worked out that if you finally get it right and how you spend this money, you can start create a footballing dynasty, much like Manchester United did twenty years ago. And that doesn't help the European authorities sell football as this sort of meritocratic anyone can win type of competition.
Giles it Ene, thanks so much for coming on the show. Thank you, Thanks for listening to us here at the Big Take. It's a daily podcast from Bloomberg and iHeartRadio. For more shows from iHeartRadio, visit the iHeartRadio app podcasts, or wherever you listen and we'd love to hear from you. Email us questions or comments at Big Take at bloomberg dot net. The supervising producer of the Big Take is Vicky Bergalina. Our senior producer is Katherine Fink. Frederica Romanello
is our producer. Our associate producer is Zenobsidiki. Gild Garcia is our engineer. Our original music was composed by Leo Sidrin. I'm West Kasova. We'll be back tomorrow with another Big Take