One scoop to start: News at sports agency GSE Worldwide, whose clients include pro golfer Bryson DeChambeau and DeMarcus Lawrence of the NFL’s Dallas Cowboys. BC Partners’ credit arm provided fresh capital to fund expansion, the latest private investment firm to push into the talent agency industry. More via the FT’s Eric Platt here.
That’s just the latest in what was a truly monumental week in the world of sport. Private capital is coming for the National Football League. But the way America’s richest sport is managing the entry of institutional investors perhaps holds lessons for European football, where ownership rules are far less stringent.
This week, we also dig into a marked decline in transfer spending by football clubs in Saudi Arabia, the rise of climbing and the economic impact of Euro 2024 in Germany.
Do read on — Samuel Agini, sports business correspondent
What the NFL can teach sport about private equity
In the multibillion dollar sports investment boom since the coronavirus pandemic, the 32 franchises that comprise the NFL were off limits to the private equity firms buying up assets in the sector.
So this week’s vote to permit a select group of investment managers to buy minority stakes in NFL teams marks a historic moment in sport history.
The lucky firms are Ares Management, Arctos Partners, Sixth Street and a consortium made up of Blackstone, Carlyle, CVC, Dynasty Equity and Ludis, which was founded and led by retired NFL player Curtis Martin.
But make no mistake, the buyout firms are playing by the NFL’s rules. They are expected to commit around $12bn to buying minority stakes in franchises. No investor can buy more than 10 per cent of the common shares in any single team. More complex structuring, like preferred equity, is not allowed. And forget about a quick profit: the buyers must hold their stakes for at least six years.
More firms are likely to be added to the list of permitted investors, but the message is clear that this is an exclusive ownership group. The NFL has not only handpicked the chosen few, it has established tight control over what kind of transactions are permitted.
“This won’t change a thing,” NFL Commissioner Roger Goodell said. “All it is a silent position that would allow access to capital for those teams that wish to offer 10 per cent of their team. They will not be in any kind of decision-making influence in any way.”
“We think the single-owner structure has been very valuable . . . and this does not impact that at all,” he added.
By contrast, European football is far less fussy around ownership. Uefa, which governs European football, said earlier this year that 39 per cent of the 96 clubs in the “Big Five” leagues (England, Spain, Germany, Italy and France) have ties with private equity or debt firms.
Many of these deals still wouldn’t fly in the NFL, which had leverage entering the private equity negotiation. Its franchise owners are some of the richest men and women in America, with the benefit of an 11-year media rights package worth $110bn. Anyone seeking to buy an NFL team must win approval from the existing owners.
European football clubs, on the other hand, are constantly chasing the next capital injection because of their historic tendency to overspend on buying and paying players.
The question, however, is whether the NFL can retain the upper hand if it continues to open up to institutional investors.
Part of the rationale for permitting the likes of Arctos and Ares to buy in is that NFL franchises trade for billions of dollars these days, meaning that even billionaires find it hard to pull together enough cash to fund deals. The NFL limits how much debt can be used to fund takeovers, meaning that a little bit of private equity could go a long way to facilitating franchise trades.
The staggered introduction of private equity funds will also allow the NFL to plot out the next steps and determine the rules based on how its new ownership paradigm works in practice.
That’s an advantage versus Europe’s leagues, which are grappling with how to deal with the influx of capital from private equity and even sovereign wealth funds after the fact.
Saudi Pro League reins in the spend
It was just a year ago that an influx of cash from Saudi Arabia fuelled a record-breaking summer transfer window for European football.
But Saudi Pro League clubs have been more restrained this time round, spending just over €297mn this summer, versus €950mn the same period last year, according to data aggregator transfermarkt.
Overall, club spending in Europe’s “Big Five” leagues — England, Spain, Germany, Italy and France — fell by 10 per cent to around €5.2bn year on year.
Al Ahli, Al Ittihad, Al Hilal and Al Nassr, the four clubs that Saudi’s Public Investment Fund took over last year, have all registered marked declines in expenditure, according to transfermarkt. Newcastle United, the PIF’s English club, cut spending to €68mn from €153mn last year.
There are broader signs of restraint at the PIF, with the FT’s recent Big Read explaining why the era of Saudi Arabia being perceived as a source of easy money is drawing to a close.
There are signs also of Saudi Arabia looking beyond star signings to build up the competition.
The SPL has introduced new scheduling, including new weekend rounds featuring derby matches. That followed a five-year production partnership with sports group IMG, which also works with the English Premier League.
And perhaps another reason for the downturn in transfer spending is that the SPL has cut down the number of players each club can have on its squad, from 30 to 25. Saudis must account for 11 of the 20 places in a match day squad.
Despite Saudi clubs spending around 30 per cent of their outlay last summer, the decrease must be seen in context. Only five leagues are higher in the league table for expenditure this summer.
And the sports press still senses the desire to spend big if the right player is available.
Don’t write off the Saudi league just yet.
Highlights
-
Climbing has gone from niche pursuit to Olympic sport. It’s attracting private equity interest and sponsorship from major brands, including Red Bull and Adidas. Understand the trend with this exclusive Scoreboard video.
-
Eagle Football, the football and technology vehicle co-owned by US investor John Textor, is targeting an initial public offering and a valuation of more than $2bn, according to Sky News.
-
Euro 2024 provided a €7.4bn economic boost to Germany and its 10 host cities, according to Uefa, which organised the football tournament. More than 90 per cent of that was due to spending by 2.7mn ticket holders.
Final Whistle
Neal Maupay has had a big month. The French striker rebuked Everton fans for harassing the squad on their way back to Liverpool after a 4-0 humiliation against Tottenham Hotspur.
“Imagine another job where it’s normalised to get abuse like this,” he posted on social media site X on August 25. “Hanging around at a train station to scream at men who are trying their best . .. ”
Within days, the 28-year-old had quoted a post by transfer content specialist Fabrizio Romano, who’d gotten wind of Maupay’s impending departure to Olympique Marseille in the south of France.
The video certainly won’t mend relations with Everton supporters.
Read the full article here
