The Role of Sports Investment Companies in the Multi-Club Ownership (MCO) Model

Why Are American Investors Interested in UK Football?    

• Less Expensive Than US Sports: Unlike the NBA, NFL, NHL, MLB and MLS, investing into an EFL club is comparatively affordable. Valuations range from £5m in League 2 to £250m in the Championship. 

• Promotion and Relegation: The roulette wheel of promotion and relegation is not open to US leagues. This is where the drama lies and ROI opportunities exist.  

• Commercial Growth Potential: Many EFL teams have not fully capitalised on their brand potential and market presence. This a significant growth lever and value driver. 

• Global Audience: Football is the world’s most popular sport and the Premier League is by far the most high profile, lucrative division. The EFL is the only league which offers a route there.  

• Sexy: The phenomenon of the ‘Wrexham Effect’- More American investors are following the lead set by Ryan Reynolds and Rob McElhenney with their success at Wrexham. Football investments are seen as glamorous, exciting and intriguing.  

The Contribution of Sports Investment & Advisory Firms to Football Club Ownership  

• Identifying Appropriate investor targets – Locating clubs that fulfil investors’ target criteria, price point and ROI objectives. 

• Structuring Transactions- Full M&A support throughout a transaction lifecycle with a focus on key terms negotiation.  

• Pre-Investment Financial Evaluation: Providing full due diligence support for both parties to ensure the investment case is represented accurately and the buyer can provide a strategic growth plan and proof/sources of funds. Critical for the EFL managing body.    

How United States Investments are Impacting the EFL   

• Branding focus. US investors recognise that we operate in an attention economy and UK clubs have historically undersold their capabilities in garnering brand awareness, particularly internationally. Increasing sponsorship deals and merchandise sales are a mainstay of creating multiple revenue drivers. 

• Matchday Upgrades: For Americans, matchday is far more than just the in-game action. Investors focus on providing an experience for fans that creates a memory. Investing into stadium infrastructure, hospitality, pre & mid game entertainment and overall fan engagement is key. 

• Fail to prepare, prepare to fail – In the US, sports teams across the main four sports benefit from A-grade training facilities and playing environments. Seasoned investors recognise the importance of first-class infrastructure off the pitch, to drive performance on it. 
• Tech – Often with a link to Silicon Valley, US investors understand the importance of utilising technology to enhance sporting performance. Embracing data for player development, player trading and performance tracking helps to provide an “edge” and “marginal gains”. Two buzzwords in US investment circles. 

Drawbacks  

• Cultural Sensitivities: UK football clubs as with other UK industries, are known to have rigid traditions that are not always compatible with an international perspective. Football clubs in particular are the heartbeat of a community and staying true to local values is critical. This can often be in direct conflict to global commercial growth ambitions and can create trust issues with new ownership. Accountability and transparency is critical. 

• Financial Regulations: The EFL implements stringent financial fair play restrictions that prevents clubs from overspending. This impacts an investor’s ability to utilise a financial “war chest” to drive performance and can be challenging to operate within.  

• Risk of Failure & Reduced ROI: Investing in football still remains a high-risk activity. The majority of teams lose money and this can be a vicious cycle with increased fan scrutiny, lower supporter revenues and reduced sporting performance, all of which can significantly impact an investor’s Return on Investment (ROI). A relegation is a major financial event.  

What Makes a Good Football Investment?   

• Passionate Fanbase: Strong team loyalty among supporters is a prerequisite for revenue generation through merchandise, ticket sales, engaging sponsors and helping drive on the pitch performance & prize money. This has a direct impact on elevated broadcasting revenue.  

• Commercial Expansion Potential: A marketable brand that can attract sponsors and commercial partnerships is a huge growth lever. A TV documentary is a bonus! 

• Sustainable Finances: A stable financial operating environment enables capital to be utilised for player recruitment, stadium matchday experience and training infrastructure. Ensuring a small debt load and low annual operating costs is critical to driving successful sporting performance and wider company operations.   

• Promotion Prospects: Identifying a team with real promotion potential can create a liquidity event in short order. A promotion to the Premier League from the Championship can revolutionize a club’s financial health and is often the catalyst for further investment into the club, lucrative sponsorship deals and real estate improvements.  

• Real estate. Infrastructure is often seen as an excellent foil to sporting performance / financial struggles as it provides investors with a fall-back asset if the club is not succeeding on the pitch. Owning a significantly sized stadium and modern training facilities can be used as collateral when raising credit for a team and attractive assets to potential acquirers if a club is underperforming.  

Top EFL Clubs with American Investment