24 Mar US Investors seeking opportunities in UK Football: How American Sports investment companies are shaping the EFL.
Now more than ever, American investors are drawn to English football. The English Football League (EFL), with a rich history and passionate fanbase, offers enticing investment opportunities, leveraging the thrill of promotion and relegation.
If you’re an ardent Football fan or industry investor, you may want to know how these sports investment firms are impacting the EFL. This article covers the theses behind American investors shifting their focus towards UK football, how these investments are changing the landscape and the implications for the clubs and fans.
Why Are American Investors Interested in UK Football?
The inflow of investment into English football clubs by American investors might be perplexing but the main drivers are clear:
- 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
Sports investment & Advisory firms are key players in uniting investors and football clubs. They provide transaction support to both parties, fostering the relationship and ensuring appropriate due diligence is completed. These companies assist with the following:
- 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
US investors are changing the operating landscape of English Football with a key focus on:
- 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
Though increasingly attractive, English soccer investments are not without their pitfalls for US owners.
These include:
- 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?
The key to succeeding for financially focused sports investors in Football often starts with identifying the right acquisition asset.
Every club is very unique and offers a distinct investment proposition across 5 key criteria:
- 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
The trend of American investment into UK football is growing. 70% of the EPL is US majority or minority owned and this extends to 1/3 of all EFL teams, including:
| Arsenal | Stan Kroenke | EPL |
| Bournemouth | Bill Foley | EPL |
| Chelsea | Clearlake Capital Group & Todd Boehly | EPL |
| Crystal Palace | Josh Harris, David Blitzer & John Textor | EPL |
| Everton | The Friedkin Group | EPL |
| Fulham | Shahid Khan | EPL |
| Ipswich Town | ORG Partners | EPL |
| Liverpool | Fenway Sports Group | EPL |
| Manchester City | Silver Lake | EPL |
| Manchester United | Glazer family | EPL |
| Burnley | ALK Capital | Championship |
| Leeds United | 49ers Groups | Championship |
| Millwall | John Berylson family | Championship |
| Norwich City | Mark Attanasio | Championship |
| Portsmouth | Michael Eisner | Championship |
| Sheffield United | COH Sports Group | Championship |
| Swansea City | Andy Coleman, Brett Cravatt & Nigel Morris | Championship |
| West Bromwich Albion | Shilen Patel | Championship |
| Birmingham City | Tom Wagner | League One |
| Charlton Athletic | Gabriel Brener & Joshua Friedman | League One |
| Crawley Town | WAGMI United | League One |
| Huddersfield Town | Kevin Nagle | League One |
| Leyton Orient | Eagle Investments | League One |
| Wrexham | Ryan Reynolds & Rob McElhenney | League One |
| Carlisle United | Piatak Family | League Two |
| Gillingham | Brad Galinson | League Two |
| Walsall | Benjamin Boycott | League Two |
What is the future of American investment into UK football?
According to Adam Sommerfeld – Managing Partner at Certus Capital, all clubs could be owned by US investors over the next 3-4 years. Will American investment transform the entire EFL? – BBC Sport
The attractive entry prices, growing media revenues and legacy brands that exist in the EFL, will continue to appeal to US investors. The growth of the MLS and USL domestically may start to rival the UK for their attention but it is still a widely held belief that English teams are heavily undervalued in comparison to the Big Four leagues in America. With the World Cup approaching in 2026, seasoned US investors will want to capitalise on this opportunity to own a stake in the world’s greatest game.
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