Over the past two decades, European football has seen a notable shift in ownership dynamics. Prominent clubs such as AC Milan have seen significant changes in ownership, captivating the attention of the football world. The potential acquisition of Manchester United have been a focal point for months, drawing immense interest from investors in Saudi Arabia and the UK. An analysis of the top 10 football club transactions involving majority stakes in Europe, based on the reported considerations paid, reveals intriguing patterns. For instance, eight of the top 10 transactions were orchestrated by investors from the US.
Repercussions of the pandemic
The profound impact of the COVID-19 pandemic created a unique window of opportunity for sector investors. As existing owners grappled with cash flow shortages, many sought to divest their assets. With revenues plummeting due to pandemic-induced restrictions on fan attendance, and operational costs rising, this turbulent period opened doors for a surge in investor involvement from countries where football is becoming increasingly popular. This uptick in transaction volumes serves as substantial evidence of the prevailing sentiment among investors. Examining the top 10 ownership transactions of European football clubs with a majority stake reveals that six of these significant deals occurred post 2020.
At the forefront of this list stands the acquisition of Chelsea FC in 2022 by a new ownership consortium, spearheaded by Todd Boehly, part-owner of the LA Dodgers baseball franchise and financially backed by Clearlake Capital, alongside US investor Mark Walter and Swiss businessman Hansjoerg Wyss. These funds were directed into a secured UK bank account, with a notable commitment to donate the entire sum—confirmed by Roman Abramovich—to charitable causes. This transfer necessitated approval from the UK Government due to the account’s frozen status. As part of this monumental deal, a staggering investment exceeding €2.9 billion was allocated for the acquisition of the club's shares. Additionally, the new owners pledged a further investment of over €2 billion for the club's betterment. This encompasses investments in pivotal areas such as Stamford Bridge, the Academy, the Women’s Team, football stadium Kingsmeadow, and sustained funding for the Chelsea Foundation.
RedBird Capital Partners' acquisition of AC Milan from Elliott Capital marks the second transaction on the list. Valued at €1.2 billion, the deal saw Elliott retaining a minority financial stake in the club and securing representation on the Board of Directors. This agreement solidified an ongoing partnership between RedBird and Elliott, reinforcing and building upon the progress made during Elliott's stewardship. Furthermore, RedBird Capital Partners received a vendor loan from Elliott ranging €200-300 million and the deal structure also includes a profit-based bonus for Elliott upon any future sale of the club. Fascinatingly, this acquisition occurred a mere month after the Chelsea transaction took place.
Among the other clubs on this list that underwent ownership changes after January 2020 are Everton FC, AS Roma, Newcastle United, and Olympique Lyonnais.
Global Shifts in Football Club Acquisitions: USA Dominance
All of the acquisitions listed were executed by foreign buyers, notably with eight out of 10 instances featuring buyers hailing from the US.
Football's global allure transcends the pitch, offering an enticing terrain for private equity investors and high-net-worth individuals. Unlike many American sports, football boasts an unparalleled international reach, tapping into diverse populations across various continents. This expansive fan base, combined with the sport's surging popularity in the United States, acts as a driving force for amplified revenue streams. From lucrative broadcast media rights agreements to the flourishing market for merchandise, football's inherent global nature promises considerable financial prospects for stakeholders eager to capitalize on its widespread appeal.
However, beyond the dominance of the US in football club acquisitions, other markets have surged in recent times, notably Saudi Arabia. One prominent transaction that features in the top 10 list is the acquisition of Newcastle United. This shift in ownership occurred in 2021 when a consortium led by the Public Investment Fund, a sovereign wealth fund of Saudi Arabia, in partnership with PCP Capital Partners and RB Sports & Media, secured 100% ownership of the club.
The second transaction on the list that didn't involve a buyer from the US was the acquisition of AC Milan. In a significant ownership transition in 2017, former Italian Prime Minister Silvio Berlusconi orchestrated the sale of AC Milan, amounting to a €740 million deal, inclusive of €220 million in debt. Berlusconi's holding company, Fininvest, confirmed the complete divestment of its stake to Rossoneri Sport Investment Lux, a Luxembourg-based entity led by Chinese investor Yonghong Li.
Investors' favourites: English Premier League and AC Milan
A comprehensive review of ownership transactions within the "Big Five" leagues reveals distinct trends, notably marked by divergent trajectories in the English Premier League (EPL) and the German Bundesliga. The EPL has witnessed a substantial, 16 majority stake-involved ownership transactions since 2003, while – in stark contrast – the German Bundesliga experienced a comparatively muted landscape with merely one ownership transaction. LaLiga have seen six, Ligue 1 seven, and Serie A eleven such transactions, delineating varying degrees of ownership flux within these leagues.
Unsurprisingly, half of the clubs featured on the list of the top 10 transactions involving majority stakes belong to the English Premier League, signifying the evident allure of the highest tier of English football. The Italian Serie A stands out as the second most represented league on the list, however, AC Milan accounts for three out of the four transactions.
In the past five years, RedBird stepped into the role of the fourth owner of AC Milan, succeeding a lineage that included Silvio Berlusconi, Yonghong Li, and Elliott Capital. Each transition of ownership brought distinct financial implications. Particularly notable was the transfer from Yonghong Li to Elliott Capital, which diverged from conventional transactions. In this instance, the consideration paid wasn't a traditional purchase sum but rather a representation of the debt owed by Yonghong Li to Elliott, an outstanding amount yet to be repaid. This unconventional shift in ownership involved the settlement of Li's debt to Elliott as a form of ownership transfer, setting it apart from the customary purchase transactions in the football club ownership landscape.
Top 10 list based on implied equity value
When delving into the implied equity value considering 100% ownership, significant shifts are apparent within the top 10 list. Chelsea maintains its prominent position in the first spot with an estimated transaction value of €2.9 billion. Manchester United have ascended to the second position, commanding a value of slightly over €1.2 billion, edging ahead of AC Milan's 2022 takeover, valued at €1.2 billion.
The noticeable repositioning unfolds further as the 2018 acquisition of AC Milan saw the club’s value, at €419 million, slip to eighth place, while Olympique Lyonnais secures the seventh spot with an estimated transaction worth €422 million. Occupying the ninth and tenth positions are Internazionale Milano's two ownership changes from 2016 and 2013, with a 100% equity valuation of €394 million and €386 million, respectively.
In 2013, the Massimo Moratti era ended at Inter as Indonesian businessman Erick Thohir took over stewardship of the club following his purchase of a 70% majority share in it for a reported fee of €271 million. After just a relatively short period, Mr Thohir decided to sell the club to Chinese electronics retailer Suning Commerce Group Co Ltd, who bought nearly 70 percent of Inter Milan for €270 million, at the time the highest-profile takeover of a European football team by a Chinese firm.