Specialist
Former executive at Liverpool Football Club
Agenda
- 2022 landscape evolution for English football clubs, noting drivers of strong overall commercial positioning plus sale of Chelsea FC and considerations around Manchester United (NYSE: MANU)
- English football clubs' revenue streams, key growth drivers and major team profiling, assessing variances across tier 1, 2 and 3 profitability cohorts
- Media rights structure, matchday revenue and youth camp dynamics, noting key runway and risk considerations for potential PE sponsors
- Further value-addition areas including stadium project financing and sponsorships, and growth maximisation strategies for direct buyouts vs stake investments
Questions
1.
Could you frame the major case studies of PE investment in football clubs across the UK and the EU, noting Chelsea FC’s deal in May 2022, AC Milan’s agreed sale in June and Manchester United currently being circled by a couple of firms?
2.
English clubs are a better commercial vehicle, which shows in the valuation rise for the EPL [English Premier League]. European leagues are trying to build clout – in the Bundesliga, Bayern Munich recently toured the US to drive up awareness. How did English football clubs gain this clout and penetration among US and international audiences, and is it sustainable amid efforts from European clubs?
3.
Are EPL clubs better investment opportunities because there are more commercial rights maximisation strategies that can be applied vs a middle-tier club in Ligue 1 or in Serie A? Overall, are the clubs a better investment, and if so, what major levers can PE use to maximise a club’s value?
4.
How are you assessing Chelsea FC’s sale for GBP 4.3bn and Man U being circled – after its listing on the NYSE – by PE alongside Ineos? Ineos, for context, also has a stake in the Mercedes Formula One racing team. What were the key triggers and what are your performance expectations for the two clubs?
5.
What factors were responsible for a club of Man U’s status lacking strategic vision and teambuilding, and what were the resulting implications for its commercial opportunities? What else would private capital need to bring to revive the club on and off the pitch, beyond perhaps just changing the team dynamics as a whole?
6.
How do you rank the EPL clubs according to profitability tiers, from severely loss-making to loss-making, break-even and profitable? What are the defining characteristics across each tier?
7.
Which key clubs across the three tiers would you highlight as ripe to benefit from PE investment?
8.
How does the revenue stream structure differ across tier 1 vs 2 vs 3, assessing media rights, transfer spending, matchday tickets, sponsorship, BLM [branding, licensing and merchandising] and the earnings payout from wins?
9.
What are the variances in tier 2 revenue streams? This tier seems to have some opportunities, relative to tier 3 which doesn’t seem particularly attractive. I assume tier 2’s media rights are a little bit lower.
10.
How are the media rights typically structured for English clubs? LaLiga’s recent deal saw pushback from some clubs such as FC Barcelona, which were carved out to a certain degree because the rest of the clubs gave up the majority – or all – of their AV rights. How does the English club model compare?
11.
How would potential pushback impact the value of EPL media rights? You noted EPL broadcast rights being nearly double the size of its closest competitor – I think it’s about GBP 7bn for the recent cycle.
12.
What is the growth runway for matchday revenues across tier 1 vs 2 vs 3? How can clubs across tiers seek to drive up this critical revenue stream? Is it through increasing the number of matches or the price of the tickets, and are fans truly price-inelastic in this case?
13.
Presumably, there’s a correlation where the stronger a club’s youth camp is, the less they need to spend on transfers. How might this be used as a mechanism to push down spending on transfers across tier 1 vs 2 vs 3?
14.
What is the opportunity for private project financing to build out stadiums for tier 2 and 3 clubs, given it’s an expensive proposition for these cohorts? What are the pain points around stadium development that, to a certain degree, must be hampering the performance of lower-tier clubs?
15.
How should tier 2 and 3 clubs structure and gain sponsorships, given this component is critical to driving clubs’ health and profitability? Presumably, in tier 1 it’s a fight for sponsors trying to get access. Are there well-defined teams already on the ground to execute this, and what value-addition would private capital need to bring?
16.
How could tier 2 and 3 clubs drive the value of the BLM revenue stream with the help of PE? Tier 1 clubs globally have numerous BLM partners supporting the commercialisation strategy. Are there growth avenues that you sense need to be capitalised upon?
17.
What are the key opportunities for PE across different arms and components? What should they do when there’s a direct buyout of a club vs opportunities to take stake investments within certain revenue streams, as with FC Barcelona’s media rights? How can PE maximise the growth runway in both cases?
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