Moguls, Royalty, Bankers, Businessmen and Consortiums: The Chaotic and Expensive World of Owning a Football Club
After last week’s blog which provided an understanding around the intricate Bundesliga law of the 50+1 rule, this week I will attempt to delve deeper into the trials and tribulations of club ownership across the footballing world. Away from the 50+1 rule, an enormous and diverse array of individuals, groups and other investors own the majority of economic and authoritative shares in a club or, in some instances, a collection of clubs. However, it is an area of football that is fraught with danger and risk to the owner’s financial, political and social status.
I will begin with an overview of the widespread variety of club owners across the footballing landscape and what their motivations behind owning a club may be. I will go on to consider the good and the bad sides of club owners and suggest the characteristics, traits and attributes that could comprise a successful and well-revered owner. However, it is also important to acknowledge the biggest risks and threats that the owners may face by choosing to take charge of a football club and how this can have a detrimental impact upon their own credibility and respect. Finally, I will outline the facts of a well-known case-study; the Glazers’ ownership of Manchester United.
A Wide Variety
It is difficult to know where to begin to understand the extraordinarily diverse demographic of football club owners across the world. The first common point of identification is that it will be an individual or a group that has a significant volume of wealth. The source of this wealth can be almost anything. In the top European leagues alone, the backgrounds of club owners span far and wide across finance, property, the steel trade, automobile industry, venture capital, newspaper tycoons, investment firms, food and catering, oil and gas and even gambling moguls.
In an era where gender equality and equal opportunity is emphasised and prioritised, it is somewhat surprising that there are currently no female owners of football’s major clubs. There are examples, however, of women who have minority shares in clubs and it could be something that changes in the future. Currently, even the so-called ‘most famous lady in football’, Karren Brady, the vice-chairman of West Ham United, does not possess significant shares of the club.
One changing aspect of club ownership that has and remains to become more prevalent is the existence of consortiums and group ownership. A consortium is an association or union of several companies or individual investors that collate their funds and purchase ownership of a football club. By pooling their resources and each entity involved agreeing upon certain contractual obligations, they are able to raise greater finances to own some of the world’s biggest clubs.
A recent, famous consortium purchase was that of Chelsea Football Club led by Todd Boehly and his consortium which included Clearlake Capital Group. Boehly is the chairman, founder and CEO of the Eldridge Holding Company and forefronted the £4.25billion takeover of the London-based club. Alongside Clearlake Capital Group, Boehly will have joint control and governance over the club as it enters and negotiates through the post-Abramovich era. Boehly, alongside his associate Mark Walter, already own the Los Angeles Dodgers Major League Baseball franchise as well as the Basketball equivalents in both the NBA and the Women’s NBA; the Lakers and the Sparks respectively. They are familiar with what it means to be in charge of a major sporting entity and they have taken the leap of expanding their investment into English ‘soccer’.
The wealthiest club ownership, by a considerable distance, in the current football era, is the Saudi Public Investment Fund that purchased the Premier League’s Newcastle United in the latter stages of 2021. With an estimated net worth of assets of over $600billion, they fly high above the second wealthiest ownership, the City Football Group ($20billion estimated net worth). These are assets and finances of the sovereign wealth fund of Saudi Arabia and is overseen by a businessman and Governorand the Saudi Crown Prince who has a personal fortune of $17.6billion himself. The investment fund, which now owns 80% of the North-East of England club, is supported by many major companies across the world such as BP, Boeing, Facebook, Disney and the Bank of America to name but a few.
The practice of cross-sport ownership, such as in the case of Todd Boehly, is becoming a new norm. Some of the richest members of society are able to invest their wealth in two or more sporting entities across the globe. Commonly, investors will look into major sports in the US and the UK for increased outreach. For those that have the financial capabilities to do so, coupled with the love of sport, it is a great opportunity to heighten their status and enhance their popularity. I outline some of the best-known examples of this below:
1. The Kroenkes
- ○ The Kroenkes built their wealth from several different ventures. Most noticeably, their company Kroenke Sports & Entertainment, opened the doors into sport.
- The family have now acquired majority ownership of clubs in soccer, American Football, Basketball, eSports and Ice Hockey
- ○ Soccer: Arsenal (UK) and Colorado Rapids (MLS)
- ○ Other sports: Los Angeles Rams (NFL), Denver Nuggets (NBA), Los Angeles Gladiators (eSports), Colorado Avalanche (NHL).
- Shahid Khan
- ○ Khan is a Pakistani-American billionaire businessman. The majority of his wealth comes from his automotive company based in the United States.
- ○ Khan owns majority shares of the Jacksonville Jaguars in the National Football League in the US and London-based Fulham Football Club in the English Premier League.
- Andrea Radrizzani
- ○ Radrizzani is the owner of ELEVEN SPORTS, a global sports broadcasting company. Similarly to the Kroenkes, this made sport an accessible avenue for him to invest his wealth into.
- ○ The businessman has acquired both San Francisco 49ers in the NFL and Leeds United Football Club in the English Premier League.
- The City Group
- ○ The City group is one of the best examples of the power that a consortium can obtain through pooling their resources. The consortium is formed of the Abu Dhabi United Group (which owns a majority 78% share), the American Silver Lake investment firm and China Media Capital.
- ○ They are the second wealthiest ownership group in the world with an estimated $20billion net worth. They are led by the Deputy Prime Minister of the United Arab Emirates.
- ○ The consortium now owns eleven football clubs across the globe in England, Australia, France, United States, Japan, Spain, India, China, Belgium, Uruguay and Italy.
- ○ Their biggest success is undoubtedly Manchester City, but they have also become part of the success and growth of clubs such as Melbourne City, New York City and Mumbai City, as well as others in different corners of the globe.
Why own a Football Club?
Not only is there a variety in the business acumen, backgrounds and financial sources of the owners of football clubs; there is also a wide variety in the intentions of and motivations behind these individuals and groups purchasing ownership of football clubs. The decision to acquire a football club is not one that should be taken lightly. It can have a significant impact on the reputation, respectability and popularity of those involved. It is important to note that, in most cases, a football club is unlikely to make any kind of worthwhile annual profit and hence, the acquisition of a club is rarely financially motivated in terms of yearly returns. So why is investing large sums of one’s wealth into a football club still an attractive proposition to many who have the financial ability to do so? The major factors behind purchasing a football club are summarised below:
1. Appreciation in Value
As mentioned, year on year, a club is unlikely to make a profit that will make a difference to the bank account of the individual that owns it. However, with the direction in which football finances are going, in which player wages, transfer fees, commercial deals and the values of clubs are rising exponentially, a long-term owner of a club may see a dramatic appreciation in the value of their shares which they can then sell for a healthy profit. This may mean that there is still an underlying financial motivation in purchasing a football club. Despite the risk of losing money annually, the attraction of selling shares for a far larger value than they were bought can be a source of temptation.
An example of this is Liverpool Football Club. When the Premier League club was bought by Fenway Sports Group in 2010, managers John Henry and Tom Werner forked out £300million for the red, which was already widely recognised as one of football’s most iconic and legendary club giants. The American-based firm also owns both Boston Red sox (MLB) and the Pittsburgh Penguins (NHL) and are an example of the, often American, investments into sports teams that are somewhat financially motivated. Forbes now estimates that, as of the start of 2022, purchasing Liverpool would now cost around £3.6billion; reflecting an enormous and rapid appreciation in the value of the shares that Fenway Sports Group acquired only a dozen years ago. The graph below depicts the extraordinary rise in value of European clubs in the top leagues since 2008 and demonstrates the financial opportunity that some investors are concerned with (Source: Statista):
This is not guaranteed, however. There have been examples of clubs such as Portsmouth, Derby County, Sunderland and others that have experienced dramatic declines over recent years and no longer even hold their previous value, which has depreciated significantly. Relegation to a lower league inevitably causes major losses in value and is one of the main factors that has such an impact upon a club’s worth. These failures can partly be attributed to poor ownership and shows that it is not as simple as buying a club and sitting back and waiting for its value to increase before selling. As I will go on to explain, it is vital that the owner knows what they are doing and assists the club properly, or they may experience a fate similar to these clubs as a result of their own mismanagement and malpractice.
Ownership that is financially motivated is often the kind that induces fan resentment. Avid and devoted fans of clubs do not want to feel or witness the owners of their club withholding or withdrawing funding and financing of new transfers or worthwhile investments to improve the club for the sake of maximising their own financial gain. This is worsened if owners are also motivated by the opportunity in order to avoid or reduce taxation in their own country by investing their assets elsewhere. Ill-feeling amongst fans is inevitably detrimental to the popularity of the ownership and creates difficulties for them in maintaining their control and respectability. Financial gain is a problematic, risky and complex attraction of club ownership.
2. Political, Status and Publicity Motivation
Owning a football club can often be viewed as a ‘trophy asset’. In other words, wealthy business people acquire shares in clubs as part of a ‘status-enhancing’ venture. It can almost be seen as a form of showboating and demonstrating one’s wealth to others by acquiring an asset in the most popular sport in the world. Owners can reap a variety of benefits from owning a club. Such an opportunity can play a part in building one’s personal brand as a strategic, positive PR stunt. It is a unique form of advertising and growing awareness of an individual or group.
There may also be an element of geopolitical motivation behind the purchase of a football club. Owning a football club allows these business people and investors to open up new avenues and new, wider networks in foreign countries that can benefit them, their state or their company’s reputation greatly. For example, the likes of Roman Abramovich or other foreign investors from the United Arab Emirates, Saudi Arabia and the United States will improve the public’s perception of themselves and their states.
Regardless of what the motivations behind Roman Abramovich’s acquisition of Chelsea was, he was also determined to make the club a success under his ownership. Following his purchase of the club in 2003, Chelsea experienced almost two decades of an incredibly successful spell; the most successful period in the club’s history. Under Abramovich’s reign, they won five Premier League titles, five FA cups and had two UEFA Champions League victories. Chelsea fans did not mind why Abramovich bought the club, he was adored by the fans as he dedicated his wealth to make his ownership a success and was often in attendance at games, demonstrating his own love for the club. Up until his assets were frozen by the British government, his ownership was rarely criticised and demonstrated how club ownership can enhance the public’s perception of individuals.
3. For The Love of The Club and Local Investors
Local ownership is perhaps the most endearing and ‘boy-done-good’ sentiment behind owning a football club. This could be the case when an individual has a strong affiliation with a club, is part of their fanbase and community and has succeeded in life to the point where they are fortunate enough to purchase their beloved club. Fans may long for such an ownership as it can be reassuring to know that the owner is not there for profit or other reasons, but solely for the love of the club and a willingness to be a part of its successes.
An example of this is the Lancashire-born-and-bred businessman, Andy Holt, who made his personal fortune from the plastics industry. In 2015, on the verge of declaring bankruptcy and entering administration, Holt purchased Accrington Stanley, his boyhood club, and brought it back into safety. He has been the long-term owner since and has ambitious aspirations for the club’s future. This is a rare and unique example of club ownership but is an idyllic one for the fans and a heartwarming story in the world of football that is otherwise occupied by money-grabbing foreign investors.
The Good Versus The Bad
As I think has already been illustrated in the previous section, the successes, failures and outcomes of club ownership are turbulent and unpredictable. There are many examples of ownership that have failed for a variety of reasons, and others that have been brilliant, both for the club and for the investor or group of shareholders.
You yourself might be a lifelong fan of a club somewhere in the world; if not, place yourself inside the mind of a devoted fan that only wants to see the success of their beloved club. What might you look for in an owner? For football associations around the world, there are different criteria and regulations around who can own a football club. For example, the English FA conducts a Fit and Proper Persons Test which checks the prospective buyer’s criminal records, financial circumstances and any past history of ownership. This is as extensive as their restrictions go and means that many wealthy investors are able to acquire a club. The regulations seem to fail to account for their aptitude and skills that are needed to successfully know how to run a football club in theory and in practice. This is what the fans may look to instead.
A good owner would possess certain characteristics and implement practices that demonstrates to the fanbase that they are interested in improving the club and achieving success rather than any other reason. This would include things such as investment into the academy, the women’s team, the infrastructure such as the stadium and the training ground, the staff, the fans and arguably most importantly, the team and player personnel. All of these are important to improve the club as a whole and will ingratiate the owner with the fans of the club. Other aspects such as transparency and open dialogue with the fans as well as physically attending the games and outwardly showing support for the team are sure ways of improving the public image for an owner.
Failing to do these things will only create a negative reflection of the owner of a club. Buying a football club is a risky investment in itself, it is not helped by an owner who fails to appear hands-on and loses the backing of the fans. As has been seen across the footballing world, in clubs as big as Arsenal or Manchester United, fans will go as far as protesting openly against the ownership and can create a toxic atmosphere in and around the club. In the next section, I will explore an example of this through the Glazers ownership of Manchester United which has become increasingly sour in recent times in an attempt to show the risks of club ownership and where it can all go wrong.
Case study: The Glazers and Manchester United
The Glazer family made their fortune through First Allied Corporation, a commercial real estate company based in the United States and was well-known for handling large premium shopping center spaces. They are worth an estimated $4.7billion by Forbes in 2022. $192million of this wealth was used to purchase the Tampa Bay Buccaneers NFL franchise in 1995, although this investment has paid off as the team is now estimated to be worth over $1.2billion.
Their relevance in this blog, however, begins in 2003 when the Glazers, led by the late Malcolm Glazer, became involved in English Premier League side and global giant, Manchester United. Back then, the family had 3.17% shares in the club which quickly escalated to 75% by May of 2005 before catapulting to 98% ownership around a month later. The final purchase cost of the club was around £800million in total. Many would argue that the Glazers spotted the potential for the globalisation and commercialisation of ‘soccer’, which American Football, and the Buccaneers, did not have to the same extent, and bought the club for financial gain. If this is the case, the Glazers would see their investment as an undoubted success considering the club is now valued at around £4.9billion.
Despite the extraordinary rise in value of Manchester United, there are many fundamental flaws and problems that have been identified by the fanbase of the club and from the broader footballing community. Perhaps the fact that the club was originally purchased using loans and ‘payments-in-kind’ which came with high levels of interest, was a sign of things to come. It plunged a club that was previously debt-free, into a large amount of debt following the takeover. Hence, many objected to the purchase of the club by the Glazers from the start although during the years of success under the managerial stint of Sir Alex Ferguson, these protests gathered little momentum as the fans were enjoying the accolades the club was gathering.
During this time, Malcolm Glazer passed away and the ownership fell to his sons from 2006. By 2012, the sons had listed 10% of the club, which was equivalent to 16.6m shares, on the New York Stock Exchange. This raised some funds that were presumed as part of the efforts to pay off some of the debt the club had amassed. However, the Glazers themselves took almost half of the £150million that was raised and was the beginning of over a decade of failures following the retirement of Sir Alex at the end of the 2012-13 season.
The fans were quick to argue that the previous success was in no part thanks to the ownership of the Glazers, and lay solely with the impressive management of Ferguson and the talent of his players. The ownership and direction of the Glazers has been questioned, particularly due to their recruitment approach and transition processes since Ferguson. Coupled with rising ticket prices and increasing commercialisation as well as a reclusive style of ownership that is drastically disengaged from the fanbase, the fans have regularly participated in protests and the feeling of resentment towards the Glazer ownership is ever on the rise.
During this time, United, who previously sat at the top of the English football tree, have been swiftly surpassed by their local rivals, Manchester City. Whilst the Glazers have invested minimally in the infrastructure of the club and its academy and hadn’t even appointed a director of football until summer of this year, the City owners have put £160million into City’s academy alone, a similar amount to the funds that the Glazers took out of United from selling shares in 2012.
The protests of the fanbase and the outward expressions of disapproval towards the Glazers is a stark reminder and demonstration of the risk and dangers that come with owning a football club. Nevertheless, the family may be satisfied with their investment as the club’s value has risen enormously and means that one day they may receive a profitable payout from their original purchase. However, this begs the question of whether such ownership is healthy for football? Is there a way in which football associations can prevent owners purchasing clubs purely for financial reasons and instead encourage owners to buy into the values and principles of a club, to engage with the fanbase and have a genuine desire to improve the club in all aspects and achieve success?
A solution which may come to fruition in the future in the case of Manchester United is the potential ownership of Sir Jim Ratcliffe, a locally born businessman who has made his fortune through chemical engineering. Ratcliffe already owns Nice in France and Swiss club Laussane Sport, as well as having expressed interest in Chelsea before he was ousted by Boehly and his consortium. Now, as a lifelong United fan, Ratcliffe could become a prospective buyer for United if the Glazers were to succumb to the pressure being placed upon them by the Red Devils’ fanbase. This seems a far more attractive and fitting acquisition than Chelsea in any case for Ratcliffe as a United fan and could be a great opportunity with someone with a genuine care for and affiliation with the club to bring it back to the successes it experienced in the first dozen years of the 21st century.
This lengthy blog has scraped the surface of the complex world of football club ownership. I hope that it provides a level of understanding and intrigue into the diversity of club owners and the challenges and demands they face. It is far from simple and requires a varied scope of knowledge and expertise in order to achieve success with a football club. Some owners may acquire clubs for reasons that may not be appropriate and they are often quickly found out by the fans whilst others can master the skill of engaging with the club and its fans and enduring long-term spells of success as owners of a club that is part of the most popular and exciting sport in the world.