Craig Coben is a former senior investment banker at Bank of America and co-hosts the Fulham FC fans’ podcast Cottage Talk. Constantine Gonticas is a private equity investor and a director of Millwall FC
When new Chelsea FC owner Todd Boehly floated the idea of an All-Star Game in September, he said he hoped that “the Premier League takes a little bit of a lesson from American sports.”
The reaction was as swift as it was derisive. “Does he want to bring the Harlem Globetrotters as well?” asked Liverpool manager Jurgen Klopp. Former Arsenal striker Thierry Henry slammed the idea, while Sky Sports pundit Jamie Carragher, a former Liverpool defender, branded Boehly as “incredibly arrogant.”
As Chelsea had just spent £230mn on players only to sack its Champions League-winning manager early in the season, Boehly seemed to fit the stereotype of Americans abroad who allegedly have no clue about local practices and can’t understand why other countries can’t be just like the good ol’ USA.
An All-Star Game is a far-fetched and impractical idea, but the new crew of American investors in English football have a pretty good idea what they are buying. American ownership isn’t new — the big three of Manchester United, Liverpool and Arsenal have been under American control since the mid-2000s — but interest has stepped up. Bill Foley, owner of NHL club Vegas Golden Knights, has reportedly reached a verbal agreement to buy Bournemouth for £120mn, while American investors Maciek Kaminski and Jeffrey Soros (nephew of famous pound-shorting George) are reportedly in separate discussions to purchase Everton.
Whereas oligarchs and Middle East rulers have bought clubs to project soft power, the Americans have invested to make money. At first, the Americans bought into English teams to capture the low-hanging fruit by professionalising operations. The Glazers, for example, formed a sales team in London to maximise Manchester United sponsorship revenues while John W Henry and Fenway Sports Group overhauled management and marketing after taking over Liverpool.
But if the easy pickings are long gone, the question is why Americans are more keen than ever to buy into English football. There’s no salary cap or draft system like in the NFL or NBA, financial fair-play rules are unevenly enforced, relegation remains an ever-present risk, and dividend payments can incur the wrath of fans. Indeed, some American owners, such as Ellis Short (Sunderland) and Randy Lerner (Aston Villa), have underestimated the challenge and suffered crushing losses as well as the humiliation of relegation.
Unbowed, American investors find English football still a highly appealing investment.
First, they perceive more runway for growth. American investors compare the revenues generated in the NFL with those of the Premier League. The NFL has over twice the turnover of the Premier League, even though the former is a domestic league and the latter has global reach. The new owners believe that there is still significant growth still to come from broadcast rights, merchandising and global tours, and that the Premier League has the potential to overtake the NFL by a big margin.
Second, the Premier League is seen as immune from creative destruction and business obsolescence. Many of its leading names have been prominent for over a century, and although the risk of relegation lingers, the long-term stickiness of fan loyalty gives the type of assurance more commonly associated with an oligopolistic market.
Third, Premier League investors are keen to exploit the opportunities thrown up by multi-club ownership and consequent brand extension, with City Football Group’s progress with clubs in the US and Australia as the model. This model increases the potential for scale sponsorship deals, branding partnerships and the increasingly popular women’s football. The thesis is that this approach will turn club ownership into a franchise, changing the dynamic of negotiations with broadcasters and commercial partners.
Finally, there’s the small matter of currency. Prior to the 2016 Brexit referendum the pound hovered in the $1.50-1.60 range. Today it stands at $1.13, having hit a low of $1.06 in the wake of the UK government’s mini-budget, with a growing current account deficit meaning that the UK will require the “kindness of strangers” to provide capital for some time to come. Now is an ideal time to purchase sterling-denominated assets with global reach, although higher interest rates and weak appetite for sterling debt mean that acquirers will need to stump up more equity. S&P may rate UK sovereign debt as AA, but for asset buyers “Global Britain” is rated BBB — bargain basement Britain.
Thirty years after the Premier League was founded, American investors still find rich pickings in English football. The easy gains are gone, and the risk of losing your shirt and reputation remain as large as ever. Yet the Premier League offers growth, a competitive moat, multiple avenues for new business opportunities, and the chance to buy a prime asset in a weakening currency. English football is the one of the widely acknowledged world-class assets in Britain, and Americans are buying enthusiastically into that concept.