Private Equity Eyes Up Football For Its Next Stake

While football can never live in the past, it certainly likes to look back there with a great deal of regularity and when you look to the past as far as club chairmen are concerned, it used to be the sight of a local man made good.



A factory owner or sportswear magnate who has decided to pump every penny of their riches into the club they love and although that conjures up a rather nostalgic view of the game, it is one that was the bedrock of the game for many a year.


However, the local entrepreneur has now been superseded by the oligarch as the foreign owner and although they have been derided by the football fraternity, they have been lauded by fans of the clubs that they have purchased.


With the arrival of Roman Abramovich at Chelsea or Sheikh Mansour at Manchester City, there was an obvious step change within the English game and with these two clubs having newfound wealth, their respective rise up the Premier League table was not all that far away.


To the point where these two clubs are now considered the dominant forces within the confines of England and when it comes to the online betting sites, you will only ever find short odds for a potential league or cup victory.


While although they may be at the top, football is always constantly evolving and although some may argue that the way the sport is played has peaked and no more formations or systems can be uncovered, that is not the case when it comes to finance.


Because now it is not just the oligarch or the Arab state which wants to spend its wares, it is the world of private equity and venture capitalists that are eyeing up the beautiful game and wanting a considerable slice of it.


Not only that, but the aim is not to simply by a club in the bid to eventually flip it at a profit, now there is something of a land grab and one that comes with buying stakes in competitions such as LaLiga.


With the Premier League being the gold standard in terms of revenue generation, it is a competition that is undoubtedly envy of the rest of Europe – at least in financial terms, if not because of the prowess of their clubs.


While this envy is one that previously burned away at those who compete within the confines of the Italian and Spanish top tiers and although both leagues are also a part of Europe’s “Big Five” there was something of a chasm between the Premier League and the rest.


A chasm that will get considerably smaller in the next couple of years, as investment has come from private equity companies and when it comes to the likes of CVC, they do not invest to simply be a silent partner.


Because although CVC were foiled in their bid to purchase a 10% stake in Serie A’s media arm, the same could not be said for their attempts at buying a piece of La Liga real estate and at a cost of €2.7bn, it certainly did not come cheap.


Whether CVC pivoted to La Liga after their bid to buy into Serie A failed is something that can be argued and with the Italian top flight looking to put the sale of their media arm back out to tender, there could be a second bid to come.


Although if that is to be the case, then they may need to find some more money behind the back of the sofa, as seven of the 20 Serie A members blocked the bid at the final stage last season and with a majority of 14 needed, it meant that a first round of European expenditure was then blocked.


But at the same time, CVC were only one of seven initial bidders when it comes to Serie A’s media arm and with six other private equity firms sensing the ability to make money from Italian football, the home of the scudetto will not be short of bidders second time around.


While although the bidding war will likely continue in Italy, that is not the case in Spain and with La Liga now being handed a cash bonanza of its own, it will be music to the ears of both Real Madrid and Barcelona, who are in danger of coming fading continental forces.


Not only that, but by handing a sizeable outlay to the other 18 member clubs, it will go some way to levelling up La Liga as a whole and if the competition can be anywhere near as competitive as the Premier League in the next few years, then CVC will likely earn a quick return on their investment.


Image: Sandro Schuh on Unsplash