European football often resembles American professional leagues and creates a commercial spectacle ripe for exploitation by that model. Has European football, especially its national team sector, entered the Wall Street phase of its r/evolution?
Mr. Dollar is making an unstoppable advance on the Old Continent. In its five most prestigious leagues, American investors control 24 clubs, 10 of which are in England and 8 in Italy.
I know the next sentence will make many people’s hair stand on end: This is a great compliment to European football!
After the withdrawal of Russian capital – which, let’s not forget, gave a big boost to the development of football, not just through Roman’s Chelsea but in a much broader context and numerous social projects – three investment motives for investing in European football remain.
The first can be called the monarchist one. Although some, seeing the heirs from the Arab world in the VIP boxes of the largest stadiums, may think they are there out of a hobby and that the clubs are expensive toys in their hands, it’s actually about something much deeper. Being the main person, for example, at the “Emirates” means being under the light of global visibility and recognition. And as much as it may seem like a personal affinity – it is a state project. That is, the goal is to achieve long-term political and strategic objectives through football.
The second business model is the Chinese one. This involves the desire for a quick capital turnover. Buy expensive – sell even more expensive. That’s the motto. And it carries a lot of risks because the curse of results plays its role, and some Chinese investors have not even managed to recoup their invested money.
The American approach is the most transparent: low acquisition costs compared to franchises and significant potential for revenue growth. European football is attractive to these investors, as noted by Football Benchmark, because it often resembles American professional leagues and creates a commercial spectacle ripe for exploitation through the development of marketing strategies and the global reach of the sport.
Malcolm Glazer, to be clear, is not a representative of the American “conquest” of Europe despite various financial tricks from nearly two decades ago when he took over Manchester United. However, one of his financial reports directed the gaze of American major capital owners toward Columbus’s continent. “Forbes” reported in April 2012 that most North American franchises had increased in value, but none had reached the “Red Devils” as kings of the field—an increase of 20% brought them to $2.2 billion. More than any other sports franchise in the world, including the New York Yankees (MLB) and Dallas Cowboys (NFL).
When dissecting the capital gain of the Glazers, two things need to be highlighted: Fans and Results. Manchester United’s fan base at that time numbered 330 million people. And secondly, Alex Ferguson’s squad won the Premier League that season. In fairness, it should be said that the American dollar was experiencing a sharp decline against the British pound at the time, so currency fluctuation significantly raised United’s value in dollars. But isn’t capital the reward for risk?
What to do now? Massively putting European clubs up for corporate takeover due to the irresistible call of the Dollar would, in most cases, be a counterproductive move. Football is a much tougher “nut” and the notion of money spinning doesn’t apply here. The German model, in which fan associations hold 50%+1, controlling votes on key club decisions, will be a refuge of hope for many. The development of certain cities and regions, football culture and tradition, and the sentimental loyalty of fans must not be overlooked. Those in blazers from Wall Street can wait!
By: Zoran Avramović
