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Speaker 1: Stay looks deep.

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Speaker 2: And old Quid.

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Speaker 3: Trivich.

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Speaker 4: Way back in nineteen ninety seven, an Egyptian businessman named

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Speaker 4: Mohammad al faya Ha bought Southwest London's Fulham Football Club.

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Speaker 4: He paid about nine million dollars for it, and that

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Speaker 4: was a big deal because at the time most football

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Speaker 4: clubs across Europe were largely still owned by local business

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Speaker 4: people and in the case of the German league of

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Speaker 4: the Bundesliga, also owned by fans. Now flash forward through

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Speaker 4: the decades to today, and many football clubs, including big

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Speaker 4: winners like the UK's Manchester City and the French club

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Speaker 4: Paris Saint Germain, are owned by foreign investors from the US,

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Speaker 4: China and of course the Gulf States.

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Speaker 5: We've got hedge funds, who've got private equity, We've got billionaires.

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Speaker 6: Owning a football club is kind of cool, right, It's

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Speaker 6: a status, it's a trophy asset.

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Speaker 4: Bloomberg reporters Giles Turner, Annieerna Garcia Perez went looking to

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Speaker 4: find exactly who owns what in one of the world's

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Speaker 4: most popular sports. I'm Weskasova today on the Big Take.

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Speaker 4: Why are so many outsiders paying big money for football clubs?

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Speaker 4: And can they make any money doing it? Giles, why

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Speaker 4: did you decide to do this story? What made you

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Speaker 4: want to look into this?

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Speaker 5: We really wanted to look at this topic in the

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Speaker 5: framework of what type of investors are coming in and

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Speaker 5: buying these football clubs. It seems to be odd for

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Speaker 5: a sport that's so global. The first foreign investor into

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Speaker 5: European football was back in nineteen ninety seven, when when

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Speaker 5: Fulham FC was sold to Muhammad al Fayed. We started

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Speaker 5: to chart first of two thousand and five, which when

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Speaker 5: the Glazer family first port My United all the way

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Speaker 5: to now how the different types of investors have changed

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Speaker 5: in terms of you know, who owns what football club?

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Speaker 5: And this is a time at the beginning when hardly

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Speaker 5: anyone had any ownership in football clubs. And then what

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Speaker 5: we've seen is this steady increase, first for American investors,

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Speaker 5: but also Chinese and for the Middle East. You had

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Speaker 5: rushed at oligarchs, but also different types of investors as well.

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Speaker 5: Now we've got sports groups your home chunks with lots

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Speaker 5: of different types of clubs. We've got hedge funds who've

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Speaker 5: got private equity, We've got billionaires, we've got Gulf states.

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Speaker 5: In the past, you know, it was just sort of

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Speaker 5: your local big businessmen who wanted to own this football

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Speaker 5: club for a bit of local power and a bit

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Speaker 5: of kudos, you know, take his friends to the game

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Speaker 5: every Sunday and show off. And now it's completely changed.

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Speaker 5: It's soft power, it's politics, and it's also about trying

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Speaker 5: to make some money as well, hopefully at the end

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Speaker 5: of it.

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Speaker 4: And the line that really stuck out to me in

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Speaker 4: the story was that in two thousand and five there

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Speaker 4: were no foreign investors in the Italian, German and Spanish

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Speaker 4: leagues and that's certainly not the case anymore.

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Speaker 5: No, and it's changed for each league as well. The

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Speaker 5: UK the Premier League, that's been the one that's had

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Speaker 5: the most foreign investment, and that kind of reflects, I guess,

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Speaker 5: the UK attitude towards foreign investment. And the other end

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Speaker 5: of spectrum, you've got the Bundesliga. You know that that's

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Speaker 5: the German league. They've been really fighting foreign investment. A

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Speaker 5: lot of those clubs are owned and run by essentially

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Speaker 5: fan groups. You have a huge say in how these

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Speaker 5: clubs are run and there's a result they've done, you know,

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Speaker 5: pretty well in fending off any type of investment from

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Speaker 5: US or anywhere else. And as you say, Italy and Spain,

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Speaker 5: they've kind of been a little bit slower, but still

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Speaker 5: some of those big clubs, especially in Italy, such as

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Speaker 5: AC Milan and Intermland, you know, two of them are

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Speaker 5: the most famous Italian clubs, ones owned by US investments.

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Speaker 2: Milan reports that they'll be sold to the American investment

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Speaker 2: firm Edbud Capital Partners for one point two billion euros.

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Speaker 5: One owned by a Chinese conglomberate.

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Speaker 7: Now China's retail giants sooner has An announced it is

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Speaker 7: buying a sixty nine percent of state in the Italian

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Speaker 7: football club inter Milan. The deal is worth two hundred

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Speaker 7: and seventy million euros worth three hundred and six million

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Speaker 7: US dollars.

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Speaker 5: And so even in those leagues have seen a significant

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Speaker 5: change ownership in recent years.

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Speaker 4: How'd you go about trying to find out the ownership

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Speaker 4: of all these clubs? Because it's not always apparent, is it.

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Speaker 5: Let me tell you, it's an incredible pain to do this. Okay,

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Speaker 5: I thought it'd be pretty easy, but trying to find

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Speaker 5: out who owns or used to own, you know, an

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Speaker 5: Italian football club back in two thousand and five. People

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Speaker 5: didn't actually care so much about it back then because

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Speaker 5: it wasn't a topic. The same sort of people, the

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Speaker 5: same sort of local investors, be owning the same football club,

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Speaker 5: passing it down through families for years and years and years.

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Speaker 5: So the results was far more important who was going

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Speaker 5: to play it on the Saturday, more important about who

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Speaker 5: owned it because you probably knew the most important person

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Speaker 5: in your local town, so you knew it wasn't a topic.

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Speaker 5: And also back then, if something did change, it might

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Speaker 5: have been a little stake here and there.

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Speaker 4: You didn't. As Giles says, these investors are coming from

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Speaker 4: all over the world to buy up these clubs. Could

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Speaker 4: you give us an idea of where they're from? Who

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Speaker 4: are the biggest owners of these clubs?

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Speaker 6: As Giles was mentioning, we've seen this evolution where it

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Speaker 6: used to be the local businessman who owned the club,

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Speaker 6: and then later on, maybe twenty years ago, we started

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Speaker 6: to see examples of Richmond, but it was foreign rich

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Speaker 6: men that were starting to come in and buy the clubs.

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Speaker 6: Roman Avaramovich, the Russian Taekoon that had to sell the

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Speaker 6: club last year after he was included in the sanctions

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Speaker 6: list and international sanctions list because of Russia's envision on Ukraine.

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Speaker 1: Roman Abramovich, the owner of Chelsea Football Club, has been

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Speaker 1: sanctioned by the UK. Effectively, for Chelsea Football Club, this

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Speaker 1: is a huge blow. It basically means that it can

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Speaker 1: play players, but it can't engage in the transfer windows,

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Speaker 1: can't buy or sell players. If you're a season ticket holder,

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Speaker 1: you can go to the game, but you can't buy

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Speaker 1: new tickets to go to another game, so season tickets

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Speaker 1: holders can go.

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Speaker 6: He bought Chelsea in the yearly two thousands, so he

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Speaker 6: was one of the first movers in that regard. We

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Speaker 6: saw that pattern repeated in other leagues as well later on,

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Speaker 6: and they were coming from very different places. In Spain

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Speaker 6: we had Hicks, we had Valencia owner for instance, it's

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Speaker 6: a Singaporean businessman, so we had very different backgrounds. But

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Speaker 6: it was this idea of foreign wealthy individual buying into

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Speaker 6: the club. And more recently we started to see investment

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Speaker 6: funds and sovereign funds. In the case of sovereign of

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Speaker 6: course it's the Middle Eastern funds and with Men City

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Speaker 6: and Peri Center, Men being the two most well known

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Speaker 6: examples of Newcastle more recently as well. And yes we're

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Speaker 6: seeing in European football high interests from investment funds on

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Speaker 6: buying at least, if not a whole club, at least

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Speaker 6: a stake in the club.

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Speaker 4: So foreign investors are moving in to buy these teams.

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Speaker 4: Why is that? It used to only be local people

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Speaker 4: who were interested and now we have a lot more interest.

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Speaker 4: Why do they want these teams?

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Speaker 6: The investment regional is different depending on the profile of

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Speaker 6: the investor. Is not the same for a billionaire or

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Speaker 6: a sovereign fund than it is for investment funds. And

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Speaker 6: the reason for that is that, for instance, for billionaires

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Speaker 6: or millionaires or sovereign funds, is more about the soft power.

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Speaker 6: Owning a football club is kind of cool, right, It's

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Speaker 6: a status thing, it's a trophy asset. So it's a

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Speaker 6: mix of that and maybe that you can make as

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Speaker 6: a result of your ownership of that club, because I mean,

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Speaker 6: during the game you are a meeting with other people

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Speaker 6: that come to the game or come close deals with

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Speaker 6: you or talk business. So that's that's a good way

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Speaker 6: in Then for investment funds, that's different because they're in

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Speaker 6: the business of making money. Ideally, and how to make

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Speaker 6: money on football. Well that's still I guess the big

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Speaker 6: question mark and what everyone is trying to figure out.

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Speaker 5: So the reason why people want these teams, I think

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Speaker 5: there's three buckets. It's soft power, it's money, or it's fun.

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Speaker 5: And I think the soft power we've spoken about the

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Speaker 5: Gulf investors for example, you know you've got Manchester City

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Speaker 5: owned by every Debbie, paris Age mountained by Guitar Newcast

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Speaker 5: and by Saudi Arabia. I mean this is all plays

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Speaker 5: in soft power. The North of England is in areas

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Speaker 5: quite deprived. The UK government has made a big effort

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Speaker 5: to try and improve those areas and it's failed. It's

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Speaker 5: much better when you get a foreign invested the company

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Speaker 5: and spend their own money rather than the government's money.

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Speaker 5: And that's what's happened in Manchester and that's certainly what

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Speaker 5: probably will happen in Newcastle after the break.

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Speaker 4: How do fans feel about outsiders buying their favorite teams? Giles?

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Speaker 4: When you talk about soft power, what is it that

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Speaker 4: these Arab states can get out of this investment.

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Speaker 5: They get a lot of I think political kudos and

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Speaker 5: also appreciation for what they're doing. Most of the times

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Speaker 5: when we write about them, and you saw that with

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Speaker 5: the Qatar World Cup, they've got a lot of criticism

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Speaker 5: for the human rights record and a lot of the

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Speaker 5: focus wasn't on the football, it was on how we

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Speaker 5: see those countries being run by the people in power.

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Speaker 2: Iry T twenty two World Cup has kicked off in Kata.

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Speaker 2: A lavish opening ceremony was followed by the opening match

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Speaker 2: between the hosts and Ecuador. It's the culmination of a

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Speaker 2: twelve year build up. There's been marred by controversy over

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Speaker 2: the initial bid, human rights concerns and the environmental impact.

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Speaker 5: If you own some of the world's biggest and best

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Speaker 5: known football clubs, you're moving that conversation away from your

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Speaker 5: humans rights record into first of all, simply how good

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Speaker 5: is that club doing? But also what Abi Dabi has

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Speaker 5: done through the City Football Group in Manchester, spending a

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Speaker 5: lot of money on the local community, redeveloping large areas

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Speaker 5: of the city when the local UK authorities and government

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Speaker 5: simply didn't want to do that and claim they didn't

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Speaker 5: have the money to do that.

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Speaker 3: For examples, in that area of East Manchester, as you

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Speaker 3: well know, was basically derelic before the purchase here by

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Speaker 3: the Abbadabi United Football Group now belonging to a city

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Speaker 3: football group. We're looking at six thousand homes being built

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Speaker 3: at one point three billion dollars of investment.

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Speaker 5: And that kind of buys them a lot of goodwill.

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Speaker 5: The other reason, obviously, is fun, and there's plenty of

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Speaker 5: very richep who like earning sports teams. You get in

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Speaker 5: the US, you get it anywhere.

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Speaker 6: Really.

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Speaker 4: We've also seen investment from China in football clubs. Is

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Speaker 4: that also an example of soft power?

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Speaker 5: I think it's quite different from the golf investments. China

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Speaker 5: was far more chaotic in how it invested in football teams.

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Speaker 5: Part of it was soft power, and part of it

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Speaker 5: was simply the volume of money China was making it

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Speaker 5: a time, but also tried to make its ownly really

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Speaker 5: successful as well by luring foreign players over This is

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Speaker 5: the men's league, and it failed miserably in that attempt

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Speaker 5: as well.

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Speaker 6: In the case of the Chinese, there was a time

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Speaker 6: when they as Gels, was saying they had a lot

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Speaker 6: of money, so they went on a buying spree of

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Speaker 6: foreign assets, and sometimes it was very far from what

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Speaker 6: the core business the company was, and football was no exception.

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Speaker 6: Into this, and for instance, we had examples of Chinese

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Speaker 6: conglomerates that we're buying takes in football clubs in Spain

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Speaker 6: or also in Italy, and then they failed to invest

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Speaker 6: in the clubs after buying the stakes or taking control

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Speaker 6: of the clubs.

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Speaker 4: Didna Giles has mentioned the fans kind of being angry

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Speaker 4: mostly over a team that isn't performing well. But how

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Speaker 4: do fans feel in general about their local team being

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Speaker 4: owned by people from another country.

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Speaker 6: Well, actually, I think it depends on how well the

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Speaker 6: team is performing. If the team is doing well, having

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Speaker 6: all of a sudden someone else coming in and taking

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Speaker 6: it over, it can face backlash. For instance, in Sevilla,

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Speaker 6: a US fund called seven seven seven Partners bought a

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Speaker 6: stake and tried to team up with other local investors

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Speaker 6: and have control in the board, and a lot of

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Speaker 6: the fans pushed.

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Speaker 4: Back answer, that's football fans chanting. Sevilla is not for sale.

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Speaker 6: And part of the reason for that is because the

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Speaker 6: club was doing well at it's in European competition, so

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Speaker 6: they didn't want foreign investors to take control of their

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Speaker 6: much love club. But then in other cases, if the

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Speaker 6: club is desperate because cron owner is not investing money,

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Speaker 6: or it has been in place for some time and

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Speaker 6: it's not able to say promote the club or do

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Speaker 6: changes that bring some joy to the fans. Eventually, the

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Speaker 6: Coron owners face this opposition from fans, and they tend

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Speaker 6: to welcome fans. Tend to welcome someone who may come

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Speaker 6: over and invest in the club because at least they

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Speaker 6: see it there's a chance to win something or do better. Yeah.

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Speaker 5: I mean a bit controversial this tape, baby, but the

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Speaker 5: fans don't really matter, and it rens right as long

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Speaker 5: as you as long as you win, obviously the fans

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Speaker 5: love you. But even if you lose, I don't think

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Speaker 5: these owners either realize or particularly care. They're not going

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Speaker 5: to say that publicly, right, But let's take the Glazers again.

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Speaker 5: When they arrived when they bought Manchester nineteen two thousand

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Speaker 5: and five, I mean there were riots in Manchester. They

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Speaker 5: went to see the club, expected to be congratulated, and

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Speaker 5: I think they had to escape out of some sort

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Speaker 5: of back room because then the police turned up, because

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Speaker 5: you know, if things got so terrifying for them. Twenty

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Speaker 5: years later, they're trying to sell the club, but there's

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Speaker 5: a big possibility they might decide to carry on owning

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Speaker 5: the club with a separate investor because two of the

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Speaker 5: family members still love the club and they love coming

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Speaker 5: over to watching matches, and they have weekly briefings understand

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Speaker 5: from the club itself about the tiniest marketing metrics. They've

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Speaker 5: got no idea there's regular protests about them, or if

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Speaker 5: they do, they just don't care because they don't read

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Speaker 5: the press that we read owning a club and owning

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Speaker 5: something incredibly powerful.

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Speaker 4: The Germans seem to be doing things in a different

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Speaker 4: way with the Bundesliga. Can you describe how that works?

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Speaker 5: So how that Bundesliga works is that you've got something

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Speaker 5: called a fifty plus one rule. What that really means

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Speaker 5: is that a outside investor can't own a majority of

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Speaker 5: the club, or are the most they can own it's

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Speaker 5: forty nine, okay. So a lot of these clubs in

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Speaker 5: Germany are actually just local sporting clubs, right, Just as much

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Speaker 5: as you go down downtown and you've got an area

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Speaker 5: that has your squash club, your football club, and your

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Speaker 5: tennis club, it just so happens that the football club

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Speaker 5: is a huge organization that tens of thousands of people

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Speaker 5: go what weekend and to keep that what they've done

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Speaker 5: is they've made sure that the local fans have a

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Speaker 5: say via the directors into how the club is to run,

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Speaker 5: and they're never going to be influenced by a large

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Speaker 5: outside investor coming in a whole lot. There are, obviously,

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Speaker 5: with all these things, exception to the rule, but as

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Speaker 5: a whole that's how the Bunniestig goes run and that's

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Speaker 5: how it's managed to keep up foreign investment.

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Speaker 4: When we come back, is a football club a good

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Speaker 4: financial investment? We've been talking about how a company or

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Speaker 4: a sovereign fund would want to buy one of these

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Speaker 4: football clubs as an investment, but do they make money?

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Speaker 4: Is this a good place to invest your money?

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Speaker 6: That's the question that everyone asks themselves before getting into clubs.

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Speaker 6: There are ways actually to make money investing in football,

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Speaker 6: but owning a club is not necessarily one of them,

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Speaker 6: or the most obvious one. But instead, for instance, giving

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Speaker 6: money to the clubs in exchange of revenues on the

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Speaker 6: broadcasting rights Sixth Street has done with for instance Barcelona.

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Speaker 6: That's a way to make money, or buying a stake

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Speaker 6: on the revenues of again the broadcasting revenues of a league,

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Speaker 6: like CBC has done with Spain and Friends, that seems

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Speaker 6: another way that will probably play out well. Owly, a

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Speaker 6: club is not particularly an easy way to make money

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Speaker 6: because it's not about buying the club. It's then about

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Speaker 6: investing to perform in the pitch, and again that depends

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Speaker 6: on the club that you're buying. If you're buying it

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Speaker 6: in the second division, then maybe there's this play of

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Speaker 6: investing so that it gets promoted and then selling it

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Speaker 6: off to someone else willing to buy it. But when

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Speaker 6: you're buying a club that it's in decent shape, it's

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Speaker 6: a very expensive investment because, of course the expectation is

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Speaker 6: that it's going to play European competition, not only play,

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Speaker 6: but like do well enough to get at least to

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Speaker 6: the semi finals ideally of course even better if it wins.

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Speaker 6: But essentially it's a very very difficult investment. That's why

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Speaker 6: a lot of funds what they're trying instead of buying

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Speaker 6: just one club is buying small sticks in multiple clubs

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Speaker 6: and create like a network of clubs so that the

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Speaker 6: economics of that please better for them as an investment.

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Speaker 5: I think it runs totally right, like football is not

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Speaker 5: a lucrative investment, and I think that's the mistake investors

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Speaker 5: outside the year and make when they try and make

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Speaker 5: money out of football teams. In the US, teams are

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Speaker 5: mostly the media assets, right. You've got fixed and very

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Speaker 5: lucrative broadcasting income, You've got real estate, and you've got

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Speaker 5: brand value. I mean, they're so fixed that you can

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Speaker 5: move a team from one city to the other and

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Speaker 5: you can still make money from day one after you

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Speaker 5: move in, which is insane. That doesn't happen in football

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Speaker 5: and Europe. And I think the mistake people make when

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Speaker 5: they come and invest is that these football clubs are

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Speaker 5: not media assets, even though most of the income comes

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Speaker 5: from broadcasting rights are and said, a lot of the

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Speaker 5: money comes from just doing one in a tournament after

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Speaker 5: you've done well the previous year your local league, and

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Speaker 5: the time difference is huge. Your players could get injured,

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Speaker 5: who knows what could happen to your rivals. They could improve,

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Speaker 5: you might end up struggling with relegation, which obviously isn't

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Speaker 5: an issue in the US. And I think that's why

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Speaker 5: they're inside. The clever investors are trying to buy stakes

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Speaker 5: in the actual broadcasting rights of European football leagues rather

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Speaker 5: than the teams themselves. And we've seen certain investors who

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Speaker 5: used to think about buying teams now terrified it doing

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Speaker 5: that and only fixated on trying to get these TV

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Speaker 5: rights because that's what their rule money is.

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Speaker 4: So where do you see this going. You've tracked all

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Speaker 4: these teams, You've seen how foreign owners are coming in

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Speaker 4: and then selling. Do you think that this trend will

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Speaker 4: continue and that we're going to see more and more

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Speaker 4: foreign ownership of football clubs?

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Speaker 6: I mean, as long as they believe that someone else

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Speaker 6: will come and buy after they hold it, Yes, and

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Speaker 6: ideally at a higher valuation. Yes. But there are a

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Speaker 6: few things that could change how things are working. One

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Speaker 6: of them is if the leagues or gets more serious

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Speaker 6: about the way sovereing funds in particular invest in these clubs.

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Speaker 6: They have more capacity to sign players because they have

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Speaker 6: more revenue from sponsorship, but the sponsorship is coming from

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Speaker 6: another company own also by the fund, so there are

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Speaker 6: question marks around whether that's fair competition. There are also

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Speaker 6: question marks around whether leagues and UF are going to

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Speaker 6: get tougher in terms of what kind of network you

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Speaker 6: can own, because it's very clear that you cannot have

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Speaker 6: stakes in two clubs playing in the same league. But

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Speaker 6: then it's a bit more blurred lines whether you can

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Speaker 6: have two teams or sticks in two teams if they

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Speaker 6: are minority. Sticks in two teams, say playing European competition,

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Speaker 6: because there's a chance if we against each other. The

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Speaker 6: concept of multiplabs itself even if your teams are not

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Speaker 6: going to play against each other. Because of the implications

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Speaker 6: they have on the transfer of players. It's starting to

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Speaker 6: raise some questions among some of the of the leagues.

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Speaker 6: If they become tougher in that space, there's a chance

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Speaker 6: it becomes less attractive for specific bucket of investors.

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Speaker 5: The problem is that investors only remember the winners. Only

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Speaker 5: many people remember Ellis Short, who was a US private

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Speaker 5: equity investor and he was one of the first way

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Speaker 5: into UK football. And he bought Sunderland, which is this

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Speaker 5: pretty small town and he brought that in late two

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Speaker 5: thousand and eight and he spent two hundred million pounds

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Speaker 5: on the club and it got relegated twice and then

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Speaker 5: he sold it for fifty million. Right, it's not a

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Speaker 5: great investment, and he admits that. But you only remember

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Speaker 5: the people who made millions in the Glazers. They made

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Speaker 5: millions from Manchester United. If they do sell it with

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Speaker 5: the value they think it's worth, it could be worth

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Speaker 5: more than the Denver Broncos. But also makes a good

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Speaker 5: point about regulation European rate. You know, your football regulators

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Speaker 5: are stuck because they want to keep European competitions as

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Speaker 5: these flagship competitions that everyone wants to buy media rights

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Speaker 5: to and everyone wants to come and watch. But at

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Speaker 5: the same time, if it's just a race of whoever

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Speaker 5: has the most of money, eventually you get a point

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Speaker 5: which has Manchester City seem to have worked out that

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Speaker 5: if you finally get it right and how you spend

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Speaker 5: this money, you can start create a footballing dynasty, much

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Speaker 5: like Manchester United did twenty years ago. And that doesn't

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Speaker 5: help the European authorities sell football as this sort of

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Speaker 5: meritocratic anyone can win type of competition.

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Speaker 4: Giles it Ene, thanks so much for coming on the show.

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Speaker 4: Thank you, Thanks for listening to us here at the

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Speaker 4: Big Take. It's a daily podcast from Bloomberg and iHeartRadio.

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Speaker 4: or wherever you listen and we'd love to hear from you.

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Speaker 4: Email us questions or comments at Big Take at bloomberg

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Speaker 4: dot net. The supervising producer of the Big Take is

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00:23:10,359 --> 00:23:14,720
Speaker 4: Vicky Bergalina. Our senior producer is Katherine Fink. Frederica Romanello

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Speaker 4: is our producer. Our associate producer is Zenobsidiki. Gild Garcia

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Speaker 4: is our engineer. Our original music was composed by Leo Sidrin.

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Speaker 4: I'm West Kasova. We'll be back tomorrow with another Big

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Speaker 4: Take