US investment in the top flight on the up

Today at 09:33 AM

With the Trump administration in the US threatening punitive tariffs against UK exports (the US is the UK's biggest single country market at 22 per cent of exports), geopolitics become even more important in top flight football.

The UK government is attempting to facilitate investment into one of the British economy's most successful exports: the Premier League, which broadcasts to 189 of the 193 United Nations member states. In May, the Premier League said 1.87billion people follow the division worldwide and 900million homes globally are able to watch Premier League football. Little wonder, therefore, that North American investors have taken a liking to a product that attracts $450m (£355m) per season for the U.S. media rights alone from NBC.

Only 20 years ago, there were no majority American owners in the Premier League. Now nine of the top flight's 20 teams are majority-owned by U.S. investors: Manchester United, Arsenal, Aston Villa, Liverpool, Chelsea, Fulham, Bournemouth, Crystal Palace and Ipswich Town. Those ownerships include some of the most recognisable, and in some cases, divisive figures in English football — the Glazer family, the Kroenkes, Todd Boehly & Clearlake Capital, and Fenway Sports Group. That number is likely to increase, as Everton are expected to be taken over by the Texas-based Friedkin family.

The search for investors

Several of the non-U.S. owned Premier League clubs are seeking external investment, with merchant bank Rothschild out searching on behalf of Tottenham Hotspur, Brentford and West Ham United, to varying degrees. The U.K. government has also tapped Rothschild, along with the consultancy firm Deloitte, as part of its matchmaking process for British sporting institutions. Introductions were made in partnership with Deloitte for potential U.S. investors seeking to claim control of franchises within The Hundred, the cricket tournament run by the England and Wales Cricket Board. As for the Premier League, those deals may come down the tracks.

In an interview with the Financial Times earlier this year, John W. Henry, principal owner of Fenway Sports Group, said sports ownership has evolved from "mom and pop operations" to "tough, competitive businesses". In the Premier League, U.S. investment has been at the heart of that transition. We can largely boil it down to two forms: family offices and institutional money but, in recent years, as the cheques have become bigger, we increasingly see the two converge.

Shilen Patel, a Florida-based healthcare entrepreneur and the new owner of the Baggies, acknowledged that "dividend might be a bad word" in the lexicon of English football. He added: "The expectation is always if the club is successful to reinvest. And I don't think that that's an unfair expectation. The trade-off is you measure success by value; the more that you can do, the more valuable you can be."

Self-sustaining models

This is a consistent strand among many U.S. investors; whether it be funds such as FSG at Liverpool or family offices like the Kroenkes at Arsenal. These groups have largely pursued self-sustaining models, or what the clubs might describe as a virtuous cycle, where the club's revenue, from growing media rights, untapped sponsorship opportunities, smart player trading and enhanced matchday experiences, can be reinvested to develop the playing squad, win more games and allow for incremental growth. Self-sustaining models are also common in U.S. sport, where the Kroenkes own the NFL's Los Angeles Rams, MLS's Colorado Rapids, the NHL's Colorado Avalanche and the NBA's Denver Nuggets.

Ipswich Town

Given the huge increase in club valuations, it is little wonder all manner of U.S. investors want a slice of the Premier League pie. Take top-flight newcomers Ipswich Town: in April 2021, local businessman Marcus Evans sold the club to Gamechanger 20, a consortium between a pension fund from Arizona and a group of U.S. sports investors. The price was £30million for a club then in the third division of English football. Ipswich secured promotion to the Championship in 2023, after which Bright Path Sports Partners, a private equity firm from Ohio, invested "up to £105million" for roughly 40 per cent of the club, valuing it in excess of £250million. And that was before they were promoted to the Premier League in May.

But for every feel-good story like Ipswich, it is worth remembering some realities. According to numbers compiled by football finance expert Kieran Maguire for the BBC, Premier League clubs lost more than £1billion in the 2022-23 season, while no club had wages at less than 46 per cent of their income and 14 clubs were at over 60 per cent.

Most Premier League clubs are losing money, while fans often demand that their owners spend even more. Top-end Premier League clubs are even more expensive and some may query the level of returns we can expect. This is perhaps even more important now the potential pool of investors is diminishing: Russian oligarchs are for now out of the question, Chinese capital has largely withdrawn from English football and there are only so many sovereign wealth funds with the means and desire to gatecrash the Premier League. All eyes on the U.S. then?

The Premier League also has another advantage; a relatively low entry point for would-be investors. Sportico, for example, value the cheapest NBA team to be the New Orleans Pelicans at $2.72billion and the most expensive to be the Golden State Warriors at $8.28billion. 

Media rights

What U.S. investors are really hoping for is further growth in the Premier League's media rights. The Premier League may be a long way ahead of its soccer rivals, drawing in £3.33billion ($4.21bn) per year in domestic and global media rights, but this is dwarfed by the big American sports — despite the Premier League having a much larger global following. 

U.S. investors are hopeful that greater investment in the Premier League will come from media companies, particularly via direct-to-consumer streaming, where platforms have spent billions acquiring rights to content, but also in integrating means in which clubs can connect directly with its global fanbase and monetise more effectively. There are also thought to be ancillary opportunities linked to sports teams, including stadium development, real estate, retail, technology and food and beverage companies; digging into the idea of sport as entertainment.