From advising on takeovers of historic clubs to providing funding for top leagues, the likes of Goldman Sachs Group Inc and JPMorgan Chase & Co are discovering European football to be a lucrative source of revenue at a time when broader mergers and acquisitions activity is slowing.
The influx reflects the new era of American influence on a game that was traditionally dominated by wealthy Europeans and their close circle of advisers. Whether it’s the sale of English Premier League giant Manchester United Plc, or a new stadium for FC Barcelona in Spain, US banks are first in line.
“Wall Street has arrived as far as football is concerned,” said David Bick, chairman of Square1 Consulting and a long-time adviser on football club takeovers. “The larger investment banks have realised it’s too big an opportunity to miss out on.”
This is a far cry from the earlier years of football’s rise to the richest game in town when a handful of boutiques helped clubs go public, Bick said. Things began to change in the 2000s with the takeovers of Chelsea FC by Russian oligarch Roman Abramovich and Manchester United by the American Glazer family.
The Glazers are now selling Manchester United in what could be the biggest deal involving a professional sports club on record, with a multibillion-dollar bidding war giving banks the chance to earn fees from both M&A advice and financing.
Sheikh Jassim bin Hamad bin Jaber Al Thani, the chairman of Qatar Islamic Bank and son of the country’s former prime minister, is working with Bank of America Corp. on his offer for the club. British billionaire Jim Ratcliffe, meanwhile, is receiving advice from Goldman Sachs bankers Colin Ryan, Elis Jones and Michael Marsh, and others at JPMorgan, for a rival bid. Ratcliffe has already lined up financing from banks including Goldman Sachs.
In the absence of dedicated sports advisory desks, US banks have been pulling from their teams of technology, media, and telecoms bankers to work on football mandates. JPMorgan often turns to Harry Hampson, a TMT specialist, and Gian Piero Sammartano, head of media investment banking in Europe, the Middle East and Africa, for its football deals.
One independent adviser at the heart of the Manchester United sale process is New York-based Raine Group, which is handling things for the Glazers alongside Rothschild & Co Raine, co-founded by ex-Goldman Sachs partner Joseph Ravitch, has become a go-to shop for club owners looking to sell in recent years.
The firm advised Chelsea FC on its 2022 sale to US businessman Todd Boehly and private equity firm Clearlake Capital in a deal valued at £4.25 billion (US$5.1 billion). More recently, it worked on the sale of French Ligue 1 club Olympique Lyonnais to the American multi club owner John Textor.
“With Lyon, they played a multi-party matchmaker role,” Textor said of Raine. “They really make you feel that they only represent you.”
Given its status as one of the biggest names in sport, Manchester United may yet draw other wealthy bidders and consortiums, meaning plenty of potential work for investment banks, both big and small, to fight for.
For their purchase of Chelsea, Boehly and Clearlake engaged Goldman Sachs and Deutsche Bank AG, as well as advisory specialists Moelis & Co and Robey Warshaw LLP. English club AFC Bournemouth appointed the Los Angeles-based boutique Montminy & Co for its £120 million sale to American Bill Foley last year.
Montminy was able to win the Bournemouth mandate thanks to its work advising smaller football clubs in the years before its larger rivals appeared on the scene, according to Les Allan, the firm’s chief operating officer.
“It’s the kind of work the bulge-bracket banks did not previously address as the valuations were below their interest level,” Allan said.
There’s also Liverpool FC, another of England’s most successful clubs, whose US owner Fenway Sports Group Holdings LLC is speaking with potential investors. Fenway has been working with Goldman Sachs and Morgan Stanley, Bloomberg News reported previously.
“A lot of the American banks are getting involved in football deals because of the bidders who are getting involved, many of whom are American billionaires,” said Christina Philippou, principal lecturer in accounting, economics and finance at the University of Portsmouth.
To be sure, even with its huge global appeal, football can be a risky business for those putting up the money. The sport is littered with tales of financial mismanagement in Europe, including at top clubs, and outside investors have struggled before.
A previous wave of Chinese investment ultimately got reversed. England’s Southampton FC and Aston Villa FC, Atletico Madrid in Spain and Italy’s AC Milan have all seen Chinese backers withdraw in recent years.
Beyond deals
For now, though, the size of football deals in the pipeline point to it being another strong year for dealmaking in professional sports. M&A values in the sector hit a record US$18.6 billion in 2022, according to data compiled by Bloomberg, comfortably surpassing the previous all-time high set the year before.
And it’s not just M&A advice.
Outside the cash-rich Premier League, banks have been picking up work helping Europe’s other main football divisions shore up their finances. Already in need of fresh capital to upgrade football infrastructure and mitigate stagnant broadcast revenue, leagues in countries like Italy, Spain and France were particularly badly hit financially by the impact of the Covid-19 crisis.
Since pandemic lockdowns have ended, they’ve been seeking to raise money from outside investors, including private equity firms, through deals often tied to future media rights.
In January, Deutsche Bank, Goldman Sachs and JPMorgan submitted separate proposals to provide debt finance to Italy’s Serie A league. In Spain, Goldman Sachs is helping to arrange funds to revamp Barcelona’s iconic but ailing Camp Nou stadium.
Fan fire
A more extreme attempt to help football clubs in continental Europe bridge the financial chasm with peers in England came in 2021, with a proposal for a breakaway Super League. This crumbled almost overnight as fans and politicians lashed out against it and JPMorgan came in for criticism for bankrolling the plan. The bank later promised to “learn” lessons from the debacle.
It wasn’t the first time JPMorgan had found itself the subject of supporters’ ire. Shortly after it worked on the Glazers’ 2005 leveraged buyout of Manchester United – a deal that saddled the club with massive debts – a group of its bankers was accosted by angry fans at a dinner in Manchester.
While big banks may not understand football fan culture, they’re unlikely to let public opprobrium stand in the way of making money, according to Kieran Maguire, a lecturer in football finance at the University of Liverpool. This may be put to the test before too long with suggestions for a revised Super League already on the table.
“Football is the closest thing to religion in a secular society,” said Kieran Maguire, a lecturer in football finance at the University of Liverpool. “If you upset people who have religious fervour, there is a cost.”