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Football investors are not confused by the current market turmoil


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It is set to be a crowded weekend for sports, with European club football returning from the international break, Formula 1 hit the net in Singapore, and Minnesota Vikings line up against New Orleans Saints in London to start NFLinternational series.

Off the pitch, things look equally busy, with a number of new football investments happening in Italy, England, Germany and beyond.

In this week’s Scorecard, we have a double dose of European football, with a look at the recent volatility in currencies and interest rates that could change the outlook for US investors looking their way of pouring their dollars on this side of the Atlantic. We also explore the latest round of negotiations between private equity investors and Bundesligawhich is having a hard time attracting fans outside of Germany and in the help market.

Read on – Josh Noble, sports editor

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Everton: in play © Matthew Childs / Action images via Reuters

What could slow the wave of investment in European football clubs?

Farhad MoshiriAnglo-Iranian owners of Everton, talking advanced for sale the English Premier League American Real Estate Investor Club Maciek Kaminski. Meanwhile, Bloomberg reported this week that Watforda club lower than a division of the top flight, is considering raising equity, while the US investor Bill Foley supposedly hoping to reach an agreement for AFC Bournemouth in the coming days. And it seems every club that is not yet a member of a multi-club group is toying with being one.

What the latest talks show is that investors aren’t just eyeing the biggest global brands, following the £2.5 billion auction Chelsea FC and 1.2 billion euros sold AC Milan This year.

The wave of investor interest in European clubs does not appear to be constrained by the common market and economic strife. In the UK, the pound’s slide against the dollar is adding to the strength of US bidders.

“The weakening of the pound is not the deciding factor, it is another short-term check mark [and] Gordon Saint-Denis, head of sports finance at private credit asset manager Monroe Capital, said it was positive for US buyers in the UK. “Rich people see appreciation in the long run: these teams tend to increase in value, driven primarily by increased media rights.”

However, even as American investors are supported by favorable exchange rates, interest rates – and therefore borrowing costs – are rising. That puts pressure on investors who rely on debt to finance their investments. And there are signs that transactions may be getting more and more complicated to complete.

People familiar with Everton’s process say negotiations have been complicated by recent financial market turmoil in the UK, while Buy back 800 million euros of the Olympique Lyonnais via Crystal Palace co-owner John Textor and Authentic brand founder Jamie Salter was pushed back.

Lyon said it was waiting for confirmation that the existing lenders would continue the financing arrangements upon the change of control. The club expects “all lenders to agree before closing”. Furthermore, Textor and Salter’s Eagle Football Holdings are awaiting “definitive financial documents” for the debt they have agreed to finance the takeover. The deal will be completed on Friday.

Even so, one asset manager with a stake in the sports sector remains upbeat this week. “It’s an attractive asset class,” he said. “We like its direction, it’s less correlated [to other assets such as stocks] and it is resistant to degradation. “

As markets and economies change, investors will soon find out how irrelevant their sports holdings really are.

Germany’s Bundesliga puts private equity back on the agenda

Private capital gets rematch with German football © Sascha Schuermann / AFP via Getty Images

The Bundesliga To be talk to investors again. A year after the clubs voted against a private equity deal that would have raised them around 300 million euros, a much larger idea is being discussed. Now they are talking about creating a media business that will own the television rights both at home and abroad, with a target valuation of up to 18 billion euros – a figure similar to CVC Capital Partners‘dealing with Spain’s La Liga.

Why now? German football is losing the global war on eyeballs. The Premier League and Champions League are in front. And for those who are still not full of football, there is always La Liga.

Can money fix the problem? Those promoting the plans in Germany certainly think so. They want to see more teams hit the road in the summer, more representative offices in new markets, and a direct-to-consumer streaming platform to give everyone instant access to matches. .

But it looks like an uphill battle. English football and Spanish football have one big advantage: language. They have also been promoting their products overseas for many years, giving them a long head start.

Plus, they were able to offer something that German football lacked – an interesting story to tell. Bayern Munich won the last 10 Bundesliga championships. Despite a poor start to the season (they are currently 5th in the table), Bayern are still strong contenders for a place in the 11th list. Spain may lack big clubs, but at least they are. there are a few of them.

The new money could help Germany tackle a lack of competition if smaller clubs ramp up their spending power, but that is an issue that could easily become a sticking point in negotiations.

And if you’re a football fan, such as Cincinnati or Shanghai, how much time and cravings will you have left after having had the excitement of the Premier League, Champions League and La Liga?

This creates another potential sticking point for negotiations. Expansion abroad sounds great – but where? Clubs like Bayern have their eyes on the US, with its huge media market, growing appetite for football, and the pending World Cup in 2026. But English and Spanish football are already huge there. Some investors argue that better opportunities lie elsewhere – in Asia or Africa, where the language factor is less relevant. But it’s a much longer game and potentially harder to sell to clubs.

The Bundesliga is a premium product, which helps explain the level of interest. But it doesn’t look like an open target for investors.

Invitation:

Less than a month left before Business of Sport Summit in New York on October 24. Milwaukee Bucks owner Marc Lasry and Philadelphia 76ers owner Josh Harris will be among those providing their details. As a Scoreboard subscriber, you can claim your free digital card using promo code Premium22 and purchase access to our VIP live discussions and beverage reception . Register your card today.

Highlights

Lars Windhorst: wunder-football © David Swanson / Reuters

  • German financier Lars Windhorst hired a private Israeli intelligence company to organize a covert operation to overthrow the then-president of Hertha Berlin football club, according to a lawsuit reported by FT this week.

  • Sports streaming service DAZN completed its acquisition of smaller rival Eleven Sports this week. We have reported that it is in the works back in july.

  • Allegations of fraud keep sending aftershocks through chess world, after the champion Magnus Carlsen ended a 53-match winning streak with a loss to an American teenager at a tournament in St Louis.

Transfer market

Tim Williams, the former chief financial officer of Inter Milan, has returned to football. This week, he was appointed chief executive officer of Oxford United after working at an investment company Tifosy. English Prize one This week, the faction also announced that two Indonesian investors have taken control of the club. One of them – Erick Thohir – was the owner of Inter between 2013-16.

The end whistle

The National Football League is back, which means that even by the end of Week 3, some of the fan base was looking forward to it. That is the case of Buffalo Bills fans in their Sunday night defeat before Miami Dolphins, in which wide-ball receiver Isiah McKenzie made a tactical error by running down the field with the ball instead of going out of bounds to restart the clock. When the time expired, Bills attack coordinator Ken Dorsey was caught on the broadcast in his own emotional confusion, which he later said he would “learn from the experience.” . Catch (or not) fallout here.

Transcripts were written by Josh Noble, Samuel Agini and Arash Massoudi in London, Sara Germano, James Fontanella-Khan and Anna Nicolaou in New York, with contributions from the Due Diligence newsletter production team, reporter network and data FT’s global visualization team

Electronic money – Scott Chipolina filters out the noise of the global crypto industry. Register here

Unhedged – Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Register here

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