The article examines the evolving landscape of football economics, emphasizing the inefficiencies inherent in club management and ownership. The corporatization of the sport has led to increased foreign investments, particularly from Asian markets seeking to acquire clubs and broadcasting rights. Key examples include the shifting ownerships of clubs like Manchester United, Chelsea, and Inter, reflecting a trend towards globalized football finance and the decline of traditional local ownership in clubs like AC Milan.
Football, recognized as soccer in North America, is often criticized for its inefficiencies within the sports and entertainment industry. Recent investments have initiated steps towards the corporatization of the sport, moving away from the trial-and-error management described in the 2009 book “Soccernomics,” co-authored by economist Stefan Szymanski and sportswriter Simon Kuper.
The inefficiency of football stems partly from a lack of shareholder oversight over management. Notably, leading Spanish clubs like Real Madrid and FC Barcelona allow fan memberships that grant oversight rights akin to shareholders. German clubs have regulations limiting majority ownership, contributing to Bayern Munich’s successful and sustainable business model since the 1970s.
Manchester United was among the first clubs to view itself as a business, listing on the London Stock Exchange in 1991. After a takeover by Malcolm Glazer in 2005, despite lucrative sponsorships, its debt outpaced growth. The club was relisted on the New York Stock Exchange in 2014 as the most valuable sports franchise.
Early this decade marked a shift in football investment patterns, with European clubs becoming attractive to investors, particularly starting with Chelsea FC’s backing from Russian billionaire Roman Abramovich in 2003. Chelsea’s success culminated in a Champions League win in 2013, breaking the traditional dominance of clubs from England’s Northwest, such as Liverpool and Manchester.
Investment interest soon expanded to Paris and Rome, where funds from the Qatari sovereign wealth fund and Fenway Sports Group were channeled into PSG and AS Roma, respectively. In recent years, Asian investors have increasingly targeted football clubs, capitalizing on football’s lucrative broadcasting rights in the region, exemplified by the Singapore-based MP & Silva.
MP & Silva negotiated essential broadcasting rights for major leagues, including the English Premier League in 2013. Following rapid expansions and a significant valuation recently surpassing $1 billion, Asian investment in football went beyond broadcasting to include club ownership, as seen in the purchase of clubs like Internazionale Milano by Indonesian tycoon Erick Thohir.
Chinese investments became prominent with Suning Group acquiring a majority stake in Inter in 2016, among other acquisitions of European clubs. These buyers, notably Chinese investors, often target clubs with historic ties to regions once thriving on manufacturing, like those in Southern Spain and the Midlands.
Clubs like RCD Espanyol and Nottingham Forest have also seen ownership changes to Asian investors, demonstrating a shift in football investment trends. Meanwhile, established clubs, including Atletico Madrid and Manchester City, have attracted minority investments from Chinese entities, while Italian clubs struggle to maintain local ownership.
AC Milan remains a historical Italian football club under local ownership, though this may soon change due to increasing competition from globally funded clubs. Financial struggles have left AC Milan behind, reflecting broader trends as clubs like Real Madrid have significantly outpaced revenues, highlighting the challenges faced by those relying solely on traditional local support.
Original Source: www.videoageinternational.net
