Football’s inherent inefficiency is gradually being addressed through investment and the corporatization of clubs. Historically, clubs like Real Madrid and Bayern Munich exemplified better management through owner oversight, while newer investments from Asia, especially in the past decade, have targeted both club acquisitions and broadcasting rights, indicating a shift in the ownership landscape, particularly in European football. Notably, Italian clubs remain resistant to foreign ownership despite ongoing financial challenges.
Football, known as soccer in North America, is recognized as one of the least efficient sectors in sports and entertainment. Recent investments have initiated gradual corporatization, contrasting with the management style outlined in the 2009 book
Soccernomics. Historically, football’s inefficiency stems from minimal shareholder oversight, with club members having similar rights to shareholders, as seen with Spain’s Real Madrid and FC Barcelona.
German clubs, like Bayern Munich, have created sustainable business models through strict ownership regulations. Early adopters of the business model include Manchester United, which listed on the London Stock Exchange in 1991. Despite securing sponsorship and TV deals under Malcolm Glazer, the club’s debt overshadowed growth, leading to a New York Stock Exchange relisting in 2014 as the world’s most valuable sports franchise.
Investment trends began shifting in the early 2010s, predicting a focus on European clubs. Chelsea FC became a prime example after receiving backing from Russian billionaire Roman Abramovich in 2003, which helped them win their first Premier League title in 50 years. This investment trend spread to Paris Saint-Germain and AS Roma, led by the Qatari sovereign fund and Fenway Sports Group respectively.
Asia has emerged as a significant source of investment in football, driven by a lucrative market for broadcasting rights. MP & Silva, headquartered in Singapore, initially focused on distributing Italian football rights before negotiating deals for the English Premier League across Asia. Their valuation topped $1 billion after significant investments from Chinese groups.
Chinese investments reached beyond club ownership to include international rights. Wanda Group purchased a 68% stake in Infront Sports Media for $1.2 billion in early 2015, reflecting growing Chinese interest in football. Inter Milan was acquired by Indonesian businessman Erick Thohir and later by Chinese company Suning Group, marking a trend of Chinese buyers focusing on clubs with historical ties to industrial regions.
Clubs that fell from top divisions became attractive targets for Asian investors. Examples include RCD Espanyol and Sheffield Wednesday, purchased by Chinese and Thai billionaires. Even smaller clubs, such as Nottingham Forest and Queen’s Park Rangers, were acquired by foreign moguls. Meanwhile, large clubs like Manchester City attracted minority investments, demonstrating a shift in ownership landscapes.
Italian football has been notably conservative regarding foreign ownership, with only Inter, AC Milan, and AS Roma owned by non-Italians. AC Milan, once dominated by Silvio Berlusconi, has seen financial struggles compared to more globalized clubs. This reflects a shift, with AC Milan’s revenue stagnating while competitors like Real Madrid soar, highlighting the impact of global investment on club performance and survival.
Original Source: www.videoageinternational.net
