The bottom line:
UK football club takeovers have been ever-present in the media over the last couple of years, as the largest clubs and high-profile owners continue to be involved in speculation. This article sets out a framework potential buyers could use to assess whether to, and how much to, bid for a football club – with a complex mix of business and football expertise required to make an informed decision.
Over the past two years, takeovers of UK football clubs have perhaps been more prominent in the media than ever before.
This is undoubtedly partly driven by some of the most well-known UK football clubs becoming available for purchase – and with increasingly large valuations:
- Chelsea FC was sold for a reported initial fee of £2.5bn in May 2022 (with a further £1.75bn committed as investments into the club by the new owners).
- Manchester United FC and Liverpool FC were made available for purchase in November 2022.
- Rumours began to circulate of a bid on Tottenham Hotspur in early 2023.
Then we have the widely reported takeover of Wrexham FC by Ryan Reynolds and Rob McElhenney in February 2021. A takeover that has, at the time of writing, managed to please most of the club’s existing and new fans, initiated a Disney series, and generated an increase of over 900% of followers across social media platforms.
Whatever the motive for a takeover, a process will be followed to decide whether (and how much) to bid for a club. Here, I present a framework for making those decisions.
A framework for making decisions
A potential owner of a football club may use the following framework as the basis for decision-making:
None of these aspects are specialist to the football industry (NB: replace “current playing squad” with managerial team, and “future playing squad” with graduates, apprentices, or new recruits). However, specialist considerations under each item mean effective decisions require a mix of business and football expertise. An assessment of the current and future quality (and value) of the playing squad will require football specialists, and, increasingly, involves use of data analysis to assess player performance.
A purchaser of Manchester United will likely be using a range of tools to get an accurate assessment of the quality and value of the first team squad and younger age groups. The information above is taken from TransferLab, the data scouting tool developed by LCP in partnership with Analytics FC. Assessments of player performance are based on minutes played up to 19 February 2023.
Operational effectiveness will consider aspects such as governance structures, assessment of key staff members, the youth system, and recruitment processes.
Financial performance assessments require business expertise to assess key financial metrics and compare these to peers. Scenario testing can help understand how financial performance may differ in future.
By purchasing a football club, you are purchasing tangible assets (for example, a stadium, training facilities, and offices) and intangible assets (for example, the brand and the expertise of staff) which may include the brand, a stadium, a training complex, player registrations, commercial partnerships and, (negatively viewed takeovers notwithstanding) fan loyalty. Projections can be created for the potential earnings from these assets.
The external environment football clubs are operating in within the UK has seen, and continues to see, significant changes. For example:
- We have already seen Brexit and the introduction of new criteria for signing players from outside of the UK.
- The introduction of new financial fair play rules by the English Premier League and UEFA (the governing body of European football), with a focus on stability, cost control, and maintaining solvency.
- We are expecting a new football regulator to be launched in the UK, with the aim of achieving high standards of governance across UK football.
Other external factors to look at include how appealing the new location is to potential new staff and players, and whether the clubs have competitors in the locality.
Prediction for the future - the rise of the multi-club group
Groups involving multiple football clubs bring synergies that are similar to those seen in other industries. A multi-club group such as the City Football Group (twelve clubs including Manchester City FC in the UK, New York City FC in the US, and Yokohama F. Marinos in Japan) or Red Bull group (four clubs including FC Red Bull Salzburg in Austria, RB Leipzig in Germany and New York Red Bulls in the US) allows for brands to reach a global audience more easily, facilitates information sharing, and creates player development pathways that can operate across multiple clubs with the same ultimate owner.
Building a multi-club group requires consideration of additional factors, such as compatibility of cultures and competition rules. I expect this will become more common over the coming years – and potentially the future owners of Manchester United FC or Liverpool FC will look to develop such a group.