Scrapping Premier League relegation on table after flood of new private equity
Private equity buyers flooding into Premier League and European football are likely to want more of a say over the rules of the game, top lawyers have told City PM, including the potential introduction of ‘closed leagues’ without promotion or relegation.
The value of deals in Europe’s top five leagues – England, France, Germany, Italy and Spain – catapulted from €66.7m (£57m) in 2018 to €4.9bn (£4.2bn) in 2022. Recent deals include the £2.5bn purchase of Chelsea by a private equity consortium led by Todd Boehley, and the purchase of AC Milan by US outfit Redbird for £1.2bn, itself buying from private equity house Elliott Advisors.
The Pitchbook report reveals some 35 per cent of top clubs across Europe have some level of private equity, venture capital or private debt participation either as majority or minority owners, with owners attracted by potential broadcast revenues and the value of the historic brands.
Private equity moves
Tom Smitham, senior associate at Charles Russell Speechlys, said the increased investment from private equity firms could lead to pressure on regulatory and governance systems.
“In the future we would expect to see investors looking to more actively influence the evolution of football regulation (and indeed regulation in other sports) at national, European and international level in areas such as financial fair play structures, potential salary caps, closed leagues and multiple club ownership arrangements,” he said.
“Such regulations have the potential to significantly limit costs associated with running clubs, provide a more secure investment platform and open up further investment opportunities across multiple jurisdictions, all of which will be highly attractive to private equity investors.”
Today’s report states that over a third of Big Five clubs have US-based participation involved and that a deal for Manchester United – valued at $6bn (£5.1bn) – would see the valuation of dealmaking this year surpass €10bn (£8.59bn) for 2023.
Nicolas Moura, the author of the report, told City PM that the Premier League remains the go-to league despite the cost of forcing the door down.
“If you’re a billionaire buying for ego and prestige then I think you’re more likely to go for a Premier League club and pay a premium for [the likes of] Manchester United – but you’re getting move value in a league like France’s Ligue 1,” he said.