Steps to streamline the finances of soccer teams and the expansion of the U.S. business model open up exciting investment opportunities in the sport
Monday, 4 January 2021 – 02:17
Sport, originally a source of health and fun, has become a great river of money. According to the latest Forbes list, Roger Federer, Cristiano Ronaldo, and Lionel Messi each surpassed $100 million earned … in a single year, 2019. It doesn’t seem like a bad fishing ground to fish.
Luis Garcia Alvarez, manager of Mapfre AM Behavioral Fund, maintains that, although the pandemic has not respected this sector either, “the positive trends that already exist continue and have even accelerated in some cases“, because we have become even more sure” of the importance of sport in our society. “In addition, the pandemic has lowered” prices that already before the crisis were very attractive. ”
The United States has always been ahead in this area, “but this also makes the prices of sports franchises are exaggeratedly higher than those that can be found in Europe“Garcia clarifies.” In our continent, the management professionalization process is in an initial phase, but moving rapidly in the right direction. “If we add to this” the much more attractive valuations of assets “, it is understood that “Many American investors are turning their eyes to the other side of the pond, looking to repeat the success story of the NBA, NFL or MLB franchises in the last decade “.
Here the king, we know, is football. And it seems ready to reign in the markets too. The article “Professional sports: strategic approaches to investment attractiveness formation“published in the academic journal Economic Annals recalls the horrible financial situation of the football industry… until 2011, when the equivalent of European employers, UEFA, said enough. The rules of financial fair play, With exemplary sanctions, they not only “led to a reduction in losses,” but also stimulated “long-term investments in infrastructure and quarry.” Since then, the authors of the article have found that “the most financially stable and successful clubs are those that have chosen the North American style.”
Garcia agrees that “football in Europe has gone from being a sector in which it was impossible to invest to representing one of the greatest opportunities today.” However, “The vast majority of investors remain anchored to old prejudices and they are missing this story of change. “The fund he manages, a European equities fund, invests, for example, in Ajax Amsterdam, Olympique Lyonnais and Borussia Dortmund.
But what about the (recognized) native talent? “Spanish football is ahead of any other in financial health. The monitoring and control systems implemented by LaLiga have achieved that, except this year due to the coronavirus, almost all the Spanish clubs generate profits. Perhaps there is a lack of communication to explain to fans that, since football clubs are already public sports companies, going public would provide liquidity, an important source of financing and, above all, of investment. Greater transparency in management“, explicit Garcia.
Although not everything is football in the fertile way of sport. Garcia’s fund also has “significant positions in the Swedish company MIPS, which has patented a technology for bicycle and motorcycle helmets that protects the brain against possible rotational impacts; in the German multinational Adidas; in the Italian material company (and software) of Technology gym, and in the British chain of low-cost gyms The Gym Group “.
The consultant PwC divided into two large areas the knowledge to hit the sports management pool. On the one hand, the infrastructure: “Stadiums, pavilions and other sports and leisure facilities are capital intensive and a host of key decisions.” On the other, the hiring, which include “ticket office, retail sales and concessions, real estate operations and sponsorship.” But PwC is missing something vital to any movement in this area. Take my case: look at Mon chi, the legendary sports director of Sevilla FC.
* Disclaimer: this journalist acknowledges that his visceral sevillismo may have influenced the writing of this last recommendation.
According to the criteria of
George is Digismak’s reported cum editor with 13 years of experience in Journalism