InvestUK Academy Course Coordinator Harry Eadie takes us on a whistle-stop tour of Foreign Direct Investment in football
The ownership model of English football clubs was largely unchanged until 1983.
Clubs were predominately owned by English businessmen, yet, when Tottenham Hotspur became the first club to list on the public market, the whole approach changed. By listing on a public market, not only was there the expectation of increased capital investment, but it also facilitated for the increase of foreign investment into the English football structure.
The influx of foreign investment has seen the brand of football expand to almost every corner of the world. As Hunter S Thompson once said, “football fans share a universal language that cuts across many cultures and many personality types”. With this in mind, what impact has foreign direct investment in football had, not only for the sport, but for the wider community, and why is the UK such an appealing prospect to foreign, high net-worth businessmen?
The perception of why football owners have chosen to invest in top football teams in the UK is varied. The Glazers, an American family, billionaire businessmen and owners of several sport “franchises” including Manchester United are widely regarded as motivated purely by money. The family borrowed near to £525m from JP Morgan with an almost unimaginably high interest rate of 16.25% that they have gradually paid back, near wholly off the backs of the club and the fans. Further to this, they floated in 2012, which valued the club at $2.3bn (now $4.2bn), $223m initially went to pay off a small chunk of the club’s debts and the rest went to club’s owners. This was labelled as “a missed opportunity for more equitable ownership of our club” where there would be a fair relationship between club and owners, but from the personal and financial standpoint of the Glazer family, the ownership of a UK “business” has brought financial success seeing a return on their initial investment, yet this is much to the discontent of almost all associated with the club.
Whilst the fundamentals of such investments are to make financial gains, other investments have seen FDI benefit the wider community. In 2003 Roman Abramovich bought Chelsea FC, the club was in a financially vulnerable place and Mr. Abramovich acquired it for a cut price due to the clubs ever growing debt. Of course, the primary parameter of success on the pitch, of which the club has enjoyed plenty since his takeover winning 35 major trophies, yet the injection of foreign investment (estimated at around £1.5bn) has also seen the wider community grow and gain from such capital. In 18 years of ownership, over 500 global programmes have been supported by the club aimed at improving social, racial, humanitarian, and educational issues. In more recent COVID times the club has supported NHS employees with accommodation in the Chelsea hotel with Mr. Abramovich covering all costs, as well as supplying 13,000 meals weekly for key workers. In stark moral contrast to the Glazers, Abramovich’s successful investment into Chelsea was beneficial for both owners and fans with the club growing in value by $3.2bn, and also even those who have had no prior affiliation with the club, creating and developing both local and global connections and opportunities beyond the football scene.
For most, investing into an English football club helps develop and bring more exposure to their ‘brand’. Coverage of the sport and leagues can be found all over the world with billions being spent on television rights and new channels developing consistently, meaning people are invested now more than ever into ‘The Beautiful Game’. In some cases, the brand can also be a royal family or an entire country. In 2008, Sheikh Mansour and Abu Dhabi United Group Investment and Development Limited took over Manchester City. This purchase by an emerging market investor was not only to promote their country but also part of a wider strategy of Abu Dhabi, “the emirate [Abu Dhabi] wants to be a global sports hub, and there’s no better way of fast-tracking that than buying one of the grande dames of English football”. With owners like Abramovich and Sheikh Mansour for whom the side-benefits of investing into the UK are little more than trivial, the future of the preservation of the sport could lie in such systems as 50+1 ownership to the fans, to make sure even well intentioned owners are kept in check.