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Sports following the money will change the game in years ahead

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The global sports industry faces a diverse set of challenges over the remainder of this decade. Football follows the money, and as the game finds new deep pockets among the Middle Eastern Gulf states and United States, the structure of the game will continue to evolve. These new power bases in investment, sponsorship, audience growth has started to tilt the regional epicentre of the beautiful game away from Europe. Over the remainder of this decade, Europe’s pre-eminence as home to the top leagues, top players, and largest sources of investment and audiences may finally be challenged.

In the US, the popularity of football continues to rise, ignited by the Major League Soccer (MLS) success in attracting world-class stars (e.g., David Beckham’s move to LA Galaxy in 2007 and Thierry Henry’s transfer to New York Red Bulls in 2010) to play out their late professional years. The bigger source of US influence in elite football is the nation’s affluent audience base and vast corporate sponsorship potential, which acts as a magnet for the game’s decision-makers. Indeed, UEFA president Aleksander Ceferin has indicated that the US could host the Champions League final in the future to capitalise on the sport’s rising popularity in the country.  “Football is extremely popular in the United States these days... Americans are ready to pay for best and nothing for the [sic] less,” Ceferin told the Men in Blazers podcast, reported by Reuters. The US also won the rights to joint-host the 2026 FIFA World Cup, alongside Canada and Mexico. The US’s victory was attributed to a tacit awareness of the “potentially staggering financial revenues that would come with hosting”, reported ESPN. The US also has a vibrant women’s league which opens the door to new audiences to monetize. The US could emerge as a major epicentre for a world-class women’s football, supported by nation’s investment, sponsorship and promotional flare.

The growing presence of US investment in football extends beyond increasing popularity of the MLS. The four of most successful Premier league clubs of the last 20 years are all owned by American billionaires – Manchester United, Liverpool, Arsenal and Chelsea. US investors perceive English Premier League clubs as attractive investment opportunities with potential for significant returns. They are considered valuable assets with substantial global fan bases and revenue streams. Owning a prestigious English football club increases brand exposure and marketing opportunities for US businesses, enhancing their global reach and recognition, while diversifies their business portfolios beyond the US market.

In the Middle East, the Saudi’s football ambitions are arguably even more ambitious, both at home and abroad. The Saudi Pro League (SPL) has brought a far deeper pool of stars to play, including older world-class superstars (e.g., Cristiano Ronaldo to Al-Nassr FC) as well as players still in their prime (e.g., Neymar moved to Al-Hilal SFC and Rúben Neves to Al-Ittihad). The Saudis aspirations are drawing attention and concern among Europe’s elite clubs which are keen to preserve their wealth base, as evidenced by the ill-fated 2021 attempt by around a dozen of Europe’s wealthiest football clubs to form a breakaway “Super League” competition to supersede the Champions League. Clubs including England’s Manchester United, Manchester City, Liverpool, Arsenal, Chelsea and Tottenham Hotspur; Spain’s Real Madrid, Barcelona and Atlético Madrid; and Italy’s Juventus, AC Milan and Inter Milan were all on board. However, plans were thwarted by a fierce backlash from the sport’s governing bodies, fans and politicians. But over time, as more money into European football is sourced externally, and as rival leagues, such as the SPL in Saudi Arabia continue to draw the world’s biggest stars, these new footballing power bases will continue to exert influence on the structure of the game, league and tournaments. Any future re-emergence of an elite club football breakaway league or tournament will likely include considerable Saudi influence, which is also evident on the World Cup arena. The Saudi’s are expected to bid uncontested to host the 2034 FIFA World Cup, accommodated by last-minute rule changes to the bidding process which prompted Australia to withdrew its planned bid. Two young footballing nations in Qatar and Saudi Arabia look to have landed two World Cups despite miniscule track records and infrastructure. Football follows the money, indeed. 

Middle Eastern investment in European football has made huge strides quickly. Since the Abu Dhabi royal family’s majority purchase of Manchester City’s in 2008, the club has won the Premier League and FA Cup six times each. Pars Saint Germain has won the 10 Ligue 1 titles the Qatari government-backed investment fund’s 2011 purchase. Newcastle United fans are still waiting for their taste of football glory, under Saudi Public Investment Fund’s (PIF) majority ownership. Saudi wealth and its own domestic league aspirations has also served to further accelerate footballers’ wage inflation, as new leagues compete for each generation’s elite players.

With the influence of the Middle Eastern money into football, club ownership has evolved from wealth individual owners, billionaires and oligarchs, to private equity investors and sovereign states. Many consider the strategy part of Gulf states’ plan to diversify their countries to be the epicentre of world-class international sport before its sovereign oil wealth runs out. The trail is long and growing. In 2022, Saudi Arabia’s Aramco signed a long-term sponsorship deal with Formula One and PIF launched the LIV Golf Invitational Series, a breakaway golf tournament to rival PGA Tour. Elsewhere, Qatar Sports Investments (QSI) owns the Doha Tennis Championships and the rights to the European Cricket League. In December, the Saudi’s also showcased its ambition to host world-class boxing with a two-day event hosting six heavyweight fights including Anthony Joshua and Deontay Wilder in separate bouts.

At the other end of the spectrum, sports clubs without the glamor of elite football are struggling. Operating costs for lower league football clubs, as well as rugby, cricket and basketball, are all on the increase, which gate receipts in some cases are struggling. Where the audiences are lower, the money is significantly less.

BTG Advisory offers sports clubs an independent options review for clubs facing a financial event. BTG Advisory is a leading adviser to football clubs facing administration, having represented most of the big cases in recent years.  Our works involves defining the financial impacts of various potential adverse scenarios, including heavy financial penalties for regulatory non-compliance (e.g., English Football League’s (EFL) Profitability & Sustainability Rules), points deductions, as well as league relegation. Our team can help prepare clubs to manage their financial obligations, including navigating player contracts, parachute payments, and broader operational costs to help bridge the income gap in the event of relegation.

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