Breakingviews – Soccer giants' new owners may get tiny returns – Reuters.com

LONDON, Dec 30 (Reuters Breakingviews) – Europe’s soccer tycoons are substituting themselves off the pitch. The owners of Manchester United (MANU.N), Liverpool and Paris Saint-Germain will make some decent money by selling all or part of their clubs, though the new buyers might not.
Man United’s controlling Glazer family and Liverpool’s owner Fenway Sports put the storied clubs up for sale in November, while keeping open the option of holding on to a stake. The Financial Times reported that PSG’s Qatari owners wanted to offload 15% of the French champions.
The sellers will probably crystallise a nice return on their investments, judging by Chelsea FC’s valuation in a recent sale. A consortium led by American billionaire Todd Boehly bought the London club for 5.7 times the revenue it generated in the financial year that ended in 2021. Apply that to Man United, Liverpool and PSG, which had similar levels of sales that year according to Deloitte, and they’d be worth almost 3 billion pounds ($3.7 billion) each. That’s a huge uplift from the owners’ takeover prices of 790 million pounds for Man United, 300 million pounds for Liverpool and next to nothing for PSG, though the Qataris subsequently pumped in a lot of money.
The most likely buyers are American billionaires or cash-rich U.S. private equity firms. The dollar’s surge against the pound and euro in recent years means U.S. trophy hunters can, literally, get more bang for their buck. And they might view European soccer clubs as a cheaper alternative to sports franchises back home. Recent deals valued the National Football League’s Denver Broncos and basketball’s Utah Jazz at over 9 times revenue, according to Forbes. Possible Man United, Liverpool and PSG owners might hope that the teams will eventually reach such valuation heights.
It’s hard to see why that would happen. The European media and telecoms groups that bankrolled the sport for years, like Sky and BT (BT.L), seem less willing to pay up. Streaming giants have dipped their toes but are unlikely to come to the rescue: Netflix (NFLX.O) co-Chief Executive Ted Sarandos recently said he can’t see a way to make streaming live sports profitable. The clubs also come with baggage: Man United’s stadium needs renovating; PSG may seek a new one, Bloomberg reported. All three share the ubiquitous problem of rising player salaries and transfer fees, which eat up the bulk of revenue. In other words, the current owners’ possible returns may be as good as it gets.
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(This is a Breakingviews prediction for 2023. To see more of our predictions, click here.)
CONTEXT NEWS
Manchester United said on Nov. 22 that it was considering inviting new investment into the club, potentially including a sale.
Fenway Sports Group would consider new shareholders for Liverpool, having frequently received expressions of interest from third parties, the English Premier League club’s owners said on Nov. 7.
The Financial Times reported on Nov. 28 that Paris Saint-Germain’s Qatari owners were considering selling 15% of the club.
Our Standards: The Thomson Reuters Trust Principles.
Europe’s soccer tycoons are substituting themselves off the pitch. The owners of Manchester United , Liverpool and Paris Saint-Germain will make some decent money by selling all or part of their clubs, though the new buyers might not.
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