FOOTBALL & INVESTMENT FUNDS
- Lions Football Mag
- Oct 26, 2025
- 4 min read
Since the financial crisis, European professional football has undergone numerous changes in terms of club and league governance. These changes have come about as a result of ongoing financing needs. Investment funds are increasingly interested in acquiring stakes in clubs and football bodies. This major sport is undergoing rapid change, as evidenced by ever-increasing transfer fees, increasingly expensive tickets and many clubs building their own stadiums. The sector is undervalued and is expected to experience strong growth. By investing in professional clubs, hedge funds are seeking to diversify their portfolios and avoid putting all their eggs in one basket. It also allows them to raise their profile on the international stage. However, their primary objective remains to generate returns by reselling their shares at a later date. Like any business, the success of this type of investment depends not only on financial considerations, but also on non-financial strategies.
Different types of funds
There are various types of funds in the football world, such as sovereign wealth funds and private equity funds. Sovereign wealth funds are increasingly present in the sporting arena, with the aim of growing the profits generated by their countries' economic activity. Another aspect of these investments is the ability to expand their soft power: these clubs give them a foothold in Europe, enabling them to do new business while improving their visibility. To raise their profile, clubs are sponsored by subsidiaries of these sovereign wealth funds, such as PSG with Qatar Airways. What's more, this dual role of sponsors and club owners enriches sporting events, which become meeting places for businesspeople, politicians, economic decision-makers and financiers, thereby fostering the development of relationships for long-term business opportunities.
Private equity funds and hedge funds have much more financial objectives. Regardless of the type of activity, they target and invest in sectors that have growth potential. Their investments are part of a diversification strategy aimed at generating capital gains on undervalued clubs and receiving a share of their revenues.
Many reasons to invest in football
The arrival of funds in this sector is essentially a strategy to diversify their assets. A fund primarily seeks investments with an optimal risk/return ratio. With the current health crisis, the global economy is in decline and the uncertainty surrounding investments has further encouraged funds to invest in football clubs. Furthermore, the evolution of football club valuations is only weakly correlated with that of other more traditional assets. Investing in these clubs therefore reduces the overall risk of their portfolio without reducing performance.
Ironically, the vast majority of funds interested in football are American. This phenomenon can be explained by the fact that football clubs in the Big Five (the five largest European leagues: Germany, England, Spain, France and Italy) are undervalued compared to franchises in traditional American sports: basketball, baseball, hockey and American football. Funds across the Atlantic therefore believe they can apply the various management methods that have worked in the US to make a club more attractive and benefit from added value on resale, especially as the appeal of football has grown significantly in recent years. Furthermore, football is an ultra-competitive sport where only the big teams from the Big Five compete in major competitions such as the Champions League.
The fact that so few clubs are selected for these prestigious tournaments creates de facto value for the clubs in question.
By acquiring stakes in football clubs or leagues, investment funds hope to receive a share of the clubs' revenues, whether from television rights, commercial activities or ticket sales. When it comes to ticket sales, the fact that a club owns its stadium is a real asset for an investment fund, as match revenues go directly to the club. Owning a stadium is also an asset in the sense that funds can exploit it to the full and develop the stadium culture, as is done in the United States. Funds can generate revenue through recruitment and training units. Training players with a view to selling them on can generate significant revenue. Each time a player is transferred, his former clubs receive a percentage of the transfer fee known as a ‘training compensation fee’. With the inflation of transfer prices, having a training centre or recruitment unit with an international reach is becoming a major issue for investment funds wishing to acquire a stake in a club. These will enable a better exchange of players. The emergence of cryptocurrency in the world of football also presents a new opportunity. All of this helps to attract new people while generating profit.
Selection criteria
It is important to note that not all clubs are attractive to investment funds. They cannot afford to invest in activities that will cause them to lose money, whether it be a business, a club or a football organisation. The club is therefore managed in the same way as a business.
Accounting periods may show a deficit, but if the financial structure remains viable and the prospects for returns and asset growth are in line with the fund's objectives, they will prepare to enter the market.
Funding is not based solely on financial criteria. Numerous qualitative criteria are also taken into account when selecting clubs. Factors such as the club's reputation are important because this is a highly publicised sector, but other factors are also considered, such as infrastructure, the quality of its training centre, the economic strength of the urban area in which it is located and its debt structure, for example.
Before deciding on an investment, these funds carry out market research and draw up business plans. The football sector is an investment like any other, requiring a great deal of preparation. Investment funds are accountable to their investors/subscribers for their future performance. They cannot therefore act arbitrarily and must follow the business plan drawn up in advance as strictly as possible. Football clubs are therefore businesses in their own right and, like all businesses, they must strive to have a sustainable and sound management model.
Conclusion
Football has evolved over the years, giving rise to new players such as investment funds, but also new competitions. The economic prospects are significant, but the visibility that football can bring to businesses or simply the international reach it offers should also be taken into account.
Comments