I. GLOBAL SOCCER INDUSTRY OVERVIEW
Soccer is the most popular sport in the world, with an estimated 4 billion fans globally. Overall, the soccer market is dynamic and highly competitive, driven by passionate fan bases and lucrative commercial opportunities. In this report, we will explore key aspects of the soccer industry, specifically focusing on Europe’s renowned “Big 5” leagues, offering insights into their unparalleled influence and economic significance. Additionally, it’s crucial for the scope of this report to define the Union of European Football Associations (UEFA), one of the six continental bodies under the FIFA umbrella that govern global soccer. UEFA acts as the governing body for the “Big 5” Leagues and comprises fifty-five national association members, including seven outside of Europe, such as Turkey and Israel. Alongside UEFA, these six global confederations host other major soccer leagues worldwide including Major League Soccer (CONCACAF), Saudi Pro League (AFC), Argentine Primera Division (CONMEBOL), Campeonato Brasileiro Serie A (CONMEBOL), Chinese Super League (AFC), and Liga MX (CONCACAF). There have been notable advancements in leagues beyond Europe’s renowned Big 5, exemplified by the North American MLS. Since the arrival of Lionel Messi, widely regarded as one of the greatest players in history, there has been a surge in interest and a substantial increase in club valuations. In forthcoming reports, we will delve deeper into the dynamics of leagues and clubs outside Europe.
Table 1: Top 25 Global Soccer Leagues by 2022E Revenue (€ millions)
II. EUROPE’S “BIG 5” LEAGUES & CLUBS
Soccer leagues around the world vary in terms of popularity and financial strength. Leagues such as the English Premier League, La Liga in Spain, Bundesliga in Germany, Serie A in Italy, and Ligue 1 in France are the most prominent and lucrative leagues globally (known as the “Big 5”). The “Big 5” leagues house clubs like Manchester United, Manchester City, Liverpool, Real Madrid, Barcelona, Bayern Munich, Inter Milan and Juventus which are some of the most valuable and recognizable brands in the sport. Moreover, they attract the world’s top talent, consistently reflected in the FIFA FIFPRO Men’s World Starting 11 awards, where players from these leagues dominate. Since the award’s inception in 2005, no player outside of a major European league has been selected, with only two exceptions, both of which transferred to a team in the “Big 5” Leagues mid-season.
Exhibit 1: Aggregate European (UEFA) Top-Division Club Revenue in 2022
Table 2: Europe’s “Big 5” 2022 Revenue Breakdown
English Premier League: The Premier League is the highest level of the English football league system. Contested by 20 clubs, it operates on a system of promotion and relegation with the English Football League. It is the most financially lucrative soccer league in the world, with the highest total revenue, ticket sales, domestic TV rights and squad costs. The most recognizable clubs are Arsenal, Chelsea, Liverpool, Manchester United, Manchester City and Tottenham. England is also home to six out of the top ten most valuable soccer teams in the world (according to Forbes). Manchester United (MANU: NYSE) is the sole publicly traded club in the league.
Table 3: 2023/2024 English Premier League Clubs
Exhibit 2: Most Valuable English Premier League Teams
Spanish La Liga: La Liga is the top professional division of the Spanish Football League system. The league is ranked second in terms of total revenue, ticket sales, domestic TV revenue but boasts Europe’s largest soccer stadiums. La Liga houses two of the top three most valuable teams in the world, Real Madrid (1st) and FC Barcelona (3rd). Additionally, Real Madrid is the most successful soccer team on the European stage with 14 total champions league titles, far eclipsing the second-place team AC Milan which has 7 titles. There are no publicly traded clubs in La Liga. However, clubs like FC Barcelona and Real Madrid are owned by club members who elect a president to run the operations of the club. Table 4: 2023/2024 Spanish La Liga Clubs
Exhibit 3: Most Valuable Spanish La Liga Clubs
German Bundesliga: The Bundesliga is Germany’s primary football competition. The Bundesliga has 18 teams and operates on a system of promotion/relegation with the 2. Bundesliga. The league is ranked third in terms of total domestic TV and UEFA revenue. It is dominated by Bayern Munich, which has won 32 of 62 domestic German titles. The sole publicly traded Bundesliga team is Borussia Dortmund (BVB: XE). The Bundesliga is known for having the “50+1” rule, which in short means that the members of the club must hold 50% + 1 extra vote to have the majority vote. The fans own the majority of the club and have the ultimate say on how the club is run, eliminating the chance of an outside investor takeover. Table 5: 2023/2024 German Bundesliga Clubs
Exhibit 4: Most Valuable German Bundesliga Clubs
Italian Serie A: Serie A is the top league in the Italian League Football system. The League has 20 teams and as with all other major leagues operates on a system of promotion/relegation with Serie B. Serie A is ranked fourth in terms of overall revenue and domestic TV revenue. Serie A also has the second highest total squad costs and has the third largest stadium in San Siro (Milan). Serie A houses some of Europe’s most successful and recognizable clubs with AC Milan (2nd in Champions League Wins), Inter Milan (7th) and Juventus (10th). Italy’s most storied club, Juventus (36 league titles) is publicly traded under the ticker (JUVE: MI), although it remains majority owned by the Agnelli Family. The Roman club, S.S. Lazio is also publicly traded (SSL: MI).
Table 6: 2023/2024 Italian Serie A Clubs
Exhibit 5: Most Valuable Italian Serie A Clubs
French Ligue 1: Ligue 1 is the top level of soccer in France. Home to 18 teams, it also operates a promotion/demotion structure with Ligue 2. Ligue 1 ranks fifth in total and domestic TV revenue and third in total ticket sales. The league is currently dominated by Paris Saint-Germain, which was purchased by Qatar Sports Investments in 2011. The league’s 4th most successful team Lyon is publicly traded under (OLG: FR).
Table 7: 2023/2024 French Ligue 1 Clubs
Exhibit 6: Most Valuable French Ligue 1 Clubs
III. HOW TEAMS LIKE MANCHESTER UNITED MAKE MONEY
Soccer teams typically generate revenue through a diverse range of avenues, primarily revolving around: 1) broadcasting rights, 2) commercial activities such as sponsorships and merchandise sales, 3) gate revenues, 4) participation in club tournaments and competitions, and 5) player transfers. However, unlike many other sports (mainly the major US professional leagues), the foremost and most renowned clubs have the capacity to amass substantially greater revenues compared to their smaller counterparts, thanks to potent flywheel effects. This dynamic fosters enduring competitive advantages, exerting influence both on and off the field. Furthermore, as previously highlighted, all major European soccer leagues operate under a promotion and relegation system. When teams are demoted from the top-flight to the second-division league, they forfeit substantial earnings from broadcast rights and heightened commercial revenues. This exacerbates the gap between perennial top clubs, which rarely face relegation, and the smaller clubs.
To underscore the commanding presence of Big 5 league teams and their standing as top revenue generators, it is important to note that in 2023, the top-20 clubs by revenue experienced a remarkable 15.7% year-over-year average revenue growth, surpassing the average of 11.7% of all other early-reporting clubs. Noteworthy increases in revenue for 2023 were observed at FC Barcelona (+€176m), Paris Saint Germain (+€137m), AC Milan (+€126m), and SSC Napoli (+€120m). Among the top 20 revenue-generating clubs, nine hailed from England, four from Italy, three from Spain, three from Germany, and one from France, underscoring the exclusivity of the Big 5 leagues.
Furthermore, within this elite cohort, clubs can be categorized into three distinct segments, each defined by a significant +20% revenue leap from one ranking to the next. For instance, the 17th-ranked Newcastle FC recorded €288m in revenue for 2023, while Red Bull Leipzig, securing the 16th spot, boasted €354m (+23% more than Newcastle). A similar pattern emerges between Juventus, ranked 11th with €437m in revenue, and Arsenal in 10th place with €535m (+22% over Juventus). This delineation emphasizes how even clubs within the top 20 are stratified by revenue, showcasing the formidable advantage enjoyed by brands with rich histories and sustained on-field success. The staggering revenue disparity between leaders like Real Madrid, with €841m, and 20th-placed Brighton, with €264m, illustrates the daunting challenge smaller clubs (or even “new-money” clubs) face in closing the financial gap.
Exhibit 7: Europe’s Top 20 Clubs by 2023 Revenue
1) Broadcasting Rights/Revenue: Broadcasting rights are a significant revenue source for soccer leagues and clubs. Television networks, streaming platforms, and online broadcasters bid hefty sums for the rights to broadcast matches. The emergence of digital platforms has reshaped how soccer content is consumed, with platforms like Amazon and DAZN entering the market alongside traditional broadcasters. According to UEFA’s 2023 financial report, on aggregate, Europe’s 700+ top-division clubs reported €8.0bn of TV revenue from domestic football in 2022 – down 4% on 2019 (the last year before the pandemic) and down 0.5% on the average for the 2020 and 2021 seasons (with an average being used because some TV revenue was pushed from 2020 into 2021). Additionally, strong growth has been seen by early-reporting clubs for 2023, with 6% growth YoY in TV revenues. While it is important to note that early reporting clubs are usually ones that performed well that season, UEFA expects a record level of TV revenue for 2023. It is important to note that growth has not been enjoyed by all leagues. For example, in 2022 there were six countries where on average clubs received more than double the TV revenue that they received in 2013 (England, Spain, Germany, Russia, Portugal and Switzerland). On the other side of the coin, in 2022 France and Turkey saw the average club receive less TV revenue than they did in 2013. England’s 20 clubs reported just over €3.0bn of TV revenue in 2022, with both median and average TV revenue standing at around €150m. 18 of the top 20 clubs by TV revenue are English throughout Europe. The only two clubs ranking in the top 20 outside the English Premier League in terms of TV revenue were Real Madrid (10th) and FC Barcelona (15th). Exhibit 8: Big 5 League’s Broadcast Deals
New Broadcasting Deal Notes (2024/2025 Season and Beyond):
– Italy Serie A: A new 5-year deal from the 2024/25 season was agreed with the two incumbent broadcasters (Sky Sports and DAZN) for a total of €4.5B The deal represents a 3% decrease in the guaranteed amount but a revenue share that could potentially lead to an increase. Serie A also adopted a market-by-market approach to selling international rights, so deals are currently under discussion.
– French Ligue 1: New broadcasting terms are still to be determined. The league launched procurement processes in Q4 2023, but have not received sufficient interest for domestic rights. The current long-standing broadcaster Canal+ reportedly has expressed disinterest. Reports continue to circle that DAZN is in pole position to secure the domestic broadcasting rights for the 2024-2029 cycle.
– English Premier League: The league has secured its domestic rights deal for a four-year cycle starting in the 2025/2026 season. The league went with traditional broadcasters and removed the streaming option that was previously in place for the current cycle. The reported value of the deal is 6% per year higher than the current deal (€1.95B per year) and will last a year longer than previous cycles.
– German Bundesliga: Sale of domestic rights for 2025/2026 cycle has stalled due to ongoing discussions regarding ownership of DFL media rights. International rights discussions are ongoing on a market-by-market basis.
2) Commercial Revenue – Merchandise & Sponsorships: Licensed merchandise, encompassing jerseys, apparel, and accessories, stands as a vital revenue stream for clubs. The demand for official merchandise is propelled by an expensive global fan bases, with sales surging notably during major tournaments and events. Moreover, soccer clubs frequently secure sponsorship agreements with a diverse range of corporations, spanning sportswear manufacturers to financial institutions and airlines. These partnerships not only bolster clubs’ revenue streams but also enable sponsors to tap into a worldwide audience. According to UEFA, the top-division European clubs collectively amassed a record €7.8 billion in commercial revenues in 2022, marking a 14% year-over-year increase. Within this category, sponsorship revenues saw an 8% uptick, while other commercial revenues surged by 27%, propelled by the relaxation of stadium use restrictions and enhanced merchandising revenue compared to the COVID pandemic. Early reports for 2023 indicate a continued rapid growth trajectory in commercial revenue, with a 14% year-over-year increase among early-reporting clubs, totaling €5.4 billion in 2023 compared to €4.7 billion in 2022. Notably, commercial revenue for top-flight European clubs now stands 30% higher than pre-pandemic levels witnessed in 2019. Additionally, it’s worth highlighting that while English Premier League clubs led the aggregate commercial revenue list in 2022 with €1.97 billion (Exhibit 9), German clubs topped the list in terms of median commercial revenue generated per club, standing at €39 million per club compared to €36 million per club in England.
Exhibit 9: Aggregate Commercial Revenue by Top 5 Leagues in 2022 (€m)
Top 20 European Clubs by Commercial Revenue: In 2023, sponsorship and commercial revenue for the top 20 clubs surged by 16% year-over-year, once again surpassing the collective growth rate of the cohort. Notably, only three clubs experienced declines in commercial revenue for the year: Fenerbahçe, Inter Milan, and PSG. Meanwhile, merchandising revenue for these elite clubs skyrocketed 31% annually, while sponsorship revenue saw a commendable 14% increase. Commercial revenue outstripped TV revenues from domestic soccer by nearly twofold for the entire top 20 club cohort. However, notable exceptions exist, with Inter Milan and SSC Napoli both surpassing commercial revenue through TV distributions. Conversely, clubs like Ajax, Celtic, Fenerbahçe, and PSG boasted commercial revenues between 5 to 10 times greater than their TV revenue counterparts. Despite disparities in total revenues among the top 20 clubs, the stratification in commercial revenue is even more pronounced. For instance, Atletico Madrid’s €123M in commercial revenue in 2023 exceeded the 15th-placed Ajax’s by approximately 48%. Further highlighting this gap, Juventus recorded €194M in commercial revenue, representing a 45% increase over RB Leipzig, placed 12th on the list.
Exhibit 10: Europe’s Top 20 Clubs by 2023 Commercial Revenue
More on Sponsorships: Soccer clubs frequently forge sponsorship alliances with corporations spanning sportswear manufacturers to financial institutions and airlines. These collaborations not only diversify revenue streams for clubs but also enable sponsors to access a global audience. Among these partnerships, main shirt sponsorships stand out as pivotal agreements between top-tier clubs and companies across various industries, aiming to leverage the exposure garnered by featuring their brands on matchday and replica shirts. Analyzing the main shirt sponsorship landscape reveals retail, professional services, and betting firms as the most prevalent sectors. Betting firms constitute 23% of all main shirt sponsors across Europe’s top divisions in the 2023/24 season, representing a slight uptick from the previous season’s 22% share. As of November 1, 2023, a noteworthy 93% of the 734 top-division clubs had secured a main shirt sponsor for the current season, marking a 3% increase compared to the same period in the preceding season.
Exhibit 11: Top Clubs by Main Shirt Sponsor Deals
Exhibit 12: Top Clubs by Kit Supplier Deals
Source: Football Benchmark
Exhibit 13: Visible Kit Sponsorship
3) Gate Revenue (Season Tickets, Ticket-related Membership Fees, Single Tickets & Matchday Concessions):
In 2023, early-reporting clubs experienced a substantial surge in gate revenues, amounting to over €700 million or a 32% increase compared to the previous year. This significant growth can be attributed to the gradual lifting of pandemic-related restrictions. Notably, a record-breaking 209 million fans attended top-tier league matches across Europe during the 2022/23 season, with an additional 32 million fans attending various cup matches. The data indicates that 84% of early-reporting clubs witnessed an uptick in gate revenues in 2023. Collectively, these clubs amassed €2.6 billion in gate revenue, marking a notable 23% increase from the pre-pandemic figure of €2.1 billion recorded in 2019. England and Germany boast the highest attendance numbers by a significant margin. This is evident in their respective median gate revenues, which reach €25 million and €12 million, surpassing the €5–7 million range observed in France, Italy, and Spain.
Exhibit 14: Gate Receipts of Big 5 Division Clubs (€m)
Top 20 European Clubs by Gate Revenue: In 2023, seven clubs in Europe saw gate revenues over €100M; Barcelona, PSG, Tottenham, Real Madrid, Manchester United, Bayern Munich and Arsenal. The largest absolute gate receipt increases were reported by Spanish and Italian clubs in 2023. Paris Saint-Germain had the highest yield per fan at €140, which can be attributable to the increasing reliance on premium seating and hospitality to drive higher fan yields. Other notable yields per fan in 2023 were Tottenham (€92), Barcelona (€91), Arsenal (€83), and Real Madrid (€83). It is interesting to note that a mainstay in previous top revenue lists, Borussia Dortmund, is not present in this top 20 list and ranks 49th in yield per fan at €26.
Exhibit 15: Europe’s Top 20 Clubs by Gate Revenue
4) UEFA Club Competition Revenue: Top division clubs reported €2.9B of revenue from UEFA competitions (flat YoY). Revenue from these UEFA competitions comes in the form of prize money solidarity distributions. Revenue is derived directly from a club’s on field performance (i.e. competition prize money through subsequent successes) as well as through the results of the team’s country results over a five year period (see UEFA Elo Rankings for more info). UEFA club competitions revenue is set to rise again in 2024 and 2025 (UEFA notes revenue rises with eachthree-year cycle). Clubs with December 2024 Fiscal Year Ends will see impacts from group-stage and qualifying-stage payments under the new 2024-2027 payment cycle, while clubs with June 2024 Fiscal Year Ends will see impacts in 2025 financials. The seven total English teams that participated in UEFA competitions saw €500M in UEFA revenue in 2022, which represented 13% of the clubs’ total revenues on average. Manchester City saw the highest total UEFA revenue in 2022/2023, earning €131M, after winning the UEFA Champions League (the highest achievable UEFA Award). Historically, the most successful UEFA Competition Clubs have been Real Madrid (14 Champions League Wins), Milan (7), Liverpool (6), Bayern Munich (6) and Barcelona (5).
Exhibit 16: Top-Division Clubs’ Revenue from UEFA in 2022
Exhibit 17: UEFA League Payout Structure
5) The Player Transfer Market: Player transfers involve substantial sums of money, particularly for elite players. Transfer fees and player salaries contribute to the financial dynamics of the sport, with clubs competing to sign and retain top talent. According to FIFA, clubs spent a record $9.63B on international transfers in 2023, an increase of nearly 50% compared to 2022. The figure also broke the previous record set in 2019 by more than $2B. English clubs spent the most with a new record high $2.96B. The Saudi Pro League saw the second highest spend by a league with a total outlay of $970M, compared to $50M in 2022, as the league tried to entice top talent like Cristiano Ronaldo and Neymar to spur growth for the sport in the country. With the influx of wealthy new owners into the sport and subsequent war chests for player expenditures, transfer prices increased 116% over the period between 2013-2023.
Clubs’ Transfer Costs & Accounting 101: UEFA defines transfer costs as a combination of amortization charges, impairment charges, non-capitalized transfer costs (mainly loan fees) and any non-capitalized agent fees. The largest part of a club’s transfer costs are amortization charges, which are calculated against the original cost of the transfer with that charge being spread over the contract period. This also means that a club’s transfer costs for a specific year are mainly based on its transfer history over several years, rather than that specific year. For 2022, UEFA saw €6B in total transfer costs across its leagues and expect costs to be stable in 2023 based on early-reporting clubs. In 2022, English clubs recorded a total of €1.8B in transfer costs, followed by Italian Clubs at €1B and Spanish/German Clubs in the €770M range. Thirteen top clubs reported transfer costs of over €100M (five in England, three in Spain, three in Italy, and one in France and Germany). The Big Five leagues also accounted for 82% of all-top division transfer costs in 2022, once again highlighting the muscle that comes with being in the big leagues.
Exhibit 18: UEFA Breakdown of 2022 Transfer Costs (€6B Total)
Clubs’ Transfer Income: Transfer income is defined as net profits on disposal of player registrations and non-capitalized income. Based on early 2023 reporting clubs, 2023 saw a 49% increase in club’s transfer income vs. 2022 which clocked in at €3.8B. Transfer income in 2022. Based on those figures, 2023 saw transfer income of around €5.6B, well ahead of pre-pandemic levels (2019 saw €4.8B). English clubs are once again on the top of this list, having seen €793M in total transfer income in 2022. Italian clubs followed with €614M, while French Clubs finished third with €402M.
Exhibit 19: UEFA Breakdown of 2022 Transfer Income (€3.8B Total)
IV. OWNERSHIP IN EUROPEAN SOCCER
According to UEFA, 51% of European Soccer Clubs are privately owned while 49% are publicly owned. In UEFA’s case, private ownership means that ultimate control over the club rests with one or more private individuals and/or organizations. Publicly owned clubs are controlled by a legal entity such as a public institution or association. Going even deeper, in more than 90% of privately owned cases, the clubs are limited companies (LLC’s or joint stock companies) or owned by private individuals.
Exhibit 20: Breakdown of European Clubs by Ownership Type
Only 3% of European Clubs are Publicly Listed (See Exhibit 27): UEFA notes that over the past 20 years, clubs that were public have tended to delist and go private. Eight clubs over the past twenty years have delisted in the UK, leaving only Manchester United left. Only seven counties have top-division clubs traded on public markets and the trend of delisting should further continue based on the current market environment.
2023 Marked a Slowdown in Top-Division Club Takeovers: The pace of investments in top-division clubs across Europe has slowed significantly when compared to previous years. 2023 saw half the amount of controlling stake investments that was seen in 2022. This decline was more pronounced in Europe’s Big 5 Leagues. Only RCD Mallorca (Spain) changed ownership across the Big 5 Leagues while two relegated teams also changed ownership, Leeds United (England) and Sampdoria (Italy). This compares to five total majority ownership changes in 2022 and seven in 2021.
Exhibit 21: Top-Flight Ownership Takeovers by Year (2020-2H’23)
Private Equity Ownership in Top-Flight Leagues Continues to Rise: The pandemic has triggered significant systemic changes in European club football and the broader sports industry. Among these changes, perhaps the most notable is the rapid evolution of clubs’ ownership structures and the increasing influence of private capital investment. This transformation stems from a distinct blend of factors brought about by the pandemic’s impact on the financial landscape and the consequent need for urgent cash injections to sustain businesses. The pandemic severely impacted the sports industry, leading to estimated global losses surpassing US$50 billion. Soccer experienced an unprecedented external shock due to closed stadiums and disrupted games, causing financial crises for clubs, leagues, and media companies. This crisis coincided with a time when private capital investors held significant funds, and central banks’ monetary policies made affordable debt available, leading to a surge in private capital investment in the sports sector. This investment opportunity emerged because of pandemic-related disruptions, offering growth assets at discounted prices.
In European soccer, the impact of increased private capital investment has been notable, with instances of club takeovers, minority investments, and direct investment in football leagues through specialized investment vehicles. These investors, largely from the United States and comprising private equity funds, high-net-worth individuals, and asset managers, often utilize leveraged transactions involving significant debt. Moreover, many of these investors participate in multi-club investment arrangements, signaling a shift in the structure of ownership within the sport.
As a result, the Big 5 leagues have been subject to increased private capital deals. Currently, 37 out of the 96 clubs across the Big 5 Leagues this season have ties to private capital investors (private equity, credit and hybrid financing included), that equates to 39% of clubs across these leagues. England has the highest prevalence of private credit owners with 13 out of the 20 clubs (65%), followed by France, Spain and Italy. Germany only has one private capital owner as the 50+1 rule previously discussed prevents majority ownership in the clubs.
Exhibit 22: Private Capital Investments in Europe’s Big 5 Leagues
V. SOCCER TEAM VALUATIONS
Valuations Have Surged: Due to the robust business fundamentals and the coveted status of sports franchises as trophy assets, soccer team valuations, particularly within the top five European leagues, have experienced a dramatic surge. For instance, Forbes estimates that Real Madrid of Spain now commands a staggering $6 billion valuation, marking a 19% year-over-year increase and a compounded annual growth rate (CAGR) of 6% from 2013 to 2023. Similarly, clubs like Paris Saint-Germain and Manchester City have witnessed even more robust valuation growth over the past decade, largely fueled by substantial injections of capital from newer owners hailing from the Middle East.
Table 8: Global Soccer Team Valuations 2023 (Forbes)
Recent Majority Stake Soccer M&A (European Leagues)
Below are some examples of noteworthy majority stake purchases in the top European leagues. Sales multiples on the deals have been on average around 4x TTM sales. There also have been many minority stake deals in the space as well. Most notably, Jim Ratcliff purchased a 25% stake in Manchester United at a $6.4B implied enterprise value, representing around a 7.7x TTM sales multiple.
Table 9: Recent Majority Stake Acquisitions in the “Big 5” Leagues
Recent & Speculated Major Sport Transactions
Below are some examples of noteworthy transactions in the overall sports market, which includes deals in the major US leagues such as the NBA, NFL, NHL and MLB.
Table 10: Recent & Speculated Major Sports Transactions
VI. MAJOR INTERNATIONAL COMPETITION CALENDAR
Near Term Catalyst on the Horizon: Events like the FIFA World Cup, UEFA European Football Championship and the Copa America attract global audiences and generate substantial revenues through broadcasting rights, sponsorships, and ticket sales.
The Boston Consulting Group (BCG) forecasts that hosting the 2026 FIFA World Cup in North America could stimulate over $5 billion in short-term economic activity. BCG’s analysis indicates that individual host cities stand to gain between $160 million and $620 million in incremental economic activity. Yon De Luisa, Mexico’s Bid Director, underscores the significance of the United 2026 bid, highlighting its potential to unlock substantial economic and social benefits for host cities and FIFA, thereby fostering long-term stability and advancement in global football. Hosting a unified bid presents an unprecedented opportunity to realize FIFA’s new vision and leverage the economic power of the North American market to enrich the sport. The aspiration of soccer worldwide is to broaden its reach and audience in North America, particularly in the United States, the largest sports market globally. A successful and impactful World Cup in the United States in 2026 could catalyze increased interest in the sport, potentially fueling expanded fan bases and revenues, such as through jersey sales, in Europe’s top leagues, thus driving up valuations.
Exhibit 23: Major Men’s International Soccer Championship Calendar
Additionally, international competitions have always been proving grounds for the world’s biggest stars. Many of these stars then fetch enormous transfer fees post-competition, which could further benefit Europe’s top clubs. For example, after the 2014 World Cup, Colombia’s James Rodriguez was sold to Real Madrid fetching an €80M transfer fee due to his performance during the competition.
Exhibit 24: The “Power” of the FIFA World Cup
Manchester United PLC (MANU – $16.04 – NYSE) MANU Enters the Ratcliff Era
COMPANY OVERVIEW
Manchester United, headquartered in Manchester, England, is a UK-based soccer club that participates in the Premier League, the top league in professional soccer. The company primarily generates its revenue through broadcasting deals, commercial sponsorships, retail commerce, and match day sales. Having won 67 major trophies since its founding in 1878, Manchester United has developed into one of the world’s leading sports and entertainment brands with a global community of 1.1 billion fans and followers. Old Trafford, the flagship stadium where Manchester United has played since 1910, has a capacity of 74,879 people and is owned directly by the team. The company has a dual class structure with 56.6 million Class A shares and 114.3 million Class B shares. The Class B shares are held by the Glazer family and Jim Ratcliff, own 51.1% and 27.69% respectively. The Glazers still have 69% of the total vote.
Investment Thesis: MANU ranks among the top soccer clubs worldwide, renowned for its historic achievements and widespread fan base. The club’s new minority owner Jim Ratcliff, hailing from the club’s hometown, has initiated strategic plans to restore its former glory. We expect that the club’s majority owners, the Glazer Family, to sell the club entirely within the next 2-5 years, whether to Ratcliff or another buyer.
– The Jim Ratcliff Era Begins: In December 2023, Jim Ratcliff acquired a 25% stake in MANU for $1.65 billion, marking the culmination of an extensive strategic evaluation process that attracted interest from potential buyers like MBS. Ratcliff further solidified his commitment by injecting an additional $300 million into the club for the renovation of Old Trafford, thereby increasing his overall ownership to 27.7%. Ratcliff has also assumed full responsibility for the soccer operations at MANU, with ambitious plans to restore the club to its former greatness.
– The Glazer Era Was…Underwhelming: Since the Glazers’ acquisition of MANU in 2005, the club’s once-pervasive dominance in English and European football has waned. Much of the early success attributed to the Glazers could be traced back to the tenure of the legendary manager, Sir Alex Ferguson. During the initial years of Glazer ownership, MANU clinched the Champions League title in the 2007/2008 season and claimed the English Premier League trophy in the 2006/2007, 2007/2008, 2008/2009, 2010/2011, and 2012/2013 seasons, all under Ferguson’s stewardship. However, since Ferguson’s departure after the 2012/2013 season, MANU has only secured two major trophies: the FA Cup in 2015/2016 and the Europa League in 2016/2017. The recent Ratcliff deal marks a pivotal moment for the Glazers, offering them the opportunity to assess whether new leadership can revitalize operations and consequently enhance the club’s value in the foreseeable future. Conversely, should Ratcliff’s efforts falter, the Glazers now possess a potential scapegoat for disgruntled fans.
– MANU is a Safe Asset Play with Increasing Sports Valuations & Probable Future Sale: MANU’s valuation is poised to thrive further, fueled by the growing allure of sports team ownership among high-net-worth individuals, private equity funds, and various investment vehicles. Moreover, the company stands to gain significantly from the escalating investment across the sports landscape, driven by expanding broadcasting rights, lucrative sponsorship deals, and heightened fan engagement. Looking ahead, we anticipate that following the conclusion of the 18- month drag-along period for Ratcliff, the Glazers will explore the possibility of selling the club once more, likely at a higher valuation. Subsequently, either Ratcliff or another prospective buyer will likely assume full ownership of the club. The drag-along clause also states that in order to sell within three years of the Ratcliff minority stake, the Glazers have to fetch and price over $33/share for the common equity, setting the stage for significant upside from these levels.
Juventus Football Club S.P.A. (JUVE – €1.96 – MI) Storia Di Un Grande Amore
COMPANY OVERVIEW
Juventus Football Club S.P.A., headquartered in Turin, Italy, is a professional soccer club that competes in Italy’s top league, Serie A. The club was founded in 1897 and has 70 total major trophies, on both the domestic and international fronts. The club primarily generates its revenue through media rights, sponsorships, product licensing and match operations. The team owns and plays at Allianz Stadium in Turin, which has a capacity of over 41k people and is the sixth largest football stadium in Italy. Juventus is one of two Serie A teams to have ownership over its stadium. The team has been owned by the Agnelli family since 1923 through their ownership of EXOR N.V., which currently owns 247 million shares and 484 million votes, or 78% of the voting power.
Investment Thesis: Juventus, Italy’s premier football institution, embodies both triumph and controversy. Majority-owned by the esteemed Agnelli family, the club commands a vast and passionate global fanbase. However, scandals, such as the Calciopoli debacle of 2006 and the recent Plusvalenza Scandal, have hurt its reputation, leading to the resignation of the entire board in 2022/2023. Nonetheless, we remain optimistic about Juventus’ resurgence, as the club is poised to reclaim its former glory. Additionally, speculation regarding a potential full sale by the Agnelli family is ever present, offering investors a potential tangible catalyst.
– Italy’s Most Valuable Team: Juventus is the eleventh most valuable soccer team in the world according to Forbes. The $2.16B valuation for 2023 calculated by Forbes stands well above the next most valuable team in Italy, AC Milan, which Forbes estimates a $1.4B valuation. As it stands, Juventus and its valuation are in a league of its own in the Italian sphere. Juventus is also Italy’s most recognizable and commercial global teams with the highest brand value and social media following in the league.
– Serie A is Making a Comeback: Italy has secured an additional spot in next season’s Champions’ League group stage, courtesy of UEFA’s mathematical calculation to arrive at UEFA coefficients. This achievement underscores the exceptional performance of Italian teams on the European stage in recent years. Serie A’s attainment of this extra berth not only translates to increased financial gains for Italian clubs but also opens avenues for greater commercial revenue through heightened exposure in the prestigious Champions League tournament. Serie A was seen as the undisputed top league in the world and was even considered the best league era of all time during the late 1980s to the early 2000s. Virtually, anyone who was anyone played in Serie A during that period. After a lull and talent exodus post early 2000s, Serie A is making a comeback also in terms of players and player values.
– Stadium Ownership Adds to Club’s Asset Value: Juventus owns its stadium (Allianz Stadium) in Turin. The stadium opened in 2011 and is the sixth largest soccer stadium in Italy, with over 41,500 seats. Total construction costs for the stadium were €155M. Additionally, Juventus owns its own training grounds, and carries all land and buildings at about €180M on its balance sheet.
– Sale by Agnelli Family a Possibility: The Agnelli family, owners of Juventus since 1923 through EXOR, have faced persistent media speculation about selling the club, most recently in September 2023. Despite their repeated assertions of no intention to sell, the resignation of the entire board, notably Chairman Andrea Agnelli, suggests a potential shift. Nevertheless, we anticipate Juventus’ market value to keep climbing, possibly attracting unsolicited bids from entities eyeing ownership of Italy’s premier club.
Borussia Dortmund (BVB – €4.05 – XE) Champions League Final 6/1
COMPANY OVERVIEW
Borussia Dortmund headquartered in Dortmund, Germany, is, a professional soccer club that competes in Germany’s top league, the Bundesliga. The club was founded in 1909 and has won numerous domestic and international titles including eight Bundesliga titles, six German Supercup titles, and one Champions League title. The firm primarily generates its revenue through media rights distribution, sponsorships and advertising, product licensing and match operations. Borussia plays its matches at Signal Iduna Park, its team owned stadium with a capacity of over 81k people; the venue is the largest stadium by capacity in Bundesliga and the fourth largest in Europe.
Investment Thesis: Borussia Dortmund, Germany’s second most valuable club per Forbes, boasts an estimated worth nearing $2 billion, ranking twelfth globally and second nationally behind Bayern Munich. Known for nurturing top young talents, Dortmund relies heavily on internally developed players for success. Their commitment to player development will be highlighted in the upcoming Champions League Final against Real Madrid on June 1st, with Dortmund’s squad valued at €464M compared to Real Madrid’s €1B. It is a testament to their ability to compete with financial giants through talent cultivation.
– Germany’s “Football Talent Factory”: Dortmund has earned acclaim for its prowess in developing and transferring some of the world’s most promising young talents. The club boasts a notable presence in the list of the top twenty-five most expensive soccer transfers of all time, having sold three players who feature prominently. These include Ousmane Dembélé, transferred to Barcelona in 2017 for €105 million (ranking 11th highest transfer fee ever), Jude Bellingham, acquired by Real Madrid for €103 million in 2023 (13th highest transfer fee ever), and Jadon Sancho, whose move to Manchester United fetched €85 million (24th highest transfer fee ever). Notably, Dortmund’s tally of three top twenty-five transfers surpasses that of any other club in this elite category, with Benfica coming closest with two entries.
– Doing More with Less: Dortmund’s extraordinary success on the European stage stands as a testament to its unparalleled commitment to player development and coaching excellence. Despite not boasting a roster brimming with high-priced superstars, the club consistently exceeds expectations. This season, Dortmund has clinched a spot in the Champions League Finals by defeating Paris Saint-Germain 2-0. It’s worth noting that PSG flaunts a squad valued at €1.02 billion, whereas Dortmund’s squad value stands at €464 million. In comparison, the other semi-finalists, Real Madrid and Bayern Munich, command squad market values of €1.04 billion and €930 million respectively. Dortmund is gearing up to face the epitome of football success, Real Madrid, with their €1 billion team on June 1st in London. Moreover, Dortmund has already secured €15.5M in prize money for reaching the finals and stands to win an additional €4.5M if they emerge victorious.
– World Class Stadium Ownership: Dortmund owns the Signal Iduna Park, a UEFA Four-Star stadium renowned for its size, accommodating up to 81,365 spectators, making it the fourth largest in Europe. This impressive venue has enabled Dortmund to claim the highest average attendance of any club worldwide, with an astonishing 81,302 attendees, followed by Bayern Munich with 75,000. Prior to the 2022/2023 season, the stadium’s capacity for international games, including the Champions League, was limited to 65,829. However, the club later implemented a policy allowing fans to stand during these matches, thereby increasing the capacity and potential revenue to match that of league fixtures, reaching the full 81,365 capacity. Additionally, Dortmund currently carries the stadium and other land at €141M.
– 50+1 Rule Limits Upside, But Ownership of Germany’s #2 Team is Still an Attractive Proposition: While Germany’s 50+1 rule negates any chance for a takeover of the club (unless the rule is repealed), shareholders can continue to benefit from owning a crown jewel asset of German sports, one that continues to outperform on and off the field, with attractive fundamentals and financials.
Alec M. Boccanfuso
914-921-8327
aboccanfuso@gabelli.com
©Gabelli Funds 2024
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