Big-time sport has long ceased to be a separate industry. Today it is inextricably linked with the entertainment industry, advertising and media sphere. And with the right approach, sports can become a very profitable business.
Profit from the sale of tickets for large-scale events is not at all the main source of income. Merchandise sales, promotions, and sponsorships bring in much more money. Sports betting deserves special mention: every year, more and more people want to bet. For example, sports betting at night on online platforms has grown by 30% in 3 years.
Over the past 10 years, the European football market has been especially popular with the American rich. In England alone, there are 18 clubs headed by persons with American citizenship.
According to the most conservative estimates, 54 European clubs with different ratings are owned by American investors. Given the specifics of business and investment opportunities, most clubs only benefit from this. They get out of debt, get the opportunity to strengthen the team with new players and try out new techniques thanks to legendary coaches.
Yes, investors also benefit from it: combining personal interest and financial capabilities, they achieve results that one can only dream of in their homeland.
The other sides’ opinion
It is clear that not everyone likes this. Fans of clubs in which serious changes are taking place view the current situation extremely negatively. Not every American investor puts a club’s and its fans’ well-being first. A commercial approach to business allows them to improve finances but kills the atmosphere in the stands and within the team.
American business is built on a clear distribution of tasks and maintaining competitiveness. Even bets outside of time management are not made in the USA: everything is strictly on schedule. It cannot be said that these qualities also apply to European businessmen.
Many clubs are not widely known for a great game but have loyal fans who have tirelessly followed their favourites for many years. The administration of the clubs pays for the fans’ travel, tickets for matches and hotel accommodation. Such expenses cannot affect the team’s overall well-being, but money, in this case, is not the most important thing.
English clubs are very careful about long-term traditions and are conservative in their views on doing business. Interestingly, even such serious problems do not deter Americans: today, 18 football clubs are owned by businessmen from the United States.
Another big problem is the different perceptions of what is happening. Americans are the best at building a working scheme to get the maximum profit. There is no place or need for emotions and personal affection: society lives according to the consumer-supplier model.
Europe lives by other laws: many commercial areas have remained at an embryonic stage due to a lack of time, experience and funding. The emotional aspect for Europeans is no less important than making a profit. Therefore, the fans’ fear of losing close friendships with club members is well justified.
The main reasons for cooperation with Europe
Acquiring a control packet of shares in a European club is available not only for multimillionaires but also for middle-class businessmen. American sports are too expensive even for their investors. For example, the status of the owner of one of the clubs participating in the professional league of American football will cost about 3.5 billion dollars and about 2.4 billion for NBA-level teams.
Analysts unanimously argue that the European football market is still open to foreign investment. It is possible to purchase a mid-level football club for a reasonable price. And in the long run, even get a good profit.
- Expansion of the sphere of influence
The 21st century is nicknamed the century of technology for a reason: in 20 years, the world has become completely different. The mobile phone has become not a luxury but a daily necessity. And with the help of the Internet, you can visit a store, visit a city thousands of kilometres away, or spin roulette in a Las Vegas casino.
By virtue of its specificity, the entertainment industry is a kind of innovator, using the latest developments whenever possible. With the modern technologies, it is possible to ensure fans’ comfort without much effort, take cooperation with sponsors to a new level, identify weaknesses and improve performance.
European football is an excellent opportunity for American investors to explore new markets. Global digitalization allows club owners to be in the know even when they are in the other hemisphere.
- The impact of the pandemic on high-performance sports
During the period of self-isolation, the entertainment and tourism industry suffered significant losses. For a long time, matches were held with empty stands, large-scale sporting events were postponed or cancelled altogether, and the bills for the treatment and rehabilitation of athletes exceeded all previous figures.
Some clubs were kept afloat only by savings; others were mired in debt. Against this background, the value of the clubs fell many-fold, which American investors did not fail to take advantage of.
In Italy alone, at the height of the pandemic in 2020, 4 clubs changed owners. And in 2021, 6 more came under the control of American businessmen.
- Making important decisions on your own
Organizing big sports in the USA is somewhat different from the European one. This is also manifested in the distribution of power between the structures. The American leagues, for example, have the final say on financial matters and transfers and scheduling.
In Europe, absolutely everything depends on the owner’s decision, from the amount of prize money to the design of the form. Such tactics leave room for the implementation of any ideas.
The main categories of American investors
- Individual businessmen who already have some experience in financing large projects. For them, acquiring a controlling stake in a football club is a new stage in their career or an opportunity to enter new markets.
- A group of entrepreneurs who share participation in the life of the club according to the number of shares acquired. This option is possible when a single member of the consortium does not have the necessary amount for a sole purchase.
- Investment funds for which the sole purpose of buying a football club is to generate additional profit. They often become owners of a whole network of sports organizations in different countries.