A Guide To Financing Football Clubs: Part 2 – Equity Finance & Ownership Models

This article series explores investment and finance in football.  It is split into three parts, which examine in turn: (1) debt finance, (2) equity finance and ownership structures, and (3) financing trends resulting from Covid-19. 

Part 2, below, focuses on equity finance, and will examine:

• Various forms of club buy outs including:
  • Leveraged Buy-Outs
  • Unleveraged (Or Cash) Buyout – Majority Investment
  • Unleveraged (or cash) buyout – minority investment
• League Equity Investments
• Multi-club ownership
• Raising Finance From The General Public

Links to the other parts of this series can be found here: 

Part 1 - Debt Finance;

Part 3 – Financing Trends And Expectations.

Where an investor is looking to gain operational control of a club (or other type of entity, such as a league, as discussed below), they will take an equity stake i.e. purchase equity shareholding of the corporate entity owning the club. The motivations for investors, and the drivers of PE interest in the sports sector generally, has been covered elsewhere (for more detailed information on private equity financing at a league level, see “How Would A Private Equity Firm Invest In The English Football League?”[1] by Sam Georgevic and for a more general consideration of commercial and legal drivers for private equity interest in the sports sector, see “Why long term private equity capital in sport is a potential game changer”[2] by Peter Hanton and Greg Scott). In summary, the authors would suggest that the principal driver is value – in particular, how to increase a football club’s valuation to the benefit of the club, its stakeholders, fans and the PE investors (on exit) alike.

For the purpose of this article, we split private equity investment in football into two broad forms:

1. a club buyout, where generally an investor assumes full control of a club; or
2. the burgeoning strategy of a minority investment in a football group or league.

Using the examples of:

• Manchester United/Glazer family
• Burnley/ALK Capital
• Liverpool
• Girondins Bordeaux/King Street
• The “Moneyball” approach
• City Football Group/Silver Lake
• FSG/RedBird