I don’t really understand the football investment model

Or football corporate finance more generally.

As a business, they don’t seem to have the typical corporate goal of increasing shareholder wealth. Which is why debt is always seen as bad, compared to typical corporates for which it would be negligent not to have debt.

This is a bit of a ramble because it came into my mind, but how many football clubs are set up to generate value for the owners, and how do they actually do that?

I can kinda see it with very big clubs which have huge non football revenue streams like United or Liverpool. Maybe they generate enough cash that they can service shareholder debt and stay competitive on the pitch? Although I doubt it. Perhaps though the have enough cash flow to prop up the value of the shareholders original investment so they get repaid when they sell?

My view was always that football club ownership wasn’t an investment at all, it is just a money pit. Then things like the Ipswich deal pop up, and this has to be an investment, but how do they get the return? Must be by selling at some point, on promotion maybe?

Just a world I don’t understand.

Posted By: SimonOTBC, Jan 22, 17:13:20