American companies and entrepreneurs are increasingly investing in soccer in the U.S, and abroad, although the industry has not been immune to the economic effects of the current pandemic. On the most recent episode of "SBJ Unpacks: The Road Ahead," our Andrew Levin and O’Melveny & Myers LLP Sports Industry Group co-Chairs Chuck Baker and Irwin Raij discuss the recent rise in pro soccer ownership deals in the U.S. and abroad and how the pandemic has and will impact deal making.
On the value proposition of investing in soccer teams around the world:
Baker: Soccer is still the most popular global sport out there and if nothing else, this virus has demonstrated that there is still such a thirst for the communal aspect of sports, live sports in particular. Soccer’s been on a growth trajectory for many years, valuations around soccer fueled really by the media deals in the last decade or two decades.
On the value of soccer in North America versus Europe:
Raij: When I think about soccer, even just going back a couple years ago, there was a low cost of entry for owning a Major League sports franchise in the United States with a tremendously passionate fan base behind it with excitement and potential growth. Now, those valuations are going up and you’re seeing expansion franchises breaking the $300 million mark and everything else. It becomes a very interesting comparison between the U.S. and international opportunities for team acquisitions and when you look at it, there are similarities and yet they’re different models. In the U.S., we don’t have relegation while in Europe, you do, so these valuation concepts of being able to invest in a non-Premiership level team to try to be promoted has been some part of the feeding of the beast in some levels because there’s an excitement behind it.
On how the COVID-19 pandemic has impacted franchise valuations and the demand to invest:
Baker: Initially, it put a hold on investing generally and then as the leagues gradually began returning to play, from Bundesliga in Europe to eventually to Major League Soccer in the bubble here, it started opening up a little bit and while at first it was quite slow because you had very different price expectations. You have current owners, whether they’re control owners or limited partners, who continue to believe in the long-term underlying asset value of their property, of their team, and you have prospective buyers with liquidity looking for very depressed prices given COVID.
