Matt Hulsizer, a 45-year-old from Chicago with a widow’s peak and wide shoulders, is by all accounts a successful financier. In 2014, he sold OptionsHouse, an online options trading brokerage, and his stake in a hedge fund with more than $2 billion (Dh7.34 billion) under management for a reported $200 million.
Then he put his money into sport. In February, he bought a minority stake in the Minnesota Wild ice hockey team. In November, after failed deals for second-tier clubs Leeds and Reading, his Peak6 investment group bought 25 per cent of AFC Bournemouth, currently enjoying its first season in England’s Premier League and sitting in 16th, three points above the relegation zone.
“Our preference is to buy a Premier League club,” he said at the Soccerex convention in 2014, just after he had begun discussions with Bournemouth owner, the Russian Maxim Demin. “That’s what is on television, it is what my kids want to watch. I have a child in college and all his friends are wearing Premier League gear. What will draw us is the money, and the media payments are substantial.”
It is a fair bet that not many kids at the college were wearing Bournemouth shirts but the pulling power of the Barclays Premier League’s television rights deal has made even teams outside the top tier of clubs attractive to foreign investors.
In an unusual season where the likes of Manchester United and Chelsea have suffered a damaging run of defeats while smaller clubs have prospered, TV revenues are the most tempting cherry for Mr Hulsizer and other US investors, such as Josh Harris and David Blitzer, who each bought 18 per cent of Crystal Palace, and for the consortium reported to be interested in buying Everton.
Domestic rights for the three years starting next season will bring in £5.1 billion, or £10.2 million a game — a 71 per cent rise on the previous contract. Then there are the overseas rights. Some important deals are still being negotiated, but they should net the Premier League at least £3 billion (Dh15.87 billion), compared with £2.2 billion for the past three seasons.
The US is driving much of the increased interest. The average television audience per match in the US last year was 480,000, rising to 1.41m for Manchester United’s game against Arsenal. NBC, which paid $250m for its current television deal, will pay $1 billion for six more seasons starting in August. In China, where interest in the game continues to grow and China Media Capital purchased a stake in Manchester City last month, the next Premier League TV rights deal covering seasons from 2019 is set to be worth billions of pounds.
The TV money has made Premier League clubs, which were collectively profitable for the first time for 15 years in 2013-14, attractive even to hard-nosed US investors rather than the egotists and oligarchs who bought British clubs in the 1990s and 2000s.
If a deal for Everton goes through, eight of the Premier League’s 20 clubs will have US investors, despite years of worries from the American side about the perils of relegation and English football’s struggle to control its spending as Uefa’s financial fair play regulations took effect.
“Sport has proven to be an attractive and highly successful investment option, particularly in the US. If you look at anyone who took an NBA [basketball] or NFL [American football] team they have had a substantial return in recent years,” says Trevor Watkins, who heads the sport practice at the law firm Pinsent Masons.
“If you talk globally, we are seeing at any one time 15 to 20 active investment opportunities in English football that are live and attracting interest,” he adds.
It has taken decades — the New York Cosmos signed Pele in 1975 — but there are signs that football is gaining traction in the US. Professional football, defined as the domestic Major League Soccer as well as international competitions such as the Premier League, has become the most popular sport among 12 to 34-year-olds after American football, according to Rich Luker, founder of the ESPN Sports Poll. “Our projection is that within 20 years soccer will have passed basketball and baseball among all age groups. It could get there within 10 years, the way the trajectory is going.”
England’s Premier League has become “trendy” for US investors, says Zak Brown, the chief executive of CSM, a sport marketing group. “John Henry [the Liverpool owner] is at a really serious level, but you can be in with the big boys without having to write a big cheque [by buying a slice of a smaller club]. And of course it is hard to buy NFL or MLB [baseball] teams.”
This is key, according to Bradley Rangell, the founder of Iron Clad Sports, which advises investors from the US and elsewhere on European football opportunities. “The US sports market has a very high barrier to entry in terms of acquisition price,” he says. “While the valuation of European football clubs might be more volatile because of promotion and relegation there is potential for a more attractive return depending on your purchase price.”
Buying stakes in football clubs can be hugely complicated. John Jay Moores, the former owner of the San Diego Padres baseball team, and Charles Noell saw a deal for 30 per cent of Swansea City collapse in February after objections by the club’s supporters’ trust.
With Everton rumoured to be their next target, the corporate structure of the club could prove a problem. “It is not straightforward,” says Neil Blankstone, a stockbroker who makes a market in Everton shares.
“There is a separate holding company for the ground and the match day [and] one for the revenues from television rights. It is complicated to break it all down and see what the break clauses are. There is £45m to £50m of debt. Three directors, including Bill Kenwright, own 68 per cent. A few larger shareholders take that up to 75 per cent and then the rest is individuals.”
The success of smaller clubs this season has partially vindicated the strategies of Mr Hulsizer, Mr Harris and Mr Blitzer. Between them, Leicester, Crystal Palace, West Ham, Watford and Stoke have 157 points — two more than the big five of Arsenal, Manchester City, Manchester United, Liverpool and Chelsea. Now that even the smallest club is guaranteed enough TV money to lure a deadly striker and help fend off approaches for their best talent, the bigger teams can no longer count on one-sided matches.
The emergence of professional investors taking minority stakes, rather than always aiming to buy control of a club, is a change of strategy. The prospect of promotion to the top tier means that US investors are also casting their eyes over promising second-tier English Championship sides, which are cheap compared with US sport franchises. “The second you get a club into the Premier League there’s instant appreciation [in value],” says Mr Rangell, who has also founded a fund for investment in sport.
He points to untapped commercial opportunities that could be exploited by US investors. “There are great, well established brands in [European] football there that might benefit from the sophistication in marketing and branding that exists around US sports.”
Karish Andrews, a partner at Lewis Silkin, a law firm, represents several US sport clients and says investors believe the Premier League can increase its revenues. “The NFL is much more commercially driven,” he says.
The Premier League’s international appeal has not gone unnoticed by a new generation of buyers. “The size of its international appeal is staggering,” says Roger Bennett, a co-presenter of the NBC Sports football show Men in Blazers. “The owner of a US sports franchise is big in the [US] state where their team operates but the Premier League is a global megaphone in Asia, Europe and Africa. Owning a Premier League team makes you globally relevant.”
For Manchester City, selling a slice to China Media Capital guarantees it a presence in what could be the world’s biggest football market. Omar Berrada, commercial director of City Football Group, the parent company, says half of Manchester City’s 400m fans are from Asia and of those, 75m are from China.
“An investor can drive a club forward,” says Mr Watkins. “A club like Leeds, Sunderland or Norwich might not have the infrastructure to tap into a global base. But from North America we are seeing businesses investing in sport that have substantial marketing and commercial nous. If you buy in, you develop and that is where the opportunity is.”
For Mr Hulsizer, the goal was always to buy into a club with heritage, even if it was a relative minnow. His goal now at Bournemouth is to stave off relegation while he tries to turn the team into a big player.
