No risk. Football is attracting investors again.

European clubs are moving closer to the US sports business model, says Fitch Ratings.

A few years ago, it was almost standard practice for football clubs to spend more on player transfers or wages than they could afford. This led to massive debt among teams across the continent. As UEFA Executive Committee member František Laurinec recently told the Economic Daily, club debts amounted to €57 million in 2011, while last year it was down to just €8 million. “The introduction of economic rules such as Financial Fair Play forces clubs to run their business much more economically than in the past,” said Fitch Ratings director Julian Dupont. According to the organisation’s latest study, after several years of uncertainty there is once again a visible increase in interest from wealthy entrepreneurs to invest in European football.

Crisis or no crisis, football grows
Top-level football was one of the few sectors not negatively affected by the economic crisis after 2008. Revenues of elite teams, especially from the five most watched European leagues, kept growing. “The sports market in Europe is increasingly starting to resemble that in the USA: it is becoming clear that clubs can be very profitable if they follow a reliable business model,” says Dupont. The introduction of Financial Fair Play has slowed the activities of clubs with almost unlimited resources – most notably those owned by sheikhs from the Middle East, such as Manchester City and Paris Saint-Germain. “They can no longer afford to offer players several times higher wages and lure them easily into their club. They can only pay as much as they earn,” sports analyst and football agent Jozef Tokos explained to the Economic Daily, outlining the basic principle of Financial Fair Play. At the start of this season, Italian club Parma paid the price for failing to comply with the rules, being excluded from the Europa League due to debts. “Revenues in professional football are growing and will continue to grow. That is why investors from Asia and other continents are looking for clubs with a healthy foundation,” Tokos adds.

Taiwan and China show interest
The latest examples of investors aiming to get onto the European football map come from Asia. “I would like to invest in Italian football, preferably in AC Milan,” announced Thai billionaire Bea Taechaubol a few weeks ago. He was reportedly ready to pay $1 billion for a 50% stake in the famous club. However, last week AC Milan owner and former Italian prime minister Silvio Berlusconi denied any plans to sell the club to foreign owners. Another current example is the 26th richest person in the world according to Forbes – Chinese billionaire Wang Jianlin. The head of Dalian Wanda Group, the largest real estate developer in the country, recently acquired a 20% stake in Spanish giants and last season’s Champions League finalists Atlético Madrid. A third active investor from the East is Hong Kong technology company Tech Pro Technology Development. For nearly $8 million, it plans to buy a majority stake in French second-division club Sochaux. “Tech Pro and its subsidiary Ledus, which manufactures LED lights, want to use Sochaux to support their expansion into Europe,” Sochaux president Denis Worbe told chinadailyasia.com.