Football. Why does Ligue 1 attract so many foreign investors? – Football



There will be ten this season. Ten Ligue 1 clubs (out of 20) owned by foreign capital (Toulouse, PSG, OL, OM, Nice, Lille, Troyes, Clermont, Monaco and Auxerre). Olympique Lyon, one of the strongholds of French football, bought on July 29 by American businessman John Textor, will be the last to go under a foreign flag. “In recent years, we have seen bigger investments, not just equity investments, but management takeovers,” analyzes Thierry Granturco, lawyer at the Paris and Brussels Bar Association and specialist in sports law.

“New is the arrival of investment funds, especially American ones. Since the 90s, we have seen the arrival of billionaires, ”adds economist Luc Arrondel, director of research at CNRS and the Paris School of Economics, a specialist in football economics.

Player trading and resale capital gains

What motivates these foreign investors to invest in French football? “The entrance fee in France is relatively low, the amounts are much lower than in other countries such as England,” says Thierry Granturco. Bets on Saint-Étienne and Bordeaux even before they are eliminated do not even allow you to buy a club from the second half of the championship (English D2). The economic situation between the covid crisis and Mediapro has put some clubs in a difficult position (UEFA estimates a loss of income related to the pandemic at 7 billion euros for European football). Foreign investors were the solution to provide cash.

Another factor is the quality of French teaching. “Given the number of very good players who come to France every year, you can bet on a relatively quick return on investment, which is usually a problem in football. When you start with a Ligue 1 club purchase price of 50 to 80 million euros, if you produce a very good player, you are not far from the return on investment.

New need for profitability

This is the essence of change with the advent of investment funds: the need to make business profitable. “In addition to trading players, as in Lille, they can expect capital gains from resale,” notes Luc Arrondel. Look at Toulouse. The Red Bird Foundation invested in him when the club was in Ligue 2. They brought him to Ligue 1 and if they want to sell him, they will make a profit.”

However, these investors, especially the Americans, many of whom represent the US sports community, hold the keys to the club’s financial exploitation. “They are interested in promoting their product. In order to stay in Toulouse, they have revolutionized club management by applying the methods used in the United States, especially with regard to data.”

Ten clubs owned by foreign funds will stop or again? Stop, probably not. “Now is the right time to invest in France, especially since I think Ligue 1 TV rights will grow exponentially abroad,” said Thierry Granturco. “Now they are buying shares in commercial companies, in particular, LFP with CVC fund,” adds Luc Arrondel.

The right time, no doubt, even if all investments fail. Bordeaux represents the darker side of the system. The takeover of the club from M6 by GACP in 2018, then a year later by King Street and then in 2021 by Spanish-Luxembourgish businessman Gerard Lopez did not prevent relegation to Ligue 2. An administrative transfer to National was even narrowly avoided. . A sign that foreign capital is not always a miracle solution.

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