As millions of fans follow the Club World Cup and debate favourites, surprises and potential champions, football is generating very different conversations in the offices of some of the world’s largest investment funds. There, the discussion revolves around business valuation, intangible assets, corporate structures, acquisition financing and value creation.
This is no coincidence. Over the past decade, professional football has become one of the sectors attracting the greatest interest from institutional capital. Investment funds, private equity firms and specialised investors have been involved in increasingly significant transactions involving clubs, competitions and assets linked to professional sport.
Beyond the headlines and the figures, these transactions offer a particularly interesting lesson from a corporate law and M&A perspective: companies are rarely acquired solely for their current financial performance.
Traditionally, football clubs were perceived as unique assets, closely linked to their owners, the identity of a city or the passion of their supporters.
However, the growing presence of institutional capital has profoundly transformed this reality.
Today, it is increasingly common to find investment funds, institutional investors and multinational business groups among the shareholders of European football clubs. As a result, transactions involving football clubs are now analysed using the same tools employed in any corporate acquisition process: due diligence, valuation, financing, corporate governance, risk management and value creation.
What is particularly interesting is that many of these transactions involve entities whose financial performance, viewed in isolation, would not always justify the level of investor interest they attract.
The explanation lies in one of the fundamental principles of any M&A transaction: the value of a company rarely corresponds exactly to what is reflected in its financial statements.
One of the first issues addressed in any business acquisition process is valuation.
However, contrary to popular belief, companies do not have a single, fixed and immutable value.
Value depends, to a significant extent, on the buyer.
The same company may be particularly attractive to an acquirer capable of generating commercial synergies, accessing new markets, integrating specific capabilities or exploiting assets more effectively than other market participants.
This logic helps explain many of the transactions that have taken place in European football over recent years.
Investors are not merely acquiring sporting results. They are acquiring global brands, commercial rights, content-generation platforms, talent-development structures and exceptionally loyal communities of supporters.
From this perspective, football is simply one of the most visible examples of a reality that is replicated daily across countless corporate transactions.
One of the most illustrative examples is undoubtedly AC Milan.
Following the acquisition of the club by Chinese businessman Li Yonghong, financed in part through debt provided by Elliott Management, the failure to meet certain financial obligations ultimately led the fund to assume control of the club through the enforcement of security granted over the shares.
From both a legal and business perspective, the transaction is particularly interesting because Elliott did not behave like a traditional football club owner. Instead, it implemented a strategy readily recognisable within the private equity sector: financial strengthening, improvements in governance and management structures, cost rationalisation and the restoration of the club’s value-creation potential.
Several years later, the club was sold to RedBird Capital Partners, completing a process that bears far greater resemblance to a classic private equity value-creation strategy than to the traditional image associated with football club ownership.
If the Milan case illustrates value creation, Inter Milan provides an example of another common feature of corporate transactions: the importance of financing structures. There is a certain irony in the fact that it is Milan’s neighbour and historic rival that helps complete the lesson.
Suning obtained financing from Oaktree Capital using its stake in the club as collateral. When it subsequently failed to meet its financial obligations, Oaktree enforced its security and assumed control of the club.
The situation is particularly noteworthy because it largely mirrors a dynamic previously seen at AC Milan. In both cases, a transaction initially structured as financing ultimately resulted in a change of control.
From a legal perspective, the significance of the transaction lies not merely in the ownership change itself, but in the way a financing structure can become an indirect route to acquiring a company.
Similar mechanisms are common in many corporate transactions and highlight the importance of carefully structuring security packages and control arrangements in acquisition financing.
Another particularly revealing example is City Football Group.
Unlike traditional ownership models, the group has developed an international network of club investments across multiple jurisdictions, including England, Spain, the United States, Australia, Japan, Uruguay and Belgium.
From a business perspective, the structure resembles a multinational corporate group far more than a conventional football club.
The existence of shared platforms, global talent-development strategies, international coordination and economies of scale demonstrates the extent to which professional football has adopted concepts traditionally associated with the corporate world.
For investors, the appeal of such structures lies not merely in the performance of any individual club, but in the ability of the wider organisation to generate value through a global platform.
The transactions discussed above share a common characteristic: a significant portion of the value acquired is not directly reflected in the financial statements.
The brand is perhaps the most obvious example. Few organisations enjoy global recognition comparable to that of Europe’s leading football clubs.
Added to this are broadcasting rights, sponsorship agreements, international commercial structures, youth academies, training compensation mechanisms established under international football regulations and the ability to generate new revenue streams from highly engaged global fan communities.
From a valuation perspective, these are intangible assets that are extraordinarily difficult to replicate and which, precisely for that reason, can justify valuations that may not be immediately apparent from a review of the financial statements alone.
The major investors that have entered European football are not merely acquiring clubs or sporting success. They are acquiring global brands, commercial platforms, talent-development structures and assets capable of generating value over the long term.
And that is perhaps one of the most important conclusions of any corporate transaction: companies are rarely acquired for what they are today, but for what they have the potential to become.
Identifying that value, placing it in context and turning it into a successful transaction is precisely the objective pursued by ILIA ETL GLOBAL when advising entrepreneurs, family-owned businesses and investors on their M&A transactions, corporate growth strategies and value-creation opportunities.
By Mario García, Mercedes Cano and Xavier Vilalta, professionals at ILIA ETL GLOBAL specialising in Corporate Law, M&A, Corporate Finance and Business Taxation.
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