The United States has its own sport of football, but with the price of professional franchises skyrocketing, more Americans are investing in that other football – soccer.
Ownership of an average NFL team costs $3 billion, according to Yahoo Finance. Taking the reins of an NBA franchise will require $2.4 billion, according to USA Today. The Dallas Cowboys' have the highest reported worth at $5.5 billion; while at the lowest end, the Cincinnati Bengals are worth $2 billion.
Major League Baseball is a comparative bargain at $1.9 billion, according to Statista.com. The average value of a Major League Baseball team is $1.9 billion. The Miami Marlins are the lowest valued in the MLB at $999 million. The New York Yankees are the most valued at $5.25 billion.
The average NBA team is valued at approximately $2.4 billion. The Lakers, Warriors, and Knicks are reportedly worth over $5 billion each, USA Today reports.
With the prices of the three major U.S. sports soaring, many investors are turning to soccer as a more affordable professional sports investment.
According to Fortune magazine, the last two years have seen a number of deals in Europe, fueling the belief that soccer on that continent could be a better investment than domestic sports.
“Investing in American sports is very expensive and at high valuations,” Pacific Media Group co-founder Paul Conway told the magazine. His company owns teams in Europe.
The numbers bear this out. Fortune reported a report by KPMG showing that U.S. investors have major investments in 20% of the 60 teams playing in the leading soccer leagues in Europe. Part of the attraction is the relative value. According to sportspromedia.com, investors can put up $1 million to invest in a lower division club in a smaller European country. That investment can increase to $10 million for a top-tier club in a smaller country, and $50 million for larger clubs, according to the website.
“The role of U.S. banks in financing European soccer is huge and it is growing,” Pedro Trengrouse, a sports lawyer who coordinates an international executive program supported by FIFA, soccer’s global governing organization, told the Wall Street Journal.
According to The Guardian, American owners hope to use the same model as the owners of U.S. sports franchises, turning a profit when the value of the club increases, from sponsorships, ticket sales and merchandise sales. It is the authenticity of the sport as well as its affordability that are attracting U.S. investors, according to the BBC. However, it noted in its report that every investment and every investor is different. New York investor Peter Freund told the BBC he became incredibly passionate about the English football system.
“I became obsessed, watching [international] championship matches, Premier League matches, and I thought I might do a minority investment in a Championship club, just to get my feet wet,” Freund told the BBC.
Freund also told the BBC the experience is unmatched, noting that an investor never really owns an English soccer club. They are merely caretakers until the next investor comes along.
Two decades ago, the leading investors in European soccer were billionaires from China, Russia and the Middle East, according to The Conversation. The website noted that in recent years, U.S. private equity firms have been stepping up with investments in the sport.
According to The Conversation, deep pockets don’t ensure success on the field. The fans are aware that the investors want to make money, and the website noted that this can damage the connections between the clubs and the cities they call home.