Welcome back to the series “Private Equity in Football: A Game-Changer or a Risky Bet?”, in this fourth part, we will take a closer look at the process of buying football clubs.
For investment funds, acquiring a football club is far more than a trophy purchase, it’s a calculated entry into a high-risk and high-reward market. While headlines often focus on the final figure or the brand name, the process behind each acquisition is a carefully engineered mix of financial discipline, legal precision, and strategic intent.
For investment funds, acquiring a football club is far more than a trophy purchase, it’s a calculated entry into a high-risk and high-reward market.
Strategic Targeting & Market Research
Every deal begins with identifying the right target. Investment funds look for clubs that are undervalued relative to their brand potential, market access, or developmental infrastructure. Some funds prioritize historic clubs in top leagues with untapped commercial upside, such as AC Milan (RedBird), while others seek out lower-profile clubs that can serve as feeder or development platforms within a broader network, like Toulouse FC for RedBird or Vasco da Gama for 777 Partners.
Strategic criteria often include:
- Broadcasting footprint and media rights potential;
- Stadium ownership and local infrastructure;
- Fan engagement metrics and digital presence;
- Access to youth academies or underexploited talent markets;
- Financially distressed but historically strong clubs (e.g., Inter Milan before Oaktree’s loan takeover);
- Underperforming relative to brand potential;
- Geographic entry points into key markets (e.g., Vasco da Gama in Brazil for 777 Partners).
Due Diligence & Financial Audits
Once an investment target is identified, funds enter the due diligence phase, a meticulous process that combines traditional corporate financial audits with the unique complexities of the football industry. For private equity firms, this is where the real work begins: validating the club’s true worth, identifying potential risks, and shaping the final acquisition structure.
This analysis is typically led by a combination of M&A experts, sports finance consultants, and Big Four audit firms to ensure no detail is overlooked. Here are the key pillars:
Balance Sheet Strength & Debt Exposure
Funds review the club’s financial statements, including:
- Asset base : stadium ownership, player contracts (treated as intangible assets), training facilities;
- Liabilities : short- and long-term debts, unpaid transfer fees, tax obligations;
- Debt covenants : restrictions imposed by creditors that could limit cash flow usage.
Clubs in lower-tier leagues often carry hidden liabilities (e.g. deferred payments), which affect valuation.
Ownership Structure & Governance
Understanding who owns what is critical, especially in clubs with:
- Multiple shareholders;
- Historical family ownership or municipal stakes;
- Complex voting rights or golden shares (e.g., some Spanish or German clubs).
Some European clubs, particularly in Spain and Germany, operate under complex governance frameworks, including voting restrictions and golden shares, that limit external investor control. In Germany, the 50+1 rule mandates majority fan ownership, while in Spain, certain clubs retain member-led structures or legacy rights that affect board-level decision-making.
Contractual Obligations
This includes a deep dive into:
- Player and staff contracts : length, clauses, buy-outs, deferred wages;
- Commercial deals: sponsorships, stadium naming rights, merchandising;
- Broadcasting arrangements.
Revenue Profile & Cost Structure
A football club’s revenue is highly volatile and cyclical:
- Revenue mix : matchday, broadcasting, commercial;
- Exposure to sporting risk : promotion/relegation, UEFA participation, player sales;
- Wage-to-turnover ratio : a key efficiency metric, which UEFA recommends under 70%.
Some clubs rely disproportionately on broadcasting income or player trading, which heightens exposure to high risks.
Legal & Regulatory Compliance
Football clubs are subject to unique regulatory environments (Financial Fair-Play, National Federation’s rules, etc), and ongoing legal issues can influence potential deals.
Funds review:
- Pending lawsuits or disputes;
- Sanctions risks;
- Cross-border tax implications (especially in multi-club ownership).
For private equity investors, due diligence is not a box-ticking exercise, it’s a value-protection strategy. Football clubs may offer brand value and fan loyalty, but they also carry opaque finances, volatile cash flows, and regulatory complexities. This phase is critical not only for pricing the deal but also for identifying restructuring needs. Funds often hire sport-focused advisory teams or big four audit firms (e.g. Deloitte Sports Business Group, Football Benchmark Group, etc) to perform this assessment.
For private equity investors, due diligence is not a box-ticking exercise, it’s a value-protection strategy.
Deal Structuring
Once the due diligence phase is completed; where funds scrutinize a club’s financial health, contractual liabilities, and commercial outlook, the next critical step is deal structuring. This phase determines how the acquisition is financed and what kind of control or exposure the investor will take on. The structure depends heavily on the fund’s risk appetite, the club’s valuation and cash flow situation, and broader market conditions.
Here are the most common structuring formats in football investments, explained with examples:
Full Equity Acquisition
This is the cleanest form of ownership, the investor acquires 100% (or a controlling majority) of the club’s shares using its own capital or co-investors.
In 2022, RedBird Capital Partners acquired AC Milan for approximately €1.2 billion, marking one of the largest full-club acquisitions in European football. RedBird financed the deal through a combination of its own capital and minority co-investment from Yankees Global Enterprises, seeking to leverage Milan’s brand equity and commercial upside.
Leveraged Buyouts (LBOs)
In this structure, the fund acquires the club primarily using borrowed money. Often, the club’s future revenues (e.g., TV rights, ticketing, sponsorship) or real estate assets (e.g., stadiums) are used as collateral to secure the loan.
Elliott Management gained control of AC Milan in 2018 via a loan default. Elliott had initially loaned €303 million to Chinese owner Li Yonghong to buy the club. When he defaulted, Elliott repossessed the equity.
In May 2021, Oaktree Capital Management extended a €275 million loan to Suning Holdings, the Chinese majority owner of Inter Milan, to address liquidity challenges exacerbated by the COVID-19 pandemic. By May 2024, the debt had accrued to approximately €395 million due to the high-interest rate and compounding terms. Suning failed to repay the loan upon maturity, leading Oaktree to exercise its rights under the loan agreement and assume control of Inter Milan through debt enforcement mechanisms.
These examples show a classic distressed LBO, where a creditor seizes ownership through financial failure, then restructures the asset for resale.
Convertible Debt & Staged Earn-Outs
In transitional or riskier deals, funds may opt for hybrid instruments, such as convertible debt (a loan that can later be turned into shares) or performance-based earn-outs, where part of the purchase price is deferred and paid only if the club hits predefined financial or sporting milestones.
This is often used when the fund wants a foot in the door but doesn’t want to overpay upfront. It’s also common in lower league or financially fragile clubs, where future stability is uncertain. While private deals of this type are often not disclosed in detail, several League One and Two clubs in England have attracted investors on this basis, notably US-based groups experimenting with performance-based equity conversion models.
Minority Stake Investments
Here, the fund buys a non-controlling interest (typically below 20%), gaining exposure to football’s commercial upside without bearing full operational risk.
In 2019, Silver Lake, a US tech-focused private equity giant, invested $500 million for a 10% stake in City Football Group, owner of Manchester City and several other clubs. By 2022, Silver Lake increased its holding to 18%, valuing CFG at around $4.8 billion, one of the highest valuations in world football.
Why Structuring Matters
Deal structure defines not only the financial exposure of the investor, but also its strategic flexibility. For example:
- An LBO offers leverage and tax advantages but adds pressure to optimize cash flow for debt service;
- A minority stake is lower risk, but limits control over decision-making and exit timelines;
- Convertible debt can offer upside with downside protection, ideal for volatile markets or distressed clubs.
For funds, the choice isn’t just about acquiring a football club, it’s about engineering a financial vehicle that matches their return expectations, governance preferences, and long-term vision.
Post-Acquisition Restructuring
Once an investment fund finalizes the acquisition of a club, governance reform and operational transformation are often the first priorities. The goal is to reshape the institution to unlock long-term value and performance. This phase is critical in aligning the club with the fund’s financial logic, sporting vision, and risk appetite. This often includes:
Boardroom Realignment & Executive Appointments
Private equity investors often install a new board, replacing legacy leadership with profiles from finance, law, tech, or elite sports management. These appointments aren’t symbolic, they bring tighter corporate governance, faster decision-making, and clearer KPIs.
At AC Milan, RedBird Capital appointed Giorgio Furlani as CEO post-acquisition, aligning board oversight with a capital-focused strategy and expertise from the sports, media, and entertainment sectors, reflecting a commercial mindset influenced by American sports business models.
Sporting Department Recalibration
Investment groups often reshape the sporting structure, from academy to first team, to optimize talent pipelines and reduce inefficiencies.
Toulouse FC, under RedBird since 2020, installed a new sporting director, upgraded academy structures, and leveraged data science in recruitment. The result was directly seen with the promotion to Ligue 1 in 2022 and a historic Coupe de France win in 2023.
Financial Discipline & Budgeting Tools
Funds enforce rigorous budgeting practices post-acquisition. Clubs adopt centralized spending approval, salary caps relative to revenue, and long-term cash flow forecasts.
Data Infrastructure & Tech Integration
Private equity firms are increasingly turning clubs into ‘labs’ for sports tech innovation, deploying platforms for scouting, performance optimization, and injury prevention.
Silver Lake’s investment in City Football Group enabled a global data infrastructure across clubs. Tech sharing now drives everything from medical protocols to marketing campaigns, multiplying returns across the portfolio.
Conclusion
From scouting undervalued clubs to reshaping their governance and integrating them into wider portfolios, private equity investors bring a structured, profit-driven approach to football club management. These acquisitions are rarely emotional, they are data-backed, and designed for long-term asset growth. Yet the real test lies not in how clubs are bought, but in how value is extracted after the deal.
Now that clubs have entered the hands of financial investors, the question becomes: what happens next? Are these deals creating long-term stability, or simply flipping clubs like assets on a spreadsheet?
In the next article, we’ll explore how funds attempt to extract value post-acquisition, through debt restructuring, cost optimization, infrastructure upgrades, and recruitment strategies. We’ll also examine their return expectations, the tension between capital gains and sporting legacy, and the risks of turning clubs into short-term financial vehicles at the expense of their soul.
The business model may be rational, but is it good for the game?