{"id":5128,"date":"2019-12-19T17:11:22","date_gmt":"2019-12-19T17:11:22","guid":{"rendered":"https:\/\/tfg.rldbhg96-liquidwebsites.com\/?p=5128"},"modified":"2022-06-17T16:36:42","modified_gmt":"2022-06-17T15:36:42","slug":"margin-call-how-the-investor-of-the-future-will-identify-football-clubs-2","status":"publish","type":"post","link":"https:\/\/www.twentyfirstgroup.com\/margin-call-how-the-investor-of-the-future-will-identify-football-clubs-2\/","title":{"rendered":"Margin call: how the investor of the future will identify football clubs"},"content":{"rendered":"<div class=\"flex_column av_one_fifth  flex_column_div av-zero-column-padding first  avia-builder-el-0  el_before_av_three_fifth  avia-builder-el-first  \" style='border-radius:0px; '><\/div>\n<div class=\"flex_column av_three_fifth  flex_column_div av-zero-column-padding   avia-builder-el-1  el_after_av_one_fifth  el_before_av_one_fifth  \" style='border-radius:0px; '><div  style='padding-bottom:10px; ' class='av-special-heading av-special-heading-h2  blockquote modern-quote  avia-builder-el-2  avia-builder-el-no-sibling  thought-leadership-heading '><div class ='av-subheading av-subheading_above  ' style='font-size:15px;'><p>Thought Leadership<\/p>\n<\/div><h2 class='av-special-heading-tag '  itemprop=\"headline\"  >Margin call: how the investor of the future will identify football clubs<\/h2><div class='special-heading-border'><div class='special-heading-inner-border' ><\/div><\/div><\/div><\/div>\n<div class=\"flex_column av_one_fifth  flex_column_div av-zero-column-padding   avia-builder-el-3  el_after_av_three_fifth  el_before_av_one_fifth  \" style='border-radius:0px; '><\/div>\n<div class=\"flex_column av_one_fifth  flex_column_div av-zero-column-padding first  avia-builder-el-4  el_after_av_one_fifth  el_before_av_three_fifth  column-top-margin\" style='border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  av_inherit_color '  style='color:#80808a; '  itemprop=\"text\" ><h4><span class=\"span-reading-time rt-reading-time\"><span class=\"rt-label rt-prefix\"><\/span> <span class=\"rt-time\"> 7<\/span> <span class=\"rt-label rt-postfix\">MIN READ<\/span><\/span><\/h4>\n<\/div><\/section><br \/>\n<section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock thought-leadership-author '   itemprop=\"text\" ><h3>By Omar Chaudhuri<\/h3>\n<hr \/>\n<h3>Dec 12, 2019<\/h3>\n<\/div><\/section><br \/>\n<div  style='height:5px' class='hr hr-invisible   avia-builder-el-7  el_after_av_textblock  avia-builder-el-last '><span class='hr-inner ' ><span class='hr-inner-style'><\/span><\/span><\/div><\/p><\/div>\n<div class=\"flex_column av_three_fifth  flex_column_div av-zero-column-padding   avia-builder-el-8  el_after_av_one_fifth  el_before_av_one_fifth  column-top-margin\" style='border-radius:0px; '><p><div  class='avia-image-container  av-styling-    avia-builder-el-9  el_before_av_hr  avia-builder-el-first  avia-align-center '  itemprop=\"image\" itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/ImageObject\"  ><div class='avia-image-container-inner'><div class='avia-image-overlay-wrap'><img decoding=\"async\" class='wp-image-5129 avia-img-lazy-loading-not-5129 avia_image' src=\"https:\/\/www.twentyfirstgroup.com\/wp-content\/uploads\/2021\/04\/Screenshot-2021-04-01-at-17.10.10.png\" alt='' title='Screenshot 2021-04-01 at 17.10.10' height=\"680\" width=\"1468\"  itemprop=\"thumbnailUrl\" srcset=\"https:\/\/www.twentyfirstgroup.com\/wp-content\/uploads\/2021\/04\/Screenshot-2021-04-01-at-17.10.10.png 1468w, https:\/\/www.twentyfirstgroup.com\/wp-content\/uploads\/2021\/04\/Screenshot-2021-04-01-at-17.10.10-300x139.png 300w, https:\/\/www.twentyfirstgroup.com\/wp-content\/uploads\/2021\/04\/Screenshot-2021-04-01-at-17.10.10-1030x477.png 1030w, https:\/\/www.twentyfirstgroup.com\/wp-content\/uploads\/2021\/04\/Screenshot-2021-04-01-at-17.10.10-768x356.png 768w, https:\/\/www.twentyfirstgroup.com\/wp-content\/uploads\/2021\/04\/Screenshot-2021-04-01-at-17.10.10-705x327.png 705w\" sizes=\"(max-width: 1468px) 100vw, 1468px\" \/><\/div><\/div><\/div><br \/>\n<div  style='height:5px' class='hr hr-invisible   avia-builder-el-10  el_after_av_image  avia-builder-el-last '><span class='hr-inner ' ><span class='hr-inner-style'><\/span><\/span><\/div><\/p><\/div>\n<div class=\"flex_column av_one_fifth  flex_column_div av-zero-column-padding   avia-builder-el-11  el_after_av_three_fifth  el_before_av_one_fifth  column-top-margin\" style='border-radius:0px; '><\/div>\n<div class=\"flex_column av_one_fifth  flex_column_div av-zero-column-padding first  avia-builder-el-12  el_after_av_one_fifth  el_before_av_three_fifth  column-top-margin\" style='border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '   itemprop=\"text\" ><h3>Thought Leadership<\/h3>\n<p>Inspired by what you&#8217;re reading? Why not subscribe for regular insights delivered straight to your inbox.<\/p>\n<\/div><\/section><br \/>\n<div  class='avia-button-wrap avia-button-left  avia-builder-el-14  el_after_av_textblock  el_before_av_textblock ' ><a href='https:\/\/www.twentyfirstgroup.com\/contact\/news-signup\/'  class='avia-button  avia-color-theme-color   avia-icon_select-no avia-size-small avia-position-left '   ><span class='avia_iconbox_title' >Subscribe<\/span><\/a><\/div><br \/>\n<section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '   itemprop=\"text\" ><hr \/>\n<h3><\/h3>\n<\/div><\/section><br \/>\n<div  class='av-social-sharing-box  avia-builder-el-16  el_after_av_textblock  avia-builder-el-last  '><div class='av-share-box'><h5 class='av-share-link-description av-no-toc '>Share this story<\/h5><ul class='av-share-box-list noLightbox'><li class='av-share-link av-social-link-facebook' ><a target=\"_blank\" aria-label=\"Share on Facebook\" href='https:\/\/www.facebook.com\/sharer.php?u=https:\/\/www.twentyfirstgroup.com\/margin-call-how-the-investor-of-the-future-will-identify-football-clubs-2\/&#038;t=Margin%20call%3A%20how%20the%20investor%20of%20the%20future%20will%20identify%20football%20clubs' aria-hidden='false' data-av_icon='\ue8f3' data-av_iconfont='entypo-fontello' title='' data-avia-related-tooltip='Share on Facebook' rel=\"noopener\"><span class='avia_hidden_link_text'>Share on Facebook<\/span><\/a><\/li><li class='av-share-link av-social-link-twitter' ><a target=\"_blank\" aria-label=\"Share on Twitter\" href='https:\/\/twitter.com\/share?text=Margin%20call%3A%20how%20the%20investor%20of%20the%20future%20will%20identify%20football%20clubs&#038;url=https:\/\/www.twentyfirstgroup.com\/?p=5128' aria-hidden='false' data-av_icon='\ue8f1' data-av_iconfont='entypo-fontello' title='' data-avia-related-tooltip='Share on Twitter' rel=\"noopener\"><span class='avia_hidden_link_text'>Share on Twitter<\/span><\/a><\/li><li class='av-share-link av-social-link-linkedin' ><a target=\"_blank\" aria-label=\"Share on LinkedIn\" href='https:\/\/linkedin.com\/shareArticle?mini=true&#038;title=Margin%20call%3A%20how%20the%20investor%20of%20the%20future%20will%20identify%20football%20clubs&#038;url=https:\/\/www.twentyfirstgroup.com\/margin-call-how-the-investor-of-the-future-will-identify-football-clubs-2\/' aria-hidden='false' data-av_icon='\ue8fc' data-av_iconfont='entypo-fontello' title='' data-avia-related-tooltip='Share on LinkedIn' rel=\"noopener\"><span class='avia_hidden_link_text'>Share on LinkedIn<\/span><\/a><\/li><\/ul><\/div><\/div><\/p><\/div>\n<div class=\"flex_column av_three_fifth  flex_column_div av-zero-column-padding   avia-builder-el-17  el_after_av_one_fifth  el_before_av_one_fifth  column-top-margin\" style='border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock thought-leadership-main-content '  style='font-size:20px; '  itemprop=\"text\" ><p><strong>The second decade of the 21st century has seen a new breed of investors in European football clubs. From the west, American ownership groups have observed media rights growth rates that have outstripped even their own major sports leagues, and have therefore been attracted by the prospect of riding that wave. From the east, Chinese owners have looked to capitalise on their government\u2019s momentum of investment in football. The idea of an owner who is in it for ego or profile may not have disappeared entirely, but it has certainly become the minority approach.<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Despite arriving in Europe with good intentions and strategic ambitions, not every investment has realised its potential. Whether it&#8217;s Marseille or Southampton, Milan or Sunderland, there are plenty of case studies of clubs that have struggled under new ownership in the past decade.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Part of the problem for new investors has been an underestimation of the task required to sustain or improve performance. Liverpool owner John W Henry described the \u201csurprise\u201d he faced upon buying the club in 2010 for \u00a3300 million. \u201cThere was a huge multi-year pay-roll for a squad that had very little depth\u2026 It was a bigger issue than we feared.\u201d It would take nearly a decade for Liverpool to be consistently competitive at the top end of the Premier League.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">New owners also face an increasingly unpredictable broadcast rights market. The plateauing of the Premier League\u2019s domestic rights deal from 2019 provided some suggestions of the market having peaked, or at least pausing for breath. So-called over-the-top (OTT) platforms have provided disruption and rights growth in some markets, but for the time being they remain the exception.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As such, the opportunity for investors is increasingly about finding a margin on the initial deal. The question is, how? We\u2019ve pulled together some tips.<\/span><\/p>\n<h3><b>Tip #1: Forget what you know about divisions<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">In December 2018, our World Super League model identified Luton Town as the 38th-best team in England, Huddersfield Town as 39th, and Millwall as 40th. There\u2019s nothing remarkable about that &#8211; until you realise that these three clubs were in three different divisions at the time, with Luton in the third tier, Millwall in the second, and Huddersfield in the Premier League.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So what, you might ask &#8211; why wouldn\u2019t you still invest in the Premier League team, with all the benefits that being in that league brings? Well, the implication of this ranking is that <\/span><i><span style=\"font-weight: 400;\">in the long run<\/span><\/i><span style=\"font-weight: 400;\">, all three clubs were as likely as the other to be in the top flight &#8211; but while Huddersfield Town would come with the price tag typically associated with a Premier League club, Luton Town would be considerably cheaper.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That all three clubs were in the Championship together in 2019\/20 bears this out &#8211; though by this time the opportunity for an investor to buy a bargain club would be gone.<\/span><\/p>\n<h3><b>Tip #2: Spot the unlucky teams<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Football is the lowest-scoring sport, which means that teams can play badly and win, or play well and drop points. We estimate the latter happens 35 percent of the time, which means that there are teams all over the world who deserve to win three, four or even five games in a row, but have failed to pick up more than a couple of draws.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This can have major implications for a team at the end of a season. In the 2018-19 season, Ligue 1 club Nantes suffered a poor run of form in January despite good performances, which meant they earned seven fewer points than they deserved over a short, eight-game period. Those extra points would have put them in the top seven instead of 12th, and the club may have appeared an entirely different proposition to a naive prospective investor. There\u2019s no reason why a team can\u2019t have been unlucky for two or even three seasons in a row &#8211; after all, someone must be &#8211; and such a team would likely be undervalued for a savvy investor.<\/span><\/p>\n<h3><b>Tip #3: Compare apples with apples<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">There\u2019s no use comparing Barcelona to Betis, such is the gap in resources between clubs. There is merit, however, in comparing Real Betis to Celta Vigo, as they have similar salary spends. The club that is consistently finishing higher &#8211; in recent years that is Betis &#8211; tells investors something about how efficiently the club is applying its resources.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Investors can then assess clubs in context, and make a decision as to whether it is preferable to buy the more efficient club (on the assumption that little investment would be needed to sustain results), or the less efficient club (on the basis that the team could be improved simply through better front-office operations). This narrowing of the focus helps new ownership groups be aware of the issues &#8211; or lack thereof &#8211; that they need to address post-takeover.<\/span><\/p>\n<h3><b>Tip #4: What you saw is not what you\u2019ll get<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">There is a tendency to assume that past results are a good predictor of future results, but in an industry where performance is at the mercy of finely-tuned athletes who only enjoy a few years of peak output, this is not always the case. Clubs typically enjoy their best seasons with a peak-age squad, at which point they tend to attract the attention of prospective investors. However, by the time the takeover is complete, the investor is often faced with a rapidly ageing team that needs significant investment, as Fulham and Blackburn Rovers\u2019 owners discovered in the first half of the 2010s.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Part of the problem is that peak age is often thought to be older than it actually is (typically early\/mid-20s for attacking players and mid\/late 20s for defensive players). An undervalued team is likely to therefore be one with a squad that is on the younger side and has managed its contracts such that they can retain these players as their performance improves, or sell them for maximal fees.<\/span><\/p>\n<\/div><\/section><\/div>\n<div class=\"flex_column av_one_fifth  flex_column_div av-zero-column-padding   avia-builder-el-19  el_after_av_three_fifth  el_before_av_one_fifth  column-top-margin\" style='border-radius:0px; '><\/div>\n<div class=\"flex_column av_one_fifth  flex_column_div av-zero-column-padding first  avia-builder-el-20  el_after_av_one_fifth  el_before_av_three_fifth  column-top-margin\" style='border-radius:0px; '><\/div>\n<div class=\"flex_column av_three_fifth  flex_column_div av-zero-column-padding   avia-builder-el-21  el_after_av_one_fifth  el_before_av_one_fifth  column-top-margin\" style='border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock thought-leadership-block-blue '   itemprop=\"text\" ><h2>The investor of the future<\/h2>\n<p><span style=\"font-weight: 400;\">It is no longer sufficient to have an investment business case in football simply based on macro trends in viewing figures. The investors of the future will recognise that identifying teams that are below their natural level &#8211; and therefore likely to increase in value &#8211; are the places to shop. That needn\u2019t be clubs like Sunderland or Hamburg &#8211; huge clubs who have performed poorly in recent years &#8211; but instead are the teams that no one else has noticed are undervalued.<\/span><\/p>\n<\/div><\/section><br \/>\n<section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '   itemprop=\"text\" ><p><em>This article was originally posted in <a href=\"https:\/\/www.amazon.co.uk\/Changing-Conversation-presents-collection-boardrooms\/dp\/1709459387\/ref=pd_lpo_14_t_0\/262-7970939-1107229?_encoding=UTF8&amp;pd_rd_i=1709459387&amp;pd_rd_r=fd84b854-f03d-428f-a1d4-6ae0e68dcc25&amp;pd_rd_w=SzZSj&amp;pd_rd_wg=0aN3j&amp;pf_rd_p=da0677f5-a47b-4543-8b54-10be576b8f26&amp;pf_rd_r=HBQR9GMDCW7ES40KHJ54&amp;psc=1&amp;refRID=HBQR9GMDCW7ES40KHJ54\">Changing the Conversation, Volume III &#8211; A collection of boardroom insights<\/a>.\u00a0<\/em><\/p>\n<\/div><\/section><\/p><\/div><div class=\"flex_column av_one_fifth  flex_column_div av-zero-column-padding   avia-builder-el-24  el_after_av_three_fifth  el_before_av_codeblock  column-top-margin\" style='border-radius:0px; '><\/div><\/p>\n\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":16,"featured_media":3514,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_oasis_is_in_workflow":0,"_oasis_original":0,"inline_featured_image":false,"footnotes":""},"categories":[54,33],"tags":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.0 - 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