The Business of Football - [Business Breakdowns, EP.126]

This is Dom Cooke and today we’re breaking down the business behind the most popular sport in the world, Football or Soccer. It’s a vast market. 3 billion people around the world watch the sport and more than €30 billion euros are spent within the football ecosystem in Europe alone each year. But aside from a huge addressable market and reasonable revenue, is it actually a good business? Why do investors keep buying Football clubs? Is there any economic rationale behind that? Is there a link between sporting and financial success? Has middle-eastern money distorted the transfer market for good? These are some of the questions I asked our guest, Dr Rob Wilson, who is a football finance expert and Head of the finance, accounting, and business systems department at Sheffield Hallam University. I hope you enjoy us breakdown the business of football. For the full show notes, transcript, and links to the best content to learn more, check out the episode page here. ----- This episode is brought to you by Tegus. Tegus is the modern research platform for leading investors, and provider of Canalyst. Tired of calculating fully-diluted shares outstanding? Access every publicly-reported datapoint and industry-specific KPI through their database of over 4,000 drivable global models hand-built by a team of sector-focused analysts, 35+ industry comp sheets, and Excel add-ins that let you use their industry-leading data in your own spreadsheets. Tegus’ models automatically update each quarter, including hard to calculate KPIs like stock-based compensation and organic growth rates, empowering investors to bypass the friction of sourcing, building and updating models. Make efficiency your competitive advantage and take back your time today. As a listener, you can trial Canalyst by Tegus for free by visiting tegus.co/patrick. ----- Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt | @domcooke Show Notes (00:03:16) - (First question) - Defining the European football market (00:05:12) - How the Premier League defined itself as the world’s best league (00:08:16) - The delegation of funds based on a team’s final position in the league (00:11:19) - A brief introduction to the breakaway European Super League (00:12:53) - The sale of Manchester United and how it affects the scope of the footballing world (00:18:34) - The role emotion plays when it comes to buying and selling of football clubs (00:20:47) - The makeup of a well run football club (00:23:54) - The four-pillar model and exploring new revenue streams in football (00:25:59) - The utilization of ‘access all areas’ type documentaries as a source of revenue (00:28:40) - Breaking down the return on investment for football clubs building new stadiums (00:33:51) - Financial regulations in football and a brief history of UEFA’s Financial Fair Play (00:40:41) - The correlation between sporting and financial performance (00:42:23) - The different types of football club ownership profiles (00:44:51) - Reasons why investors choose to enter the football market (00:48:12) - Changes to the football landscape since sovereign wealth funds have entered the market (00:51:36) - The importance of the transfer market to football clubs (00:53:03) - How the fans fit into the sport moving forward (00:55:52) - Potential opportunities for TV revenue streams by entering new market places (00:56:55) - The relationship between the clubs and the leagues (00:58:20) - The lessons learned from researching the football industry