Football Investments No Longer Exclusive To Oligarchs: Brera Holdings Post IPO Statements

By Adriaan Brits

 

• Following its $7,500,000 IPO and Nasdaq Closing Bell Ceremony in February, Brera Holdings BREA are making a series of announcements.

• American investors are getting “football fever” as  Europeans pivot away from Oligarchs of the east to a much larger investor pool. 

• Football in Italy is floated as one of the foremost ways to improve social integration amid mass migration.

 

For a long time, football investments were perceived as inaccessible to the common person. Football club ownership seems like it acted as a preservation of wealth for those who made their money elsewhere and needed a safe bet. Perhaps surprising, a closer analysis of owners of football clubs will also reveal oligarchs, some with Russian money, ex politicians in exile, some even wanted by their countries. Many were given the equivalent of a golden visa in exchange for massive investments in football stadiums. 

Has the time come for rich families who profited from Europe’s most lucrative sport to share this space with ordinary investors? By all indications, it would seem so:

Multi Club Football Ownership (MCO): The Strong Incomer

Now, the market is transforming. There is a formidable list of incomers, capable of challenging the oligarchs for a share of the action. A few rare publicly traded companies are leveraging the model of multi club football ownership (MCO) to take up ownership stakes in the $27Billion European football industry as well as globally. Brera Holdings BREA is one of them and perhaps the most recent related IPO discussed by insiders on Wall Street.

Brera Holdings is certainly not alone. According to Deloitte, in their annual review of football finance, just five years ago, 28 MCO’s existed - which is now estimated to exceed 70. They are not alone: City Football Club (CFG), Redbird Capital and even Red Bull, as well as the government of Saudi Arabia, are all key players in the MCO market. 

Is European Football Pivoting Towards American Investors?  

The European football industry is pivoting towards U.S. investors. As an industry that historically courted investment from Saudi Arabia (GDP $800Billion) and Russia (GDP below $2Trillion) it can be argued that much was left on the table. By contrast, the U.S. economy represents a 22Trillion GDP, with EU combined GDP around $16Trillion. Therefore, this pivot towards American and European investors would seem an obvious choice. 

Following the IPO of Brera Holdings BREA which is now a publicly traded stock associated with football, CEO Sergio Scalpelli says that: “Brera Holdings would like to give average and institutional investors exposure to the football industry. At the same time we also want to consider our potential role in helping Italy and Europe improve social integration during times of change.”  Additional statements were also available from the companies’ website. It was quick to announce expansion plans beyond Italy: Brera Holdings issued a letter of Intent (LOI) to acquire the European first division football team Fudbalski Klub Akademija Pandev (“Akademija Pandev”) in North Macedonia. 

For American investors, at a time when the Euro is weak and the Dollar is strong, when sanctions prevent many oligarchs from entering Europe with a growing rift between east and west, seizing opportunity in Europe seems inevitable. Besides, travel, entertainment and sport stocks have been battered during the pandemic and many hedge funds are constantly scanning hoping to spot undervalued stocks with a specific imbalance: where revenues recovered but stock prices are still lagging. 

Europeans have a strong position: They are in an attractive part of the world with potential investors from all over the world, including China, Asia and the Middle East. Yet, instead of complicating matters with troublesome oligarchs, the U.S. hedge fund industry is worth $3.83 trillion, backed by the largest GDP in the world. Likewise, with so many ordinary Europeans who play their own stock markets, the potential investor pool is substantial. 

Football Industry Overview:

What exactly attracts cold and calculated investors to the hot and emotional football industry is not at all hard to understand. The numbers always do the talking. 

Media channels frequently sign six figure deals for coverage of events, with major sports brands like Nike and Adidas competing to sign sponsorship agreements with clubs. With the average value of a premier league player exceeding 8 Million Euros - clearly this is big business. 

Global search volume insights according to Google data:

• Related to football as a sport:  52 million related searches.

• Individual name Lionel Messi: 4.5 million related searches.

• Individual name Christiano Ronaldo: 4.5 million related searches.

The astronomic cumulative search data is something that no doubt captures the interest of analysts. 

Besides multi-club corporate football owners, numerous famous clubs are publicly traded stocks in their own right, for example Manchester United, Arsenal, Rangers, Borussia Dortmund and Juventus. 
Where Brera FC fits in: Brera, owned by BREA is ranked as the 3rd most popular Milan football club, with Inter Milan 2nd (valued at $1Billion) and AC Milan 1st (valued at $1.2Billion). 

The strategic appeal of multi-club football ownership: The strategic advantage boasted by the MCO model means is not hard to comprehend: 

1. The combined scale provides greater leverage to recruit better players from abroad,

2. Advertisers, for example Nike and Adidas, can reach exponentially more eyeballs in more cities as a result of inking potential deals with one single entity,

3. Purchases of any materials and machinery can be done in bulk for a number of clubs. 

4. HR strategic advantages and de-duplication of top managerial positions is possible thanks to the economy of scale.  

Football As A Means Of Social Integration In Europe?

Football is not just about profit. It serves a much deeper purpose in society today. It is a common language that unites people. In recent years, France served as an example of what happens when mass migration is not followed by a clear social integration strategy. Many other European countries, for example Italy, Spain and Greece are welcoming large numbers of new migrants who do not share a common language, religion or culture. 

Europeans understand that it is unrealistic to welcome large numbers of people and simply integrate them into the workplace without social bonds. Many argue that football is the one social activity that people share with Europe, particularly when the origins of many migrants are considered. Social integration can provide the foundation for new arrivals in Europe to begin their European dream. This is a common vision shared by many leaders in football, a momentum that can hopefully become the topic of discussion for future European social funding and social investment initiatives. 

In this context, it is also interesting to note from official sources that most Brera FC players are immigrants. Therefore, when it comes to helping migrants get a taste of the good life in Europe, in contrast to all the low wage positions from the hospitality industry, Brera Holdings leads by example. 

Final Take:

Nobody said that hooliganism in football will completely fade away, hence the chairs and drinking cups at the events will always be made of plastic. Yet clearly, as many people were slumbered during the pandemic, some publicly traded companies moved in and are now buying up and consolidating strong portfolios of football clubs and related assets. Many of them are willing to give the average investor a share of the action. You will probably have to seek professional advice when assessing a list of football related stocks to invest in. This space is one to watch closely in the months and years ahead. 

 

Adriaan Brits is an Ecommerce specialist and sector analyst, with a long track record in writing for IBTimes and Jpost. His investor newsletter gained momentum largely due to his in-depth ecommerce research and trend analysis.