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Analysis | It’s not just Man City. Financial football is becoming more and more common


Hassane Kamara is a high-octane defender at Watford FC in England. He was the club’s player of the year last season, although he did not join until January 2022. He is also a symbol of the financial engineering available to football clubs through the increasingly popular multi-club ownership model.

Watford were relegated from the Premier League last summer and Kamara was sold to Italian side Udinese for a profit of around £12 million ($14.4 million). That seemed like a great trade, but even better was that Udinese, which is owned by the same Italian family that owns Watford, immediately loaned the player back.

No rules were broken and Watford chairman Scott Duxbury was candid about the motives, telling the club’s website that the deal was aimed at balancing “financial well-being and keeping a team to compete”. It helped Watford deal with the lost revenue from the loss of a division.

This week, Manchester City, a member of a much larger and more powerful multi-club group, was charged with more than 100 financial breaches by the Premier League. The club, part of Abu Dhabi-owned City Football Group, denies any allegations. The infringements resemble claims that were rejected or barred by the Court of Arbitration for Sport as early as 2020.

Watford’s internal player trade is small in comparison, but for independent clubs and their fans, any financial advantage seems to give jointly owned teams an unfair advantage. Such sale-and-loan-back transfers are just one example of how owning multiple clubs can boost or ease the finances of football teams in a group. The model is becoming increasingly popular with owners, but less so with fans attached to the identity, history and local nature of their club.

Proponents of multi-club ownership say it could help protect clubs financially. The phenomenon is certainly expanding: according to the Sports Intelligence division of the International Center for Sports Studies (CIES) in Switzerland, nearly 250 football clubs worldwide were part of a multi-club group in 2022, up from less than 100 five years earlier. According to UEFA, the governing body of European football, nearly one in ten top clubs in Europe have ownership links with one or more others.

The financial pressure of elite football is enormous. The annual risk of missing out on lucrative competitions can cost clubs tens of millions in lost TV revenue. At the same time, teams must comply with UEFA financial sustainability rules designed to prevent them from spending beyond their means and going out of business, or benefiting too much from super-rich owners.

Clubs are constantly looking for ways to increase their revenues to cover the rising prices of players and their wages. English clubs spent the most ever on new players in January, at £815 million. Clubs have tied expensive players to longer contracts so they can write off the cost over several years, as Chelsea did this year with an eight-year deal for £90 million midfielder Mykhailo Mudryk. UEFA has already indicated that a rule change is planned to stop this.

Fernando Roitman, head of sports information at CIES, says player transfers, cross-club sponsorship deals and scouting fees can be used to help a specific team’s finances. Most multi-club groups have a clear vertical hierarchy with a flagship club ahead of smaller clubs in the pecking order, he says. This is a big reason why fans don’t like it: they want their team to fight fair for trophies, not a breeding ground or feeder club for a single elite team.

However, Roitman adds that the main rationale for a multi-club strategy is to optimize player recruitment and development, especially with younger prospects – and ultimately to maximize profits when a player is sold out of the group.

In Europe, clubs owned or controlled by the same investors are not allowed to face each other in cup or league competitions. If a lesser club in a group enters an intra-European competition, the investor may have to sell out – although success on the pitch probably also means selling for a profit. In 2017, RB Leipzig of Germany and Red Bull Salzburg of Austria both qualified for the Champions League. Despite their bond through investment from the Red Bull beverage group, they were each allowed to compete following changes in governance, funding and personnel. UEFA decided that no person or entity controlled either club.

Problems like this have been rare so far. Despite recent rapid growth and investor interest, the multi-club model is still in its infancy, says Theo Ajadi, manager in the sports business group at audit and consulting firm Deloitte. The idea has been around for a long time, but not many investors have tried to exploit it yet.

Owners have a lot of freedom over how and where to recognize income from things like multi-club sponsorship deals. There is nothing stopping a group from shifting most of the revenue to the top club with the higher player costs, although national leagues or regulators can judge the fairness and appropriateness of how the money is allocated, Ajadi added. Many of Manchester City’s alleged rule violations are related to revenue, sponsorship, related parties and operating costs.

Niall Couper, CEO of Fair Game, a British research and pressure group, says the model raises new questions about transparency and financial fairness. “It needs to be thoroughly dissected and subjected to thorough scrutiny,” he says.

Complaints about the commercialization of football ring hollow to me – that ship sailed decades ago. But it seems important not to let the sporting and commercial dominance become unassailable. The more this multi-team model grows, the more we need to track how it is used and assess whether it provides an unfair advantage.

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This column does not necessarily reflect the views of the editors or Bloomberg LP and its owners.

Paul J. Davies is a Bloomberg Opinion columnist on banking and finance. Previously, he was a reporter for the Wall Street Journal and the Financial Times.

More stories like this are available at bloomberg.com/opinion

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