English League: American-funded "adventurer's paradise"

Portsmouth, Rexham, Plymouth, Gillingham, Leighton East, Lincoln City... After reading this string of names, what comes to mind?

Unless you're a deep player in the computer game Football Mananger, or you're a... Otherwise, the string of names, except for Portsmouth, which reminds you of a short-lived Premier League club N years ago, is full of strangeness.

However, these professional clubs in England's lower leagues now have a commonality - they are all clubs controlled by American capital.

This string of clubs, distributed in England's third, fourth and even fifth division professional clubs, like Wales' Rexham, although they have been playing in the English league system for more than a hundred years, but after falling out of the English Premier League A and B Division, they are not considered "professional clubs" in the strict sense.

American capital's enthusiasm for European professional football, especially English football, has been heating up for 20 years, and the trend has spread from top to bottom. A year ago, Todd Boley's Clearlake Fund bought Chelsea, investing and committing a £2.5 billion + £2 billion model, and the latter £2 billion was mainly for the reconstruction or construction of Stamford Bridge.

In addition to Chelsea, the Premier League clubs controlled or invested by US capital, including Manchester United, Liverpool, Arsenal, Manchester City, West Ham United, Fulham, Aston Villa, Crystal Palace, Leeds United and Bournemouth, a total of 11 clubs, of which the Premier League clubs controlled by US capital, up to 8, there is a growth trend in the future, and it is only a matter of time before the Premier League becomes "Super Football League dominated by American capital".

And this trend of US capital penetration is still spreading to the middle and lower end of the English football pyramid. Of the clubs listed at the beginning of this article, Portsmouth also has a certain international reputation, after all, it has won the FA Cup in the 21st century, and several others are all acquired by American investors at low prices.

They don't come because they love football, they come for a return on their investment.

Portsmouth is a case in point. At the beginning of the 21st century, a large number of stars, including the famous marshal Redknapp, were hired for a short time because of the investment of funds related to the Russian oligarchy, but after the capital ebbed, the results took a sharp turn, successively downgraded, once liquidated and stopped, and almost bankrupt. American investor Michael Eisner bought the South Coast club in 2017 for just £5.67 million. Eisner's professional background, once the head of the Disney Group, he invested in Portsmouth, is to the bottom.

Boley's investment in buying Chelsea is enough to buy 441 Portsmouth... Eisner acquired Portsmouth, nicknamed the "Pompeii Legion", when the club was in the process of being promoted from League Two to League One, Eisner was optimistic about this investment project because: Portsmouth is not far from London, about 100 kilometers; There is only one professional club in the city; Home Fraton Park has a capacity of more than 20,000 people; He has previously played in the top league and even in Europe, and has great potential.

There is no doubt that Portsmouth has appreciated significantly in the five years since the acquisition – currently 9th in League One in the third tier and still has a chance to be promoted to the Championship. Ipswich City, which is similar in size in the same league, was acquired by US capital Gamechanger 20 for £40 million. In 2022, there is also the US blockchain agency Wagmi United, which bought League Two club Crowley City for 5 million pounds.

The Premier League was established in 1992 as an independent act of England's traditional professional league system, which for more than 100 years was administered by the "League Council of England" (EFL). Today, EFL directly manages only 72 clubs in the Championship, League A and League Two professional leagues.

The penetration of US capital from top to bottom naturally requires a lot of investment risk, because the valuation of the club is closely related to the league level of the club, the performance of the competition and the surrounding economic environment. Among the US investors, there are also exits such as former Aston Villa boss Randy Reiner, who claims to have controlled Villa for 10 years and lost more than 200 million pounds, "English football is the Wild West of the sports world, where fraud, scammers and quacks have nothing to worry about..."

Of course, investors who do not know how to trade and do not pay tuition will encounter various challenges in such a highly market-oriented and seriously lacking social supervision field, but this is precisely the adventurer's paradise loved by American investors.

An executive of a low-level league club controlled by American capital analyzed: "England's traditional giant clubs, either have been acquired long ago, or the market price is too expensive, so the profit-seeking instinct of American capital is aimed at 'potential stocks' - these low-level league clubs, the acquisition cost is not high, if there is a certain growth potential, the future return is absolutely considerable." ”

Therefore, in the eyes of the vast majority of American investors, English professional football is a value depression, and the most extreme return on investment for low-level league clubs is to one day rise to the Premier League, and it will appreciate again as the rights of Premier League events rise in price through social media in the future. At the same time, in the management and operation of professional sports, American investors are accustomed to believing that the management method that works well in the US professional sports market is more advanced and effective than European professional sports.

There are also a series of parameters that can increase the valuation of English clubs by US capital, such as geography - whether the club's location is close to the metropolis, especially London; e.g. just-in-time prices; For example, the possibility of promotion to the Premier League – Premier League clubs can earn more than £100 million in media rights revenue each season. These factors superimposed, it can be clearly seen that the clubs acquired by the United States have a clear trend of emphasizing the south over the north, and the British economy is more developed in the south, and the closer it is to London, the greater the appreciation may be.

U.S. capital and investment funds in various international markets are looking for investment opportunities everywhere, and the worse the overall economic environment, the more urgent they are. It is rare to find projects in the market with an annual revenue growth of more than 10%, and investment targets such as Ipswich Town, Portsmouth, Plymouth and Championship London club Millwall, with a huge stadium capacity, even in the lower leagues, the attendance can easily exceed 10,000 people, so this is a promising investment opportunity for US capital.

Among the surging American investors, of course, there are also romances, or, like controlling football games, fantasizing about taking a low-level club to the next level. Hollywood stars McAy Henry and Reynolds, teaming up to acquire fifth-tier club Rexham in 2021, is a bit of a game. However, after the acquisition, McEy Henry and Reynolds immediately brought the reality TV shooting team to shoot such a reality TV story, which is not so much a romantic game as it is a twist and turn of media commercialization.

The media copyright of the Premier League has become a business myth in the international market of professional sports in the past 30 years, and US capital has long believed that in the context of the increasing accessibility of social media and video distribution methods, even in the lower leagues, media copyright still has rich room for appreciation. These capitals cannot have any values related to the respective communities of football and clubs, only pure profit driven.

In a way, isn't this also "pure" professional sports?