Potential Minority Investment

I've seen more informative websites

https://thefootballco.com/

 

I found this article .... make of it what you will, doesn't sound like we are going to see an influx of money ... its all self generation and club networking within the group. Not sure I like the sound of this tbh

9 January 2023 - 4:21 PM


Author James Corbett

Photo Alamy

Exclusive: Goldman Sachs veteran on the verge of launching $1 billion Multi-Club business

The Football Co chairman Peter Grieve says group of unnamed international investors and executives have already acquired multiple clubs and academies globally and are looking for spring launch with initial $1 billion valuation.

Grieve, a former US marine and Goldman banker of 25 years standing, says structure is “teed up and ready to go for a big bang”.

Why it matters: Research by Off The Pitch last year showed more than 200 clubs globally are now part of MCO models. Are Football Co’s a continuation of an existing trend, or a new riff?

The perspective: Grieve describes game’s current ownership structures as Medieval and says The Football Co’s MCO model will be modelled like an international corporation.

A new company with a $1 billion multi club ownership portfolio will launch in spring, headed by a former Goldman Sachs banker and with a leadership team drawn from executives with decades of experience from the global football business.

Football Co chairman Peter Grieve says that the group – via what he terms “our owner operators” – have already made club acquisitions in South America, CONCACAF and Central Europe as well as “academies throughout the developing world”.

The group are also close to another club acquisition in England and are in negotiations over several other clubs.

“I think the overall valuation at the end of the day, when we're done, will be many billions,” he says. “I would say, when we get to the initial launch it's more like a billion.”

“They are teed up and ready to go for a big bang,” he adds of the existing assets.

“They are individually owned by our owner operators. There is a big bang that will put them all in at once [to The Football Co’s ownership].”

Mystery men

Grieve at this stage is unwilling to say who those owner operators are. The company, he explains, is in the midst of a sort of soft launch, introducing themselves to key media, so that when the aforementioned “Big Bang” comes fans will have a reference point.

He adds that The Football Co is cognisant of the legal and regulatory issues surrounding club ownership and director tests and how potential mergers may fall under scrutiny.

Grieve says that there are several name-brand investment banks in the final stages of vying for the mandate, and family offices looking at The Football Co as a turnkey solution for investing into football.

Beyond the three regions he mentioned where acquisitions have been made, Grieve personally owns Bantu Rovers (the Aston Villa midfielder Marvelous Nakamba came from its academy), who play in Zimbabwe’s first division and has in the past been linked to the purchase of Hull City. In recent weeks the Brazilian media has carried speculation that he is behind a bid to buy Atlético Mineiro, Belo Horizonte’s most historic club.

Post-interview the mask slips a little, and his PR representative emails a slide with the leadership team’s business experience.

According to the slide it includes the chairman and CEO of a public company, a US sports league commercial executive with $1 billion of partnership deals to their name, a former Adidas Asia head, a senior executive at the European Club Association, the owner and president of a Champions League club and a country head of delegation at last year’s World Cup. It seems an intriguing line up, but still no names.

Medieval industry

Grieve sees an opportunity amidst what he terms the “broken” current club ownership model. He believes the football industry as an investment opportunity is not reflective of modern international businesses.

“Individual clubs are too small to be really good companies. They're not diversified enough. The footprints not big enough.”

He points to clubs almost everywhere outperforming the SP500 as an asset class with low correlation, but says that the way the football business has been structured puts off institutional ownership or individuals as shareholders (“Beyond those who want to put a certificate on their wall saying the own a chunk of their club and then do nothing with it,” he adds.)

But size isn’t the only problem. “Ownership is medieval,” he says. “Why is it medieval? All of these clubs play to the level of their economic reality. ‘Here's the revenue line. We take a percentage of those revenues and that's what can be invested in the squad’.

“And for the most part, over longer periods of time, that's where they play. The only way to improve play is to increase the level of revenues, and if they are incapable of doing that, then the only way to gain promotion is for the owner to reach into his pocket and put in more money or to sell up because if he can't, he has to sell up.”

The Football Co says that it will address these shortcomings via its MCO model. A diversified portfolio lowers investor risk, he says, and there are economies of scale that can be applied across the group. The use of big data is still underexploited in football and Grieve talks expansively about the group’s own data guru, whom he says he has been collaborating with for a number of years.

Individual clubs are too small to be really good companies. They're not diversified enough. The footprints not big enough

“It's all about the data,” he says. “It's about the data on the football side. It's about the data on the fan side. It's about the data in every business you're in and how you tie that together.” Data, he says, “is part of the secret sauce.”

Changing the MCO model

If all of this sounds familiar, that’s because it is. Research by Off The Pitch last year showed that more than 200 clubs globally are now part of MCO structures. What few – if any – of these ownership groups have done so far is turn those synergies into a truly successful model.

Grieve is well aware of the shortcomings of the existing groups. Current MCO models fall short because there is little interaction between different clubs in ownership models, most obviously in terms of player trading; The Football Co will be different in that, he says. It is different too in terms of ownership structure. Whereas MCOs like 777 and City Football Group are owned by funds, The Football Co will be shareholder owned. He talks about the potential for public ownership.

Football man

After the US Marines, whom he served for seven years in the 1970s and 1980s, after Goldman Sachs, after a spell as chairman of a bank in West Virginia, Grieve describes football as his “fourth career.”

While he talks like a businessman, his pronouncements are inflected with what seems like a genuine love for football, which he still plays as a central midfielder half a century after first coming into contact with the sport at High School.


“All of my best friends, everything that is good in life that has happened to me has come out of this game,” he says.

He tells me of his pride in Nakamba’s ascent from Zimbabwe to the Premier League, and also that of Teenage Hadebe, who made a similar journey to play for Houston Dynamo in the MLS.

“We probably could have put five more guys from that generation into top five leagues, but didn't have the connections or the way to do it, and that’s what set me off on this journey,” he reflects.

 

Was literally coming on here to post the same thing. A very interesting article. Would appear that we are the club in England that he mentioned in this article back in January.

 

Yeah. Not great.

 

On the contary. Something like this could be a real gamechanger for a club like Watford. If done correctly, then it could really propel the club forward. Sure, there are a lot of moving parts, borrow from Peter to pay Paul, but we're used to that with trading on a smaller scale between us and Udinese.

Of course, it's a big unknown and with that brings a lot of nervous energy and distrust, but I think we have to move on from Gino asap, and this sounds a very intriguing and ingenious prospect.

 

I was about to say the same. It’s basically what we had with Udinese and Granada just with one of the biggest clubs in Brazil and Bantu United in Zimbabwe.

We’re already Banter Town in this country so it makes sense.

 

So we become a small cog in a huge machine with the objective of somehow magically achieving profits for a pool of investors, totally losing our identity.
The business model seems to be stick lots of different businesses together and suddenly they will all become profitable. Maybe there's an opportunity to save costs by centralising functions, bulk buying etc but seems like just a lot of hot air to get rich investors to hand over their money to a fund. If part of the cog is losing money, just close it down and divert funds elsewhere. Love or hate Pozzo, I can't think of anything further from the EJ type of owner with an emotional investment than this.

 

COG objects to being a cog.

 

Genuinely thought you were going to end that description with ‘but that’s enough about how things are now’.

 

yes was going to make that very comment but then thought "no, this is a serious discussion !" !!
PS what's a COG ?

 

What more do you want? It's a cutting edge site: https://thefootballco.com/tuck-mba-alumni-story-peter-grieve/

 

To add to my own point, this group will not make money from Watford whilst in the Championship. They will have to over invest initially to get us promoted. Once we go up then they will have to ensure we’re good enough to stay up.

It has clear similarities as to when Pozzo took over. We knew they were going to cream off our profits to feed Udinese and the Pozzo family, and that’s how it transpired.

This will be more of the same, but in a much bigger scale. They need a relatively low cost club operating in the EPL making profit for the group. As a fanbase we’re used to that concept and are comfortable with it as long as it puts us in a mid-table position in the Premier League, it’s all good.

Maybe 5 years along he line, we’ll get a little frustrated with non progression, but if we’re in a place where we’ve got a shot at Europe and winning a domestic cup, that’s good enough for me.

 

If we don't play he's going to take his soccerball home and tell his momma on us.

 

Another page from the excellent site. For the news page, it's not carrying much news.

https://thefootballco.com/category/news/

I'm being facetious. If the company is going to launch in the spring then these pages will (probably, most likely) only be test versions. Who knows if they're alpha, beta, gamma, delta or all the way down to omega tests but tests all the same. Or a front for something else. Probably tests though. Hopefully.

As for that article, nothing fills me with more confidence than the mention of shareholders >shudder<

A possible plus from the same piece though is the acquisition of “academies throughout the developing world”. So presumably Africa in particular will be mined in a way clubs our size cannot possibly do as a single entity, and hopefully the same for other under exploited areas too.

The likes of Barcelona, Madrid & Bayern Munich have their own branded academies and capitalise in that area well. So if this is to go through it's possible we get a slice of that market in a way we don't right now.

That will also minimalise transfer outlay to some extent, I'd presume, making the club a little bit more self sufficient/economically viable within the larger group context.

Who knows right now. It's a relative unknown so whatever plays out will play out. More fun times though!

Soccer moms?! Well, now you've told us they'll be involved I'm 100% in with this buy-out!! #MakeWatfordGreatAgain

 

Just a revenue stream on a spreadsheet to some ex banker who owns the mighty Bantu United. Think I'll just give up if this goes ahead, and say ******** to football

 

Having just finished reading John Preston's book about Elton and GT, what a different world we live in.

 

Some highly sceptical voices in this thread, but relative to some of the other US-based investors in football either already out there or who had been mooted as potential purchases this seems far from the worst potential outcome.

Yes mention of returns and shareholders will cause some concern, but nowadays unless you're basically being bought out by one of the Arab royalty pouring their oil money in, then it'll always be part of the conversation.

People have focused on the mentions of Bantu United and a club in Brazil, but from the sounds of both this article and the one in the Athletic, the group seem as if they are far from just stopping there as far as acquisitions go. Also, the group also owning Atletico Mineiro is absolutely nothing to be sniffed at - they are currently 3rd in the Brazilian league and have produced some very good players over the years. The other multi-club ownership groups with stakes or ownership of top flight Brazilian clubs tend to usually be fairly large, with a top flight, top 5 league European club in their portfolio - see Red Bull Group, City Group, Crystal Palace and Sevilla+Genoa.

The Athletic article mentions a club in Slovenia being bought (I presume that's the "Central Europe" club, and whoever the CONCACAF club is has not yet been revealed it seems.

Atletico Mineiro, a club in the CONCACAF, a top Slovenian club, and the Gambian academy, could already provide us with a good, cheap pipeline of talent. In this day and age, not being part of a multi-club group could leave you behind.

This group seem certainly more ambitious in their scope, and with more existing football knowledge, than the new US owners of clubs like Birmingham and Burnley, or what had been proposed as part of the previously mentioned SPAC purchase and float deal.

The leadership team even supposedly includes: " the owner and president of a Champions League club" - who the heck could this be? And how could they be involved in helping to oversee a football group which presumably would still be separate from the CL club they are President of? Unless this group is somehow also going to purchase a CL club as well.

Either way, it doesn't sound as if their purchases will stop with us. I wonder if they will also take Udinese as part of the investment?

Really, this could be much worse.

 

Time for Watford Football Club to exit the banter years and enter the bantu years

 

Further to this, assuming that it is one person who is both the owner and president of a Champions League club - as far as I can see that would narrow it down to only Lazio, Napoli and RC Lens out of clubs in the CL group stages who have an owner and a President who are the same person.

So assuming the Pozzos might not sell to a rival club of Udinese, I'm going to make a wild guess that RC Lens will also become part of this group.

 

It seems like TFC has conceived of a much looser multi-club model than has been created so far, something like a franchise system, where the underlying clubs receive the benefits of loose affiliation in return for some sort of take for TFC. Maybe on top of that some clubs (including us) would be directly owned and operated whereas others are managed by independent owner operators. I’m not convinced personally.

 

But the article states:

““They are teed up and ready to go for a big bang,” he adds of the existing assets. "They are individually owned by our owner operators. There is a big bang that will put them all in at once [to The Football Co’s ownership].”"

So it does sound like they will all become owned by TFC. You could maybe assume that the Pozzos for example are currently our "owner operators", but soon once the sale is complete the ultimate ownership will become TFC.

It is not clear how much of the operation of each individual club will be centralised though, but they talk as if there will be a reasonable amount of centralisation and knowledge sharing as part of TFC operating as its own company.

If anything it sounds like the reverse to what you're claiming - and that TFC have conceived of an even closer/tighter multi-club model than is the usual (though in our case our ownership model is already very close, albeit between just two clubs); from the article:

"Grieve is well aware of the shortcomings of the existing groups. Current MCO models fall short because there is little interaction between different clubs in ownership models"

 

As has been shown before, prem clubs lose huge sums of money, only a few make a profit at all. The additional cost of staying in the prem far outweighs the additional revenue. The only reason to own a small/med club is because you love it, or you have a huge ego, and/or v deep pockets eg BHA (love and deep pockets).

 

This is the main part which concerns me - though hopefully it's more a very long-term pipe dream or just puff for the media.

 

Yes public ownership is the default 3/5 year exit plan where all investors cash in their chips if it's been a successful operation. Public ownership though would place even more emphasis on turning over a profit rather than anything to do with sporting success or local values.

 

If it's not the Bantha wars I'm taking my Lightsabre and going home.

 

Well I guess these guys think differently.

 

I'd be more worried he didn't mean traditional public ownership, as in IPO followed by a public listing etc, but more like the audience participation type nonsense that was tried at Ebbsfleet a few years back.

 

I would be interested in the views of @Jumbolina on this as I know he just wants rid of Pozzo whatever the outcome. For me, I think we need a change and this just feels like The Pozzo's on a bigger scale but could be interesting

 

I think it's reasonable to assume he's talking about some kind of IPO.

 

Thanks. Interesting analysis. I may have paid too much attention to the owner operator phrase. Still not particularly inspired

 

Heard something interesting regarding this this afternoon - happy to share with a few people privately but probably unwise to spread about in here just yet.