L1 clubs, a still green Eden for investors


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Paris (AFP) – French football is popular: almost half of the elite clubs are now in the hands of foreign capital, whether investment funds or wealthy businessmen, an attractiveness barely damaged by several failures.

OL falling into the hands of American businessman John Textor, yet another episode in the retail sale of French football which has accelerated in recent years. A few months earlier, Red Star, National’s club, had been sold to the American fund 777 Partners…

Why are investors so interested in French clubs?

“Make no mistake, the clubs are undervalued in France, and the potential is quite enormous”, slice a business lawyer on condition of anonymity.

If the strategies differ between an investment fund and an industrialist, their common appetite comes from this low valuation of French clubs. As in all of Europe, they have been hit hard by the Covid-19, a pandemic which has cut European football revenue by around 7 billion euros over two seasons, according to UEFA.

“Clubs are not expensive”

American businessman John Textor on May 18, 2014 at the MGM Grand Garden Arena in Las Vegas Frazer Harrison GETTY IMAGES NORTH AMERICA/AFP/Archives

But this crisis was coupled with another in France, that of the bankruptcy of the former broadcaster Mediapro in 2020 which brought down the price of clubs even more.

As a result, French clubs are not expensive, and investors, who are betting on a recovery in TV rights during the next cycle starting in 2024, believe that they can offer them a rapid capital gain.

“For an investment fund, the logic is quite clear. You have to buy at a low price, value and resell in the short to medium term between 3 and 5 years, or play on transfers”, assures a business lawyer close to the soccer environment.

And unlike Germany, for example, no law prohibits an investor from owning more than 50% of a club.

“France is one of the best places to invest,” says Vincent Chaudel, founder of In&Sport and the Sport Business observatory. And it is likely to remain so for a while according to him.

“The economic environment is healthy, the clubs are not expensive. And there are several reasons to invest, there are several ways to obtain a return on investment other than through financial gain”, he explains.

The Hispano-Luxembourger Gerard Lopez leaving the headquarters of the LFP on June 14, 2022 in Paris
The Hispano-Luxembourger Gerard Lopez leaving the headquarters of the LFP on June 14, 2022 in Paris JULIEN DE ROSA AFP/Archives

American businessman Frank McCourt, who bought Olympique de Marseille in 2016, has not yet sold, for example.

The bad Bordeaux scenario

“It has been said a lot that he was looking to do real estate in Marseille. Did he succeed? We don’t really know,” wonders an analyst. “But it looks like he won’t lose any money, he didn’t get a bad deal.”

His compatriot John Textor, already a shareholder in clubs in Brazil (Botafogo), Belgium (Molenbeek, 2nd div.) and England (Crystal Palace), looked at OL, a club “with Champions League potential” , recalls Vincent Chaudel.

However, the road to financial success after buying a club is not so simple. Many have learned it the hard way, like the American Paul Conway, who took over AS Nancy in 2020, relegated to National this season.

Mediapro, the former L1 broadcaster went bankrupt in 2020
Mediapro, the former L1 broadcaster went bankrupt in 2020 DENIS CHARLET AFP/Archives

The Bordeaux scenario certainly also has something to cool some ardor.

The club, sold by M6 to the American fund GACP in 2018, was sold almost immediately a year later to another fund, King Street.

But in April 2021, this fund also threw in the towel, ceding control of the club to Spanish-Luxembourg businessman Gerard Lopez.

A succession of shareholders which did not prevent the relegation of the Girondins to L2, then an administrative relegation to National (3rd division) pronounced by the DNCG, financial policeman of French football, which the club immediately appealed. Against a background of losses of “nearly 45 million euros”, according to Vincent Chaudel, for a club already in deficit for the 2020-2021 financial year of 67 million euros according to the DNCG.

“This example shows that the owners of clubs of this caliber must have the financial strength to support such a sporting hazard”, analyzes Vincent Chaudel.

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