It has been an unprecedented month for the Premier League, with a rogue secession attempt, massive protests against the six English co-conspirators and threats of retaliation by governing bodies. While the backlash has been fierce, the Big Six remain among the most valuable sports teams in the world, and soccer insiders don’t expect the European Super League debacle to dent those sky-high prices.
European soccer is a matter of haves and have much, much less. The ESL laid bare which side of the coin teams in England, Spain and Italy were on. England’s top six clubs are playing a different financial game than the other 14 clubs they share the pitch with each season.
“The Big Six clubs are essentially in a walled garden where their revenue, and thus player spending, is meaningfully above the traditional mid-table clubs,” says Inner Circle Sports co-founder Steve Horowitz, who has been the investment banker in numerous soccer transactions in Europe, including EPL clubs Liverpool and Crystal Palace. “This creates an advantage that makes it statistically highly unlikely they will get relegated in any season.”
Manchester City is the only one relegated in the past 30 years, and their most recent promotion was in 2002, six years before Sheikh Mansour bought the club and launched his spending spree. Arsenal has been the worst of the group on the pitch, finishing eighth last year and in the same range this season. They’ve been in the top flight of English soccer for a full century.
The revenue drop-off from the No. 6 club among the elite, Tottenham Hotspur or Arsenal most recently, to No. 7 in any given year is more than 50%. An awful year for those six might mean an 11th place finish in the standings, but any of the other 14 English clubs are a couple of injuries away from potential relegation to the Championship, England’s second-highest league.
The result is the Big Six get valued more like NFL or MLB franchises, which operate in a “closed” system where teams are guaranteed a seat every year at the adult table—and the lucrative revenues that come with it—no matter how poorly the team performs on the field. That means multiples of five-to-six times revenue for these clubs, while the rest are one-to-two times revenue due to the financial uncertainty. The result: Tottenham ranks No. 6 with a value of $2.85 billion, and No. 7 Everton is more than 80% lower at $525 million, according to Sportico’s calculations.
Manchester United is the most valuable club in the Premier League at $4.65 billion. The team is publicly traded and has a recent enterprise value of $3.4 billion, but most soccer insiders think the team would fetch a significant premium in a private transaction and potentially $5 billion if the Glazer family wanted to sell. They are followed by Liverpool ($4.14 billion), Manchester City ($4 billion) and Chelsea ($3.35 billion). The bottom 14 teams are worth a combined $3.7 billion. Man City and Chelsea face off next week in only the third-ever UEFA Champions League final between a pair of English teams.
The Man United value is 26 times Burnley, which ranks No. 17 at $180 million, the lowest-ranked club for teams staying in the EPL for the 2021-22 season (we figure recently relegated Sheffield United is the least valuable overall at $60 million).
Compare that to the valuation gap from top to bottom in Sportico’s assessment of U.S. sports leagues: six times in MLB (New York Yankees to Miami Marlins); four times in the NBA (New York Knicks to New Orleans Pelicans); and three times in the egalitarian NFL (Dallas Cowboys to Cincinnati Bengals).
How investors value teams in a closed versus open league system is on display in the recent sale process of Orlando City SC. Major League Soccer is the 20th strongest soccer league in the world by one rating system, yet the Wilf family, owners of the Minnesota Vikings, is close to an agreement to buy Orlando for roughly $400 million. By Sportico‘s count, there are 11 clubs valued lower in the Premier League, the unquestioned top soccer league on the planet.
There have been a pair of high-profile minority stake investments in top clubs over the past 19 months. Private equity investor Silver Lake spent $500 million in November 2019 for a stake in Manchester City’s parent, City Football Group, that valued CFG at $4.8 billion. RedBird Capital closed a $750 million investment in March in Fenway Sports Group, which counts the Boston Red Sox and Liverpool in its portfolio.
The best Premier League teams are global assets that reach every corner of the world with sponsorships and merchandise. NBA teams are valued at seven times revenue on average under the premise of its potential for globalization; the EPL is globalization on steroids. Its jersey sponsorships and kit deals are more like media rights and reach hundreds of millions of people.
“If you own an NFL team, you own a team in the biggest league in America, but with an EPL club, you own a team in the most-watched sport around the world,” says Inner Circle’s Horowitz.
There have been other minority investments—the San Francisco 49ers increased its stake in Leeds to 37% in January after its initial investment in 2018—but control sales have been scarce since a flood of Chinese investors paid exorbitant fees for several English soccer teams in 2016 and 2017. Alan Pace’s ALK Capital closed on a purchase of Burnley in December for a reported $265 million, but many question the structure of the heavily leveraged deal. Sportico values the club at $180 million.
There are at least four clubs on the market and few known bidders so far near the asking prices of the current owners, outside of a Saudi Arabian-led consortium that bid $400 million for Newcastle in 2020 but withdrew the offer following pressure on the Premier League to block the sale.
This is the final week of the Premier League season, and it is usually filled with drama as three clubs are bound for relegation and the top four qualify for the lucrative Champions League—part of the lure of the ESL was getting all Big Six clubs into a guaranteed European tournament. There is less drama this year at the bottom of the Premier League standings. Fulham, West Bromwich Albion and Sheffield punched their ticket for the Championship long ago, and Man City has locked up its seventh league title, but Chelsea, Leicester City and Liverpool are still jockeying for the final two Champions League bids.
Relegation is a death knell for clubs. Premier League distributions, largely from TV, plummet from $150 million to roughly $30 million, excluding parachute payments. Clubs need to revamp their business model immediately for the new revenue reality, and most clubs in the Championship bleed red ink chasing the Golden Ticket of promotion. Swansea City FC was in the Premier League in the 2017-18 season and had plans to expand its Liberty Stadium, but relegation that season scuttled them.
Swansea is back in contention in the EFL playoffs chasing the last promotion spot—the top two finishers in the league standings are automatically promoted. That final EPL promotion spot will be decided in the Championship playoff final on May 29, and it has an apt nickname: “the world’s richest game.”
