Investor Billions finally Paying Off for Premier League Teams

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It is not a secret that more and more European soccer clubs are owned by investors or companies. In fact, 49 European teams are corporations which means that they are not registered as traditional soccer clubs due to high ownership of investors. Taking the English Premier League as an example, it shows that the billion worth investments in the teams start paying off. On the opposite, German Bundesliga teams face law restrictions that do not allow investors or companies to take over the club, while the teams in England, Spain, Italy, and France can be owned by foreign or domestic businesses.

The results in the round of 16 in the UEFA Champions League are symbolic for the development in European soccer. Half of the eight teams that made it to the quarterfinals are English: Manchester City, Manchester United, Tottenham Hotspur, and last year finalist FC Liverpool. Even more significant, City, Tottenham, and Liverpool kicked out the three German teams FC Schalke 04, Borussia Dortmund, and FC Bayern Munich. In six matches, the Germans could only score three goals, while the English goal machine produced 17 goals – a demonstration that English soccer overtook German soccer.

A key reason for this development is that English teams are able to spend huge amounts of money to transfer high-quality players who are superstars in their home countries, for example, Liverpool’s Mohamed Salah and Sadio Mane were ranked first and second in the voting for the CAF Best African Player of the Year 2018. In particular, according to transfermarkt.com, the four English quarterfinal teams together spent about 3.1 billion US dollars for player transfers in the last five years.

On the other side, the four German teams that qualified for the Champions League this year invested 1.2 billion US dollars in the same period. Even average Premier League teams such as FC Everton (11th place in Premier League) spent approximately 540 million US dollars in the past five years which is 160 million more than longtime Bundesliga winner FC Bayern Munich. Moreover, Spanish La Liga winner FC Barcelona, Italian Serie A winner Juventus Turin, and sheik club Paris St. Germain spent more than double the amount that Bayern Munich invested in the last years.

Subsequently, there are two main reasons why every other European top league (especially the Premier League) has more financial power than the Bundesliga. First of all, German teams cannot be fully owned by investors or companies that would be willing to spend a lot of money on new players. The Bundesliga contains the “50+1” rule which states that soccer clubs do only receive a license if more than 50 percent of the club is owned by the club itself instead of domestic or foreign businesses.

In contrast, in the other European top leagues, investors or companies are allowed to hold more than 50 percent of a team. For example, Singaporean billionaire Peter Lim bought FC Valencia (Spain) in 2014. In the French league, Qatar Sheik Tamim bin Hamad Al Thani bought noble club Paris St. Germain in 2012 and in England, 17 of the 20 club owners own more than 50 percent. The most famous club owner in England is Ukrainian Roman Abramowitsch who took over the FC Chelsea in 2003. In the past 15 years, Abramowitsch’s estimated investment in the club was 1.39 billion US dollars.

Other than that, the English Premier League teams earn a significantly higher amount of TV money since the league is marketed really well. It is the world’s most popular league, attracting a potential television audience of 4.7 billion people in 185 countries. The current TV deal was signed back in 2015. It turned out to be the most lucrative TV deal in the history of football worth approximately 3.44 billion US dollars.

That contract guaranteed even the last ranked team in the 2017/2018 Premier League season (West Bromwich Albion) a payment of 124 million US dollars. Manchester City, the winner of the competition last year, received 197 million US dollars. In contrast to that, Bundesliga winner and Champions League semi-finalist last year, FC Bayern Munich received TV money of only 112 million dollars. The 1. FC Nuernberg, last ranked team in the Bundesliga currently, only received 32 million dollars which illustrates that English teams have a better financial basis than German teams.

The question in the future will be if the German Bundesliga will open up more towards foreign and domestic investment in the clubs in order to keep up with the other leagues.