The Jeremiahs who were quick to spot financial doom for the local authority and university sectors are already betting on the bloated football industry to deliver a string of administrations.
This month alone has seen two major Scottish clubs, Rangers and Caley Thistle, peering into the insolvency toolbox to find rescue solutions. Everton FC, presently 16th in the Premier League, appears to have dodged a bullet after an agreement to sell to US private equity firm 777 expired in June: the investor has now collapsed. It all shows, yet again, that even in the top tiers it’s hard for football clubs to balance the books.
Some commentators blame private equity for inflating club valuations like a dotcom bubble that’s about to burst. The profile of money in, money out has spiralled upwards. When Clearlake Capital led a £2.5bn deal to buy Chelsea in 2022, it set a global record for a football club acquisition. Since then, Chelsea has made no fewer than nine player purchases for more than £50m each, including two for more than £100m.
In the same year, Redbird Capital Partners acquired AC Milan from a major hedge fund for just over £1bn – a record outside the English Premier League. Its founder has warned that while he and his rivals have injected much needed liquidity into the sector, valuations based on media rights monetising intellectual property may mask what can realistically be done to improve a club’s operations. Others are now saying that the value of broadcast rights can go down, as well as up. It has already happened in Italy. It’s becoming increasingly clear that any investor under the illusion that the Premier League is guaranteed to make them more billions is seriously misguided – even in the top third of the table.
I know the game pretty well: I was Vice Chairman of Tottenham Hotspur (ninth in the table) in 1991 and again from 2001 to 2006. It was at Spurs that I began my working relationship with fellow Buchler Phillips Director, Paul Bobroff. Paul was chairman of the club for seven years, during which time Spurs became the first football club to float on the Stock Exchange. I first became involved in football club restructuring more than 30 years ago, when Buchler Phillips was appointed administrator to Wealdstone FC. During the 1990s I advised Luton Town FC, Millwall FC, Oxford United FC, Swindon Town FC and Barnet FC, as well as, of course, Spurs.
So, to many, Buchler Phillips is synonymous with football finance. Our team’s success rate in restructuring and securing the future of troubled football clubs is unparalleled, always underpinned by a rigorous methodology for increasing revenues and turning losses into profits.
The same tight grip is an approach that is often needed across all areas of sport, which is dogged by business interruption, brand reputation and issues of health and safety more directly than many other sectors. In addition to uncontrollable risks, there are corporate risks presented by poor management, which should be well within the control of the boardroom, not least in football clubs.
It’s often forgotten that Jeremiah was not only seen as a prophet of doom, but also as a prophet of hope. This chimes with the Buchler Phillips approach of ‘work out, not bail out’, and we are able to deploy it far beyond the sport of football that we love so much. Our turnaround specialists provide a broad spectrum of operational and advisory services to a wide range of sports clubs, leagues, governing bodies, agents, sports marketing companies, government agencies, lenders and investors in the sector.
We are also leading advisers to individual sportsmen and women. Our services for organisations include expert witness services; turnaround and debt restructuring; advice on stadium financing and real estate issues; valuation of intangible assets; and guidance on rights, royalties, licensing and commercial agreements. Businesses in any area of the sports sector wishing to explore strategies for financial restructuring and recovery are welcome to contact Buchler Phillips for a no-obligation discussion about suitable next steps.
Written by David Buchler, Chairman at Buchler Phillips, UK based independent boutique firm with an impeccable Mayfair heritage, specialising in corporate recovery, turnaround, restructuring and insolvency.