Hollywood actor Ryan Reynolds delighted both supporters of his club Wrexham AFC and neutrals watching on TV recently as he attended the club’s fourth-round FA Cup tie against Sheffield United – while it’s fair to say that the takeover of the Welsh club by Reynolds and fellow co-owner (and Hollywood star!) Rob McElhenney has got us all talking about football club ownership.
Reynolds and McElhenney aren’t your traditional football club owners. Of course, the first step is having a few hundred million pounds lying around. But even looking past the upfront cost, actually owning and operating a football club is likely to be a tall order – not to mention the hoops you’ll have to jump through to become an owner!
With club ownership in the headlines, commercial finance specialists, Anglo Scottish Asset Finance, take a look at what it really takes to buy a football club.
Which club should you buy?
As much as we’d all love to run the club we’ve supported since childhood, it isn’t always that simple. Your first step in buying a football club is identifying which ones you’d consider buying. Plus, there is the chance your relationship with the club could sour. It’s good to have a shortlist of clubs that you’d be interested in. You might look at supporter bases who are unhappy with their owners, or teams that, with a little extra investment, could push on to the lucrative promised land of European football.
In the past ten years, billionaire investment in Aston Villa, Wolverhampton Wanderers and Leicester City has propelled the clubs from the Championship to the Premier League and has seen all three compete at a high level. Leicester City won the ultimate prize of the Premier League trophy in the 2015–16 season. It really is achievable if you have the financial backing.
The football club’s place in its city is another important aspect to consider. Crystal Palace is a well-established club, but in comparison to London giants like Arsenal and Chelsea, its overall impact on the footballing cityscape is notably smaller. Meanwhile, sleeping giant Newcastle United was recently revived from its slumber by Saudi investment fund PIF, and its subsequent ascent up the Premier League has brought a newfound optimism to the whole city.
Ryan Reynolds and Rob McMcElhenney famously chose Wrexham AFC because they wanted to lend financial stability to a club in need – so your motives are important too!
The legalities of owning a club
The organisational structure of the clubs on your shortlist will affect your potential purchase of them – although they’re all considered standalone legal entities. In the Premier League, every club is registered as either a public or privately owned company. In other countries – and in lower-division English football – clubs may be owned and operated by a consortium of fans.
Germany’s Bundesliga 50+1 rule dictates that all clubs in the league are majority-owned by supporters, while La Liga’s two main leaders Barcelona and Real Madrid are member- and fan-owned. In England, however, it’s the likes of Enfield Town and Prescot Cables that are owned by supporters. McElhenney and Reynolds took over Wrexham AFC from the Wrexham Supporters Trust after it overwhelmingly voted in favour of their takeover – so bear in mind that you might need to win supporters over before you even become owner!
By becoming a majority shareholder in a publicly traded club, you could become the de facto owner. According to UK takeover law, when a buyer acquires “control” over a target company, it must then make a ‘mandatory offer’ to all shareholders to acquire their shares at the highest price paid in the last twelve months. “Control” is deemed to be once you’ve purchased 30% of the club’s shares, so once you’ve reached that figure, you must make your mandatory offer and begin your takeover bid.
In the majority of cases, however, your chosen club will likely be privately owned, meaning you need to purchase it from its existing owner. For reference, the takeover of Newcastle set its buyers back £305m – chump change compared to Todd Boehly’s £4.25bn takeover at Chelsea.
How much will a club cost me to buy?
It’s not just the upfront cost, running overheads and squad investment that you need to think about when buying a football club. The club’s financials are undeniably crucial. As the new owner, you’d be saddled with all the club’s existing debts and liabilities – which could net you a great purchase price, provided you’re willing to absorb the club’s debts.
Both Chelsea (1982) and Swansea City (2001) have been sold for just one English pound. A bargain, surely? But this was to allow the new owners to spend their money on whittling down the debts the clubs had accumulated, which threatened their future survival. Wrexham was purchased for £2 million, catapulting the club ahead of its National League competition in terms of spending power.
Even your future club’s supporters can help you to negotiate a better price – if they’re unhappy with their existing ownership. Though fans rarely can directly affect the direction of a privately-owned club, they can certainly help create a hostile atmosphere and ‘encourage’ a quick sale via protest. This has arguably helped Manchester United’s owners, the much-maligned Glazer Family, begin the process of selling.
Are you fit to be a club owner?
You’ve overcome the hurdle of accruing your funds, and you’ve had your bid accepted – but there are still hurdles to overcome. You will need to be personally vetted by the Premier League in order to determine whether you are of adequate moral standing to represent your new purchase and the league in general.
Whether or not you can buy your football club at this point comes down to you passing the Owners’ and Directors’ Test. You may be prevented from completing the sale for a range of reasons, including criminal convictions (for a wide range of offences), a ban by a sporting or professional body and breaches of certain football rules, such as match-fixing.
You can finally buy your football club once you pass this test – but keep yourself out of trouble, because you’ll be re-reviewed every year!
Long-term football club financing
It’s no secret that football clubs need regular investment to not only stay afloat but to challenge at any level – especially the upper echelons of competitions like the Champions League. The threat of relegation and the accompanying financial issues mean that a lack of investment is an impossibility if you want your club to continue to exist.
You’ll need deep pockets and long-term financial stability to keep your football club operating and competitive. Be prepared to spend, spend, spend – failing to invest your personal wealth into the club could quickly turn the supporter base against you.
Glenn Henery, Sales Director at Anglo Scottish Asset Finance, comments: “Owning a football club is not for the faint-hearted – there are so many factors affecting your investment. If you’ve got the funds, however, and you’re willing to use them, it can be a hugely rewarding and lucrative position. As long as you’re prepared to spend and put the club first, there’s no reason you can’t make money, given the huge TV licensing payouts for modern Premier League clubs.”