Earlier this week, Dubai International Capital became the latest entrant into the field, as it began “exclusive negotiations” with Liverpool FC about a potential acquisition of the storied club. If the deal is ultimately successful, Sheik Mohammed bin Rashid al-Maktoum, the ruler of Dubai and controlling shareholder of DIC, will join the growing list of foreign investors who have taken over Premiership sides, among them Russian tycoon Roman Abramovich and Tampa Bay Buccaneers owner Malcolm Glazer.
But investor interest in the pitch has not been limited to the United Kingdom. Earlier this year, a consortium of investors, including Colony Capital, Butler Capital and Morgan Stanley, acquired the French first division team Paris Saint-Germain (PSG) for approximately €41 million ($50 million).
Long one of the glamorous stalwarts of the French league, Saint-Germain has struggled in recent years amid corruption scandals, hooliganism and poor performance. Vivendi, the team’s former owner, reportedly invested approximately €250 million in the club but was still never able to turn a profit. This season, PSG is off to its worst start ever. And late last month, a PSG supporter was killed by a police officer during a melee involving anti-Semitic and racist violence. Following the incident, the mayor of Paris threatened to cut off the team’s annual €2 million subsidy if efforts to curb hooliganism were not implemented.
Despite these setbacks, however, Colony and its fellow investors can still take heart in one of Saint-Germain’s prized assets: real estate. Parc des Princes, the team’s home stadium, is located in Paris’ ritzy 16th arrondissement, one of the most expensive residential neighborhoods in the city. Colony has reportedly announced plans to upgrade the stadium, expanding its capacity and developing new luxury amenities. The firm is also rumored to be considering residential developments nearby.
Colony is not the only investor interested in the intersection between real estate and football. For example, Arsenal’s former pitch in north London, Highbury, is currently being converted into luxury apartments that will incorporate elements of the former stadium. Similar projects are under discussion at Liverpool, which is hoping to build a new stadium in the near future; there are plans for the team’s existing park, Anfield, to be developed into a public plaza surrounded by offices, retail establishments and apartments. And earlier this year, when Israeli real estate and hotel magnate Eli Papoushado made an unsuccessful bid for Premiership side West Ham United, he noted that his interest in the club was rooted in property not players.
“I don’t understand football,” he told The Independent. “But in these deals there is always a real estate opportunity and that interests me.”
Back in France, more investment firms could follow Colony’s lead. The French government is considering legislation that would allow football clubs to list on the stock exchange, providing a tidy exit route for investors. One of the requirements of the pending legislation is that teams will have to demonstrate that they are capable of generating revenues beyond just ticket sales, implying that team owners will need to monetize their ancillary assets such as real estate in order to successfully go public.
Perhaps anticipating a potential trend, Sebastien Bazin, the head of Colony Capital in Europe, told reporters at the time of the Saint-Germain announcement: “It’s the first French club bought by investors. But I can bet it’s not the last.”