SPORTS INVESTMENT INSIGHTS
Structuring Investments and Governance Frameworks in the Evolving Landscape of European Sport
The focus of this article is to: (i) provide an overview of the increasing trend of minority investments and consortium vehicles within the ownership structures of European sport assets; and (ii) highlight key points for investors’ deal structures and ongoing governance arrangements as a result of this change in the sports investment landscape.
Changes in the shape and structure of European sports investment
Historically, the European sports model relied on ownership by local benefactors to assist in funding the industry by investing, benevolently or otherwise, their own money in advancing their local team. Subsequently, with the growth of international interest in European sport, we witnessed the rise in the “international” benefactor, who saw the potential for both capital growth and worldwide exposure from these investments. However, recent years have seen the dial shift even further from the benefactor model to an array of different forms of investment vehicles, family office led consortiums, strategic investors, sovereign wealth funds and private investment firms (with a diverse mix of investment strategies and mandates). This interest from diverse sources of capital has contributed to an increasingly more complex ownership landscape where minority stakes and consortium deals are now commonplace in the industry.
Typically, the franchise, closed-league model of the North American leagues has created a fertile ground for minority investments, with more predictable revenues and the knock-on impact of higher valuations (including, in recent times, from institutional investors given the loosening of league-level regulations). However, both open and closed sports structures in Europe have also seen growth in the number of minority and multi-investor transactions. Some of the key drivers of this trend are:
Escalating valuations
As valuations of sports assets have soared in the last decade (particularly at the more premium end of the market), existing investors are seeking to de-risk their initial investment through bringing-in a minority partner. For control transactions, the valuations are necessarily driving investors to form consortiums to fund a bid.
Funding requirements
While cost controls and financial sustainability are major themes in European sport ownership, it remains the case that many of the highest revenue businesses in the sector are loss-making. Majority owners are increasingly looking to bring in minority partners to help with these ongoing funding requirements. Whilst this may be necessary for working capital purposes, it is also common that such capital injections precede substantial capital expenditure on, for example, stadium development.
Preference for a minority position
A minority stake can be an attractive option for investors for a range of reasons:
- an opportunity to invest in an asset class where full control acquisitions may (i) be infrequent, given that the number of investible assets is limited; and (ii) requires materially more resource (both in terms of initial acquisition cost and future funding needs);
- minority investors can benefit from ownership and the growth of the asset without facing necessarily the brunt of the PR exposure which may be borne by the controlling shareholders; and
- while there are regulatory considerations when holding multiple investments within the same sport (e.g. see here for Northridge’s article on UEFA’s approach on multi-club ownership), there are examples of institutional investors building a diversified pool of minority holdings within the industry which reduces concentration risk on a single asset.
Formula 1 provides an example of a “closed” sport which has seen valuations multiply in recent years, in no small part due to the growth of the sport in the US market. The status of the incumbent teams is protected, with the acceptance of new teams to participate in Formula One (e.g. Cadillac F1) regulated by the Concorde Agreement - the contract which governs the relationship between the sport's key stakeholders (see here for Northridge’s article on Investment in Formula 1). Accordingly, the sport has been popular for minority and strategic investments: see, for example, MSP’s £185m minority investment in McLaren F1, Arctos’ minority investment in Aston Martin F1, and more recently the Qatar Investment Authority’s decision to purchase a reported 30% stake in the incoming Audi F1 team.
European football, often held out as the epitome of the promotion and relegation model, has also seen a growth of minority ownership. Recent examples include Red Bull's minority investment into Leeds United, Ares’ 33.96% investment into Club Atletico de Madrid, Atairos’ investment into Aston Villa FC’s holding company, V Sports, and Arctos' 12.5% investment into PSG.
These transactions reflect a trend across the industry. Deloitte’s 2024 and 2025 Sports Investment Outlook highlighted the following:
- In 2024, across global deals, 48% were minority investments, evidencing that minority ownership is progressing beyond the borders of North American franchised leagues.
- In 2023, 40% of the transactions globally in football were minority investments, which shows the shift in the sport’s ownership structure from the traditional “sole benefactor” model.
As well as sports assets now having multiple investors on the share capital table, the changing identity of these investors is also driving a shift in the way many investments are structured. As more institutional capital invests in European sports assets, there has been an increased prevalence of more structured forms of capital. Whilst some investors may still opt for straight equity investments, many of the new investor class favour instruments with greater downside protections and debt-like features. (See here for Northridge’s article on balancing equity vs debt in football investments.) These instruments may operate as a form of preference or redeemable share at the team level, but are also often inserted at a higher level in the corporate group creating a more complex capital structure on a look-through basis. Therefore, complexity in the ownership landscape is being driven by the number of investors in an asset and also the different forms of capital that these investors may hold.
Designing a governance framework
The shift in the identity of investors, as well as the more structured nature of the instruments, have all contributed to a more complex capital structure which needs to be thought through in the documentation.
In addition, the growth of minority ownership more generally (often from investors who may have differing strategic rationales / investment outlooks than the majority), has led to new negotiation challenges as parties seek to set up an effective and harmonious post-transaction relationship, whilst protecting their own position.
This section highlights a few of the key considerations relating to governance rights and the associated negotiation points for investors. Namely: board structure; approach to reserved matters; future funding obligations; compulsory transfer provisions; dispute resolution; and fan activism.
Find out more
Please feel free to contact Ian Lynam, Mike Herbert and Scott Treleaven if you have any questions regarding investing in sport.
