Football & Finance: Exploring the Capital Markets

By Antonio A. Boccia, Baldi Finance S.p.A.

Over the last few decades the business of football has grown significantly. The worldwide broadcasting of sport events by global media conglomerates, and the rapid acceptance and development of sport sponsorship have changed the traditional business model of football clubs, which historically has relied on match day revenues.

The globalization of football has, on one hand, brought football clubs additional revenue, generated primarily by commercial activities such as the sale of broadcasting rights, sponsorships and licensed merchandise. On the other hand, football clubs now must commercialize in order to remain financially competitive and sustainable in light of increased costs.

Maintaining a sustainable financial position may require football clubs to make significant investments to achieve objectives such as:

  • Improving on-field performance (buying the best or more promising players);
  • Improving/increasing national and international branding through effective marketing initiatives (promotions, sponsorships, etc);
  • Enhancing the sustainability of its business model, and diversifying its revenue stream by expanding beyond broadcasting rights and tickets by focusing on merchandising, sponsorship, and stadium revenues.

Reaching these objectives may require investment in new technologies, personnel, manufacturing, new or renovated venues, financial and legal representation, and marketing initiatives. A primary question for many football clubs is where to obtain the additional capital needed for these specific investments? There is a variety of options available to clubs interested in raising capital, including those potentially offered by the capital markets, such as:

  • Issuing corporate bonds;
  • Initiating an IPO (Initial Public Offering); and
  • Integrating a football club’s fan base into a shareholder structure.

However, to date, only a few European football clubs (Juventus, Roma, Lazio, Borussia Dortmund and Manchester United are some examples) have initiated IPOs or have financed their revenue programs via capital markets. This limited number demonstrates how difficult it is for football clubs to enter capital markets and, perhaps, how reluctant capital markets are to embrace football clubs.

This paper discusses the key dynamics of capital markets and how football clubs must prepare in order to finance their investment programs through a capital markets action. It is clear, that for football clubs, having a solid economic and financial track-record may not be enough and that further “intangible”, but substantial prerequisites may be necessary, such as a:

Well defined and executable business and marketing strategies reflected in an economic and financial business plan;

  • Balanced corporate governance;
  • Proper corporate structure; and
  • Competent management team.

This paper addresses effective and potentially successful financial and governance strategies that football clubs can follow that will facilitate a capital raising action through capital markets.



1. The Globalization and Commercialization Of Football

2. Sport clubs and financial sustainability: new challenges

3. Why capital markets?

4. The financial appeal of a football club

5. Categorizing Football Clubs

6. Integrating the clubs’ fan base into shareholder structure

7. A path towards financial attractiveness

8. Financial Fair Play

Annex 1: The market benchmark

Annex 2: Fun intervention models (Bayern Munich and Portsmouth)


1. The Globalization and Commercialization of Football1

Over the last few decades the global business of football has grown significantly. As the game attracted more spectators and players’ salaries increased, football clubs, which until then were sporting associations, began to commercialize, largely in order to stay financially competitive, and in the process some football clubs became international businesses.

Consequently, football matches at many levels are now international, players are transferred worldwide, and the European Championships and FIFA World Cup are now high-demand media events with worldwide distribution - and football has become the world’s most popular sport.

Before the 1990s, the primary aim of professional football clubs was entertainment through onfield success while remaining financially solvent, rather than maximizing profit. However, increased involvement of global media conglomerates, worldwide broadcasting of sport events, and the rapid acceptance and development of sport sponsorship became important new revenue sources for clubs.

Thus, the commercialization of football has changed significantly the business model of football clubs. Traditional reliance on match day revenue (including season tickets sales and club memberships) has been supplemented by revenues dependent primarily on commercial activities, such as selling broadcasting rights, sponsorships, and licensed merchandise, as shown in the figure below from Deloitte Money League report2:


1 Planet Football Money League Sports Business Group - January 2017
2 Deloitte Football Money League, January 2018



An additional and rather recent element of commercialization within the global business of football is the increasing interest of foreign individuals and corporations in investing in top tier football clubs.

In particular, the desire of individuals and corporations from the United States and China in particular to associate with elite football is higher than ever, as indicated in the following charts3 which refer to the 15 of Europe’s major leagues4 where a club has controlling parties (owning more than 50% of shares)


3 Source: Uefa Report 2016 “European Club Footballing Landscape”
4 15 European major leagues include: Italy, Spain, France, England (Premier League and Championship League), Belgium, Germany, Greece, Netherlands, Portugal, Switzerland, Austria, Russia ,Turkey and Ukraine



Data indicate:

  • The majority of the 256 clubs analyzed have a controlling party although a sizeable minority do not (37%); of the 63% that have a controlling party the majority have a domestic owner (mainly in Russia, Ukraine, Greece, Italy, France and Belgium)
  • The English Premier League (60%) and Championship (58%) top the list in terms of foreign club ownership;
  • Over the last decade the most steady flow of new foreign owners has come from Usa;
  • The number of high-profile Russian and Middle Eastern investors has considerably fallen since 2008 to 2012;
  • More than 70% of all foreign takeovers in the top 15 leagues since 2016 have involved Chinese investors who have taken over clubs in Premier League, Serie A, Championship, Ligue 1, la Liga and Eredivisie.

2. Sport clubs and financial sustainability: new challenges

As a result of the above mentioned commercialization phenomena, football clubs continue to face new and often intense competition, but some clubs appear ill-equipped to manage significant and demanding financial challenges.

Clubs without a focused financial strategy or the lack of effective financial management may underperform off the pitch, even though they may perform well on the pitch, while keeping their fan base highly identified and fully engaged.

However, even though a club may be relatively successful on the pitch, it may definitely need to plan specific investments intended to:

  • Improve on-field performance (buying the best or more promising players);
  • Improve/increase marketing effectiveness through promotions, sponsorships and/or new marketing initiatives;
  • Enhance the sustainability of its business model, and diversify its revenue stream by expanding beyond broadcasting rights and tickets and focus on merchandising, sponsorship, and stadium revenues. Such a strategy may require significant investment in new technology, personnel, manufacturing, new channel partners, venues, financial and legal representation, and marketing initiatives, etc.

A primary question for many football clubs is where to obtain the additional capital needed for these specific investments? Due to my experience in finance over the past twenty years, I know there is a variety of options available to clubs interested in raising capital:

  • Issuing of corporate bonds;
  • An IPO (Initial Public Offering); and
  • Integrating the club’s fan base into a shareholding structure

However, such options are viable only if clubs are willing to implement a reliable and sustainable growth plan and, therefore, a fully executable marketing plan and, in addition, as better explained in paragraph four (“The Financial Appeal Of A Football Club” section d), the club is willing to adopt a proper corporate structure.



Many football clubs throughout Europe, even those with a significant fan base and substantial visibility at national and international levels, do not appear to have a focused strategic business plan. It is difficult to attract investors (national or international, private or institutional) if a club does not have well defined and executable business and marketing strategies.

The two key questions for football clubs seriously interested in raising capital are:

  1. Is the club financially sustainable and, therefore, eligible for a capital market action?; and
  2. Is the club able to raise financing for its investment programs on the capital markets (as many other businesses do)?

3. Why capital markets5?

Capital markets include a broad category of markets facilitating the buying and selling of financial instruments. In particular, there are two categories of financial instruments of capital in which markets are involved. These are equity securities, such as stocks, and debt securities, such as bonds. Capital markets involve the issuing of stocks and bonds for medium-term and long-term durations.

Other than the distinction between equity and debt, capital markets also are generally divided into two categories, primary and secondary markets. In primary markets, stocks and bonds are issued directly from companies (also called the issuer) to investors, businesses and other institutions, often through underwriting. Primary markets allow companies to raise capital without or before holding an initial public offering so as to make as much direct profit as possible. After this point in a company’s development, it may choose to hold an initial public offering in order to generate more liquid capital.

At this point the shares may move into the secondary market, which is where investment banks, other firms, private investors and a variety of other parties resell their equity and debt securities to investors. This takes place on a stock market or a bond market, which exist on exchanges around the world (for example, NYSE, London Stock Exchange, Euronext etc.). Capital market participants include individual and institutional investors such as pension funds and mutual funds, municipalities and governments, companies and organizations, banks and financial institutions. Suppliers of capital generally want the maximum possible return at the lowest possible risk, while users of capital want to raise capital at the lowest possible cost.

Individual investors (also known as retail investors) want to buy and sell securities for their personal accounts, rather than for the accounts of a company or organization. Retail investors normally buy in much smaller quantities than institutional investors. As mentioned, capital markets make it possible for companies to raise significant levels of capital through issuing new shares and initiating an IPO or issuing a corporate bond.


5 Source: Investopedia and Http://Smallbusiness.Chron.Com



Initiating an IPO allows a football club to raise a substantial amount of capital and, therefore, finance its investment programs without having to borrow from traditional sources. An IPO also will allow a club to avoid paying interest required to service the debt. This "free" capital, if spent effectively on well-defined growth initiatives, can result in increased revenue a club. New capital may be spent on marketing and advertising, hiring additional experienced personnel who may require higher compensation packages, research and development of new products and/or services, renovation of venues, acquisitions of ancillary businesses, new construction, and dozens of other programs designed to expand a club’s business and improve profitability. In addition, once a club has initiated a public offering, additional equities may be sold easily to raise additional capital. A publicly-traded company with a stock that has performed well in the market, will usually find it easier to borrow additional capital, and usually at a more favorable interest rate.

On the other hand, with every share of stock sold to investors, the club’s ownership stake is diluted, or reduced. Because equity investors typically have the right to vote on important company decisions, a club could potentially lose some control over its business. Therefore, some clubs, to fulfill their financial needs, may opt for promoting a capital increase by issuing preferred shares. This class of shares gives the shareholder a higher claim on the company’s assets and earnings than those held by common shareholders. Preferred shares generally have a dividend that must be paid out before dividends to common shareholders, and the shares usually do not carry voting rights. By issuing preferred shares majority shareholders and a club’s management team may accomplish a fund raising without diluting their ownership in the club.

An alternative option for football clubs requiring long-term financing is to raise capital through the bond markets. There are a variety of reasons why this option may be preferred. It may be to fund the purchase of large assets such as new venues, technology, or equipment. Alternatively, it could be to secure a longer-term funding structure by providing access to long-term working capital or funding for increased investment in other dimensions of the club’s business, such as marketing.

If a club issues a bond, it does not sell ownership in the club. However, similar to shares, once bought, bonds can be traded by investors on the public market. Bonds can offer a football club a variety of advantages such as:

  • Stabilizing the club’s finances by having substantial debt on a fixed interest rate, which offers some protection against variable interest rates or economic changes;
  • By not diluting the value of existing shareholdings - unlike issuing additional shares of stock; and
  • Enabling more cash to be retained in the business - because the redemption date for bonds can be several years after the issue date.



There are some disadvantages to issuing bonds, including:

  • The accumulation of interest. In addition, payments must be made to lenders regardless of business performance. During a poor season or a difficult economic period, a highly leveraged club may have debt payments that exceed its revenue; and
  • The potential for a club’s share value to be reduced if its profits decline - this may occur because bond interest payments take precedence over dividends.

4.The financial appeal of a football club

Prior to selecting a securities investment, investors (institutional and private) normally pay attention to several factors related to the issuer (the legal entity that develops, registers and sells securities to finance its operations) in order to understand if the potential investment may provide a reasonably high level of return.

A comprehensive list of key factors that should be taken into account by institutional or retail investors when considering to invest in a football club includes:

a) Trends of the global football market6

Investors normally consider investments in securities more favorably when the issuers are operating in growing and promising markets, showing positive financial results, and projecting favorable financial prospects. As for football clubs, a review of detailed financial reports suggests that the overall market trend is quite mixed, however, promising trends have been in place over the last few years, indicating significant improvement in revenues, margins, and financial indebtedness, which indicate that financing via capital markets may be achievable for some football clubs.

Negative factors which would prevent Football clubs from financing via capital markets

  • Exorbitant operating costs: player wages represent 62% of the net costs of European clubs have grown by 42% since 2010; over the same period all other costs combined have grown by 12%; of the € 5.7 bn additional revenues recorder between 2010 and 2016, 59% has gone on wages and 24% on reducing club losses.
  • Negative bottom line: in 2016 net bottom line (for all European football clubs on aggregate basis) resulted in losses (€m 269), although a positive trend is in progress (net losses were cut by 84% over the last four years).


6 Uefa Report 2016 mentioned in footnote 3



Positive factors which would suggest Football clubs to finance via capital markets

  • Skyrocketing revenues: Almost +600% over the last twenty years with a CAGR around 9,8%.
  • Net debt is decreasing: The combined net debt of Europe’s top-division football clubs dropped notably since 2011 (from 65% to 35% of revenues), also as a result of the Financial Fair Play rules promoted by UEFA.
  • Club net assets (asset > liabilities and debts) have increased for the sixth consecutive year, more than doubling to € 6.7 bn since the introduction of Financial Fair Play rules.
  • Social media dominance: The top 20 European clubs convey more than 600 million Facebook likes and 161 million Twitter followers.

b) Economic and financial performance.

Referring to some “consolidated” economic and financial analyses of best practices, investors see investments more positively in football club’s with:

  • Turnover (CAGR), over the last three years, >0
  • Net Profit >0
  • Growing (or at least stable) marginality over the last three years
  • Net Financial indebtedness7 /Ebitda <= 4x/5x;
  • Net Financial indebtedness /Equity <= 1x/1,5x

In addition, more specific sport industry related criteria might also be taken into consideration, for example:

  • Restrained dependence on broadcasting rights, at least in line with a football market benchmark8
  • Stadium Load factor9: in line with football market benchmark
  • Gross Ebitda10 % and Ebitda % in line with football market benchmark For more information about the Market Benchmark, see Annex 1.

c) Company Perspectives Regarding a and b above

Even provided that conditions a) and b) might be matched and positively evaluated by investors, if economic and financial projections and long-term financial and marketing strategies of a football club are perceived as inconsistent and possibly un-executable, it is likely that investors would be reluctant to invest in such an issuer; therefore, the projected bond and or IPO would be rejected by the financial markets.


7 Net Financial indebtedness = (Short-Term Debt + Long-Term Debt) - Cash and Cash Equivalents
8 The market benchmark (determined through my proprietary analysis) is the average value of different data (on an aggregated basis) related to the main four European Leagues (Premiere League, Bundesliga, Liga and Serie A) and where applicable even including Deloitte Money League data
9 Load factor: Stadium capacity/average attendance
10 Gross Ebitda%= (Total Turnover – Total Cost of personnel)/Total turnover



d) Proper legal corporate structure and balanced corporate governance

Corporate governance may be defined as the processes, practices and structures through which a company manages its business and affairs and works to meet its financial, operational and strategic objectives and achieve long-term sustainability. 11

It is generally believed that only public or large companies with many shareholders need to be concerned about, or can benefit from, implementing corporate governance practices because it is often perceived as costly and bureaucratic as it may slow the decision making process. The reality is that all companies – big and small, private and public, early stage or established – compete in an environment where good governance may substantially impact on key corporate events like:

  • Raising capital;
  • Securing debt;
  • attracting and maintaining talented, qualified directors;
  • meeting the demands and expectations of sophisticated shareholders; and
  • preparing for potential acquisition / exit or next phase of growth

which may notably affect the long-term viability of every company.

We may argue that a positive correlation exists between good corporate governance practices and long-term shareholder value, which may result in several benefits such as:

  • high performance Boards of Directors;
  • accountable management and strong internal controls;
  • increased shareholder engagement;
  • better managed risk; and
  • effectively monitored and measured performance.

There is no common, or comprehensive set of corporate governance policies or practices; the “effective” ones depend on several factors, including:

  • the nature of the business;
  • the company’s size and stage of development;
  • availability of resources;
  • shareholder expectations; and
  • legal and regulatory requirements.





However, we may identify five top corporate governance best practices that every Board of Directors (and every company) should adopt:

1) Build a strong, qualified board of directors and evaluate performance. Boards should be comprised of directors who are knowledgeable and have expertise relevant to the business and are qualified and competent, and have strong ethics and integrity, diverse backgrounds and skill sets, and sufficient time to commit to their duties.

2) Define roles and responsibilities. Establish clear lines of accountability for the Board, Chair, CEO, Executive Officers and management

3) Emphasize integrity and ethical dealing. Directors must not only declare conflicts of interests and refrain from voting on matters in which they have an interest, but should embrace a general culture of integrity in business dealing and of respect and compliance with laws and policies without fear of recrimination is critical.

4) Evaluate performance and make principled compensation decisions by establishing measurable performance targets for executive officers and tying their compensation to such performances.

5) Engage in effective risk management. Companies should regularly identify and assess the risks they face, including financial, operational, reputational, environmental, industry-related, and legal risks.

Regardless of the corporate structure adopted, much of the discussion related to corporate governance centers on the debate as to whether the board or senior management should focus exclusively on enhancing value for the shareholders or extending their focus to the rights, stakes and influences of all stakeholders (Shareholder vs stakeholder management approach).

With regard to football clubs, because most of them generally enjoy a close relationship among their corporate sponsors, media partners , consumers, and investors, the most desirable corporate governance framework is expected to be focused on a transparent set of rules and controls in which shareholders, directors and officers have aligned incentives and all relevant stakeholders are properly protected.

Foreman12 emphasized that a stakeholder approach may be significantly rewarding in terms of financial viability. For example, positive and proactive management of media rights may lead to more favorable media attention and increased willingness to broadcast matches. It may also lead to increasing substantially fan engagement, with positive economic and financial results.

The stakeholder approach, although more demanding from a management perspective, is definitely more suitable in case of a capital markets action by clubs. The open and positive management of key stakeholders is expected to generate positive effects on a football club’s revenue stream, making investors more willing to support the club as positive returns from its investments are more easily achievable.

12 Corporate Governance Issues In A Professional Sport; Author: Julie A. Foreman; Choose your business structure:



The most suitable corporate governance model should also be complemented with the most appropriate corporate legal structure. A synergistic relationship between a club’s corporate governance model and legal structure will impact not only how much a football club pays in taxes, but also on the ability of the club to raise capital on capital markets. When a football club is seeking to raise funds by being listed on a stock market, the designation as a PLC (“Public Limited Company”) must be its legal structure, otherwise stocks cannot be offered to the general public and be acquired by anyone, either privately or publicly, during an initial public offering or through trades on the stock market.

The designation PLC is more commonly used in the United Kingdom and some Commonwealth countries, as opposed to "Inc." or "Ltd," which are the norms in the United States and elsewhere. The mandatory use of the PLC abbreviation after the name of the company serves to instantly inform investors, or anyone dealing with the company, that the company is public. Whereas a football club’s capital needs are fulfilled by issuing corporate bonds, the most appropriate legal structure would be the “Limited Company” (LC). In a Limited Company, the debt of the company is separate from the debt of the shareholders. As a result, should the company experience financial distress because of normal business activity, the personal assets of shareholders will not be at risk. Ownership in a Limited Company can be transferred easily, and ownership in many LC companies is often passed down through generations.

5. Categorizing Club “Financial Appeal”

By combining key elements of the economic and financial pre-requisites identified in Sections a) and b) it is possible to categorize football clubs according to their “Financial Appeal”, which in this case refers to the ability of a football club to approach capital markets.

  • Green clubs meet all key economic/financial pre-requisites mentioned in Sections a) and b). Therefore, Green Clubs have the appropriate economic and financial conditions required for approaching capital markets and to complete successfully a capital raising.
  • Black clubs meet most of the key economic/financial pre-requisites, however, they may be required to undertake additional preliminary actions before meeting Green pre-requisites and then they may go forward with desired capital markets action.
  • Red Clubs do not meet most of the key economic/financial pre-requisites and face serious financial and structural issues that must be addressed substantially before they are capable of approaching capital markets.



5.1) A study case: Premier League13

By having the current economic and financial data of a football club available and applying conditions summarized in Section 4/b (The Financial Appeal of a Club) it is possible to identify those Premier League clubs that are “eligible” to approach capital markets, assuming that the football club market (Section 4/a) is expected to remain in a positive trend.

Premier League Football Clubs’ “Financial Appeal”:

  • Three football clubs in the Premier League match perfectly all the conditions stated in Section 4/b. They are “financially appealing”, however, before approaching a capital markets action (potentially in the short term), it would be necessary for the clubs to check how compliant they are with respect to conditions 4/c and d.
  • Fifteen football clubs match most of the conditions stated in Section 4/b. However, they definitely need to address specific issues in order to gain a “financially appealing” status before approaching capital markets, at least in the medium term. 



13 Source: data per clubs, referred to season 2015-2016, are reported in



6. Integrating the clubs’ fan base into shareholder structure: An alternative and effective way to move football clubs toward financial sustainability.

Normally stocks or bonds, as mentioned in the Section 3, are traded mainly by institutional rather than individual investors. However, in the case of a football club, investments in securities may involve a substantial number of individual investors who are representative of the fan base of the football club. Those investors, unlike institutional investors, may be inclined to invest in securities issued specifically by the club, mainly because of club loyalty and pride rather than as a result of a careful and complete economic and financial analysis.

Over the last few years because of the continued commercialization of many football clubs, fans have seen their clubs transformed from traditional community-focused clubs into corporate-like entities. In fact, sometimes a kind of “small multinational” emerges, often made up of mainly foreign players. In this case, many fans may become dissatisfied and no longer identify with their team.

On the other hand, commercialization has resulted in a minority of clubs (although significant in terms of their worldwide popularity and a high level of fan identification) being owned by their fans. In these “membership” football clubs, ownership is distributed among a relatively large number of fans. FC Barcelona, Real Madrid and Bayern Munich are examples of this type of ownership structure. Consequently, the fans of these clubs may have a significant influence on the level of commercialization and provide a substantial contribution to the club’s financial sustainability.

Although fans may definitely be willing to invest in their favorite football club because of their high level of fan identification or their “fanatic liaison”, a fair involvement for fans would require a club to:

  • Be at least at the Green or Black stage (as described and referred in Section 4 and 5)
  • Adopt some fair corporate governance measures rather than a proper corporate structure so that fan investments and contributions to the club management might be properly safeguarded.
  • Benefit from some financial cushion in case of relegation (Parachute payment).

6.1) Fan Intervention model

We may consider two different examples of “fan intervention” models:

  1. The model adopted in Germany, where the direct involvement of fans in club affairs (even the most popular ones, for example, Bayern Munchen – see Annex 2 -) is very common; and
  2. Portsmouth FC, which represents the intervention of fans in a bankruptcy procedure (See Annex 2)



6.1.a) The German model14

The Bundesliga, Germany’s top professional division, has the unique distinction of being the only major European football league where its teams collectively make a profit. The Bundesliga also has the highest average attendance of the five major European leagues, in part, because of its fan-friendly measures of low ticket prices and direct fan involvement in club affairs. The Bundesliga is governed by the Deutsher Fußball–Bund, which has made certain provisions for governance that has helped to achieve significant financial strength. In 1998, the Deutsher Fußball–Bund permitted its member clubs to adopt a few different club governance structures, as long as the clubs controlled the new structures.

Known as the 50+1 Rule, these provisions allowed for a number of unique options in structuring a club. The clause states that, in order to obtain a license to compete in the Bundesliga, a club must hold a majority of its own voting rights. The rule is designed to ensure that the club's members retain overall control (at least 50+1), protecting clubs from the influence of external investors.

The idea was to prevent a single entity from taking total control of a football club and to avoid private investors from playing with club teams like toys and simply bailing out once the club loses their attention. It also helps to avoid teams being treated as if they are a personal playground, so that fans can identify with their clubs.

The following diagram shows the typical Bundesliga club structure according to 50+1 rule:


14 (by Ryan Murphy)



Can the 50+1 Rule survive15?

Most fans have pointed to the rule as a protector of German football. However, over the last few years the 50+1 rule has taken hit after hit, which raises the question if the rule is going to survive in the future.

Recently Hannover 96 president and opponent of the rule Martin Kind told “I’m against the rule and I would recommend to dissolve the rule entirely. However, this is going to be difficult and therefore I would suggest modifying this rule.”

Back in 2011 Kind managed to amend the law, as he threatened to sue the German League (DFL) to get the rule removed. In the end the clubs of the league agreed to allow investors who had been involved for 20 years to acquire the majority of shares of a club’s professional football division. In the aftermath of such an amendment, Martin Kind will take the full control of Hannover 96 in 2018. Most fans in Hannover would already argue that their president is already all-powerful. Kind’s stances against some of the club’s Ultras and hardcore fans have led to disagreements between the fans and the club itself on a number of occasions. Some fans in Hannover have decided to only attend the matches of the second team.

Martin Kind is far from being the only person pointing out that the rule is a hindrance for foreign investment and further growth for the league.

We may argue whether Kind’s standpoint might be acceptable or not, but it must be also pointed out that the 50+1 rule seems to provide stable and effective protection and safeguards to the investment made by fans because of the adoption of the dual board corporate structure (the supervisory board – Aufsichtsrat - which is in charge of supervising the actions of the managing board – Vorstand –). As a consequence fans may feel fully committed and identified with their team “granting” their constant attendance and loyalty . Not surprisingly Bundesliga has been recording since long time the highest (along with Premier League) level of stadium load factor (see Annex 1 section a.2) and an undisputed leadership in terms of commercial revenues among the European leading football leagues.

6.2) Financial cushion

The active participation of fans in a club’s management should consider further elements with the purpose of safeguarding their investments as much as possible . The most important European Leagues (Premier League, Serie A, Bundesliga), for example, provide “parachute” payment rules16. Parachute payments were introduced to support clubs that dropped into the second tier. These payments are intended primarily to provide a financial cushion for the relegated clubs that are supposed to have spent heavily on transfer fees and wages (to be competitive in the first division) and, in some cases, have lost substantial broadcasting rights because of the relegation. Such amounts have risen rapidly in the last decade from £32m to £91m (Premier League) earmarked over three years for clubs who are relegated.




 7. A path towards financial attractiveness

Not all football clubs are able to raise financial resources through corporate bonds, IPOs or integrating the fan base as shareholders. This is because success depends on whether or not the football club ultimately achieves its financial goals (solvency, profitability, financial sustainability, etc.) and on the way investors perceive the club, as well as how confident they may be in receiving a positive return (ROI) from such an investment. Some football clubs, although they may have considered resorting to capital markets, may refrain because of factors such as:

  • The club meets only a few of the above conditions mentioned in the Section 4/b Clubs “Financial Appeal”
  • The club may be managed similarly to a family business and be financially unsophisticated. Therefore, club management may not be willing to accept the financial scrutiny or need for transparency that is required by financial markets.

When a football club decides to enter capital markets, there may be a profound effect on its leadership and direction. Instead of ownership and accountability being assigned to the same relatively small group of people, ownership is spread out among the club’s investors and accountability is isolated in the hands of the board of directors. The board has to act ethically, legally, and in the best interest of the shareholders and/or bondholders at all times.

However, most football clubs worldwide have traditional ownership and corporate governance schemes (as if they were family businesses), which are very often perceived as a deterrent to investing by institutional or private investors because they do not see any kind of safeguard for their investments.

Not surprisingly, few European football clubs ( Juventus, Roma, Lazio, Borussia Dortmund and Manchester United are some of the few examples) have initiated IPOs and are now listed on stock exchanges around the world.17 This limited number demonstrates how reluctant clubs may be, how difficult it is for football clubs to enter capital markets and, perhaps how reluctant capital markets are to embrace football clubs.

Creating a framework that provides a “virtuous path” towards a higher level of “financial appeal” might help overcome this mutual reluctance between football clubs and capital markets. Such a path may involve Green and Red clubs with the purpose of educating owners and managers with the best market practices in terms of:

  • Organizational structure
  • Corporate governance
  • Marketing polices
  • Determining the most suitable and viable financial tools to support a club’s investment program and preparing a club to access to more sophisticated long term financing opportunities and to deal with all investors (institutional and “retail”).




7.1. The potential path to capital markets for all financial categories

  • Green Clubs: although they have potential to approach the capital markets because they match all the key economic and financial pre-requisites (see above) they may need to address other key issues such as:

    - Developing and executing a feasible strategic management/marketing plan;
    - Appointing a new, highly competent management team; and
    - Establishing a balanced, effective and legal corporate governance structure.
  • Black Clubs: Preliminary actions should be put in place immediately, for example, decreasing financial indebtedness, improving the level of marginality rather than improving the dependence on broadcasting rights, etc., in order to be considered as a Green Club, and then proceed toward capital markets.
  • Red Clubs: These clubs face serious financial issues and may require thorough corporate restructuring and revamping of the club’s business model. The option/decision of funding the club via capital markets might be considered, but not before the club takes necessary actions to address the issues, which, over the last 2-3 years, have been producing notable improvements, for example:

    - Showing a “consolidated” improvement along with growth in turnover and marginality, however, with net losses not necessarily set to zero.
    - Decreasing financial indebtedness in terms of absolute value or at least improvement in relative terms (improved financial indebtedness/equity, and financial indebtedness/Ebitda ratios).

Participation in a training program by the club’s financial managers may be necessary to “certify” that a club has adopted (or is going to adopt) effective benchmark management practices. This approach would increase the likelihood that a club may successfully complete a capital markets action and, therefore, improve the financial sustainability of the club.

8. The Financial Fair Play

The lack of financial solvency, together with the general state of the economy, threatened the existence of several football clubs in Europe. To address this and ensure clubs were moving towards a sustainable financial model, UEFA introduced “Financial Fair Play Rules”.



8.1 Rules18

Financial fair play is focused on improving the overall financial health of European club football, and encouraging clubs to build for success. Financial fair play was approved in 2010 and the first assessments were launched in 2011. Since then football clubs that have qualified for UEFA competitions have to prove:

  • They do not have overdue payables to other clubs, their players, and social/tax authorities throughout the season. In other words, they have to prove they have paid their bills.

Since 2013, clubs also have been assessed against break-even requirements, which require clubs to balance their spending with their revenues and restricts clubs from accumulating debt. In assessing this, the independent Club Financial Control Body (CFCB) analyses each season and three years' worth of club financial figures, for all clubs in UEFA competitions.

In June 2015, UEFA updated its regulations (as it does from time to time for all regulations) to address some specific circumstances aimed at encouraging more sustainable investment while maintaining control of overspending. Situations addressed include clubs requiring business restructuring, clubs facing sudden economic shocks and clubs operating with severe market structural deficiencies in their operating region.

More precisely, football clubs can spend up to €5million more than they earn per assessment period (three years). However, a club can exceed this level only to a certain limit, and if it is entirely covered by a direct contribution/payment from the club owner(s) or a related party. This prevents the build-up of unsustainable debt.

The limits are:

  • €45m for assessment periods 2013/14 and 2014/15
  • €30m for assessment periods 2015/16, 2016/17 and 2017/18.

In order to promote investment in stadia, training facilities, youth development and women’s football (from 2015), all such costs are excluded from the break-even calculation (so-called sustainable investments). If a club is not in line with the regulations, it will be UEFA's Club Financial Control Body that decides on measures and sanctions. Non-compliance with the regulations does not mean that a club will be excluded automatically, but there will be no exceptions. Depending on various factors, e.g., the trend of the break-even result, different disciplinary measures may be imposed against a club.





 There is a series of disciplinary measures that include:

  1. warning;
  2. reprimand;
  3. fine;
  4. deduction of points;
  5. withholding of revenues from a UEFA competition;
  6. prohibition on registering new players in UEFA competitions;
  7. restriction on the number of players that a club may register for participation in UEFA competitions, including a financial limit on the overall aggregate cost of employee benefits, expenses of players registered on the A-list for the purposes of UEFA club competitions;
  8. disqualification from competitions in progress and/or exclusion from future competitions; and
  9. withdrawal of a title or award.

8.2 Rationale

The central principle of FFP, as reported in a joint statement19 (as of March 2012) issued by EU Vice President J. Almunia and UEFA President M. Platini, is based on the notion that football related income should at least match football related expenditure. No business can lay solid foundations for the future by continually spending more than it earns, or could reasonably expect to earn. Thus, the “break even” rule reflects a sound economic principle that will encourage greater rationality and discipline in club finances.

Similarly, the FFP rules that monitor and enforce the financial obligations that clubs owe towards other football clubs, towards employees (in particular, to players) to social and tax authorities and to other creditors are also important elements in the overall financial regulatory structure of football and are to be supported.

By favoring the so-called sustainable investments and by setting the acceptable deficits in absolute million € terms and not relative percentage terms (break-even assessment), UEFA is aiming to foster a more sustainable financial management by clubs without jeopardizing either the ability of clubs to comply with the “breakeven” principle and their potential to grow.

8.3 Criticism of FFP rules

In principle the key purpose of FFP is to “counter the financial doping” and encouraging a more sustainable and disciplined financial management by clubs. However, it has been argued20 that such a rule may “disrupt the market and have corrosive effect over it” because the main benefactors of FFP are the one who have more money than others.

The FFP set of rules generally establish that football income should at least match related expenditure but they do not clarify further neither about the distribution and/or composition of income -- media rights, transfer market, commercial and match-day income – nor about eventual expenditure caps. For example, according to UEFA If a club's owner injects money into the club through a sponsorship deal with a company to which he/she is related, then UEFA's competent bodies will investigate and, if necessary, adapt the calculations of the break-even result for the sponsorship revenues to the level which is appropriate ('fair value') according to market prices.





In this regard it is worth mentioning two relevant and recent cases that involved Manchester City and Paris Saint Germain (Paris SG), both fined by UEFA with regard to the 2011 assessment period.

  1. Man City21, bought by the Abu Dhabi United Group in 2008, have accepted a conditional £49m fine and restrictions on their European squad and incoming transfers basically because the club's sponsorship deals with Etihad, an airline which is based in Abu Dhabi, home of the ruling family, which also runs the club. The deal, which was signed in 2011 and encompasses stadium and shirt sponsorship is worth approximately $628 million over 10 years.
  2. Paris SG22, owned by the Gulf state of Qatar via its Qatar Sports Investments fund since 2011, was hit with a fine of €60million, and their UEFA Champions League squad was reduced to 21 players for the following season. UEFA argued that deals such as Paris SG's $167-million-ayear sponsorship with the Qatar Tourism Authority, is an invalid way of balancing books under the break-even rules.

Such a soft approach from UEFA has been fiercely criticized, as it may trigger distortionary actions which would negatively affect the competition, thus a creating inflationary spiral that may irreparably harm the football industry. As long as UEFA will be more inclined to impose financial punishments and fines rather than sporting sanctions (e.g. banning from playing European Competition when such distortive actions are put in place) it will end with fostering inequalities: Manchester City and Paris SG will keep on spending more than they can with the purpose of enjoying success on the pitch. Should they incur penalties in breaching some FFP rules they might be fined but their wealthy owner will likely injecting additional money into the club (most of which, by the way, will go to UEFA). As a result of such a vicious circle, clubs that have money can take out more money and, therefore, make more money harming the competitiveness and increasing the gap with smaller clubs.

8.4.FFP and Capital Markets

FFP introduces discipline and rationality in club football finances. FFP imposes stricter and more effective financial management of a club, thereby reducing the likelihood that a club will have to face significant financial difficulties or even the possibility of a bankruptcy procedure.




Recalling the main prerequisites of “financial appeal” of a football club (see Section 4/b) it can be assumed that football clubs complying with the FFP rules have in place a framework for more effective management of financial resources and are, therefore, more financially appealing and potentially eligible for a capital market action. Most of these clubs are presumably either green or black clubs.

However, as emphasized above, the main purpose of a capital market action is to raise capital to finance the club’s investment programs related to its strategic business plans. Such plans must be perceived as viable and producing interesting and feasible returns for the club itself and for its investors.

As such a capital market action merely intended to raise financial resources to comply with FFP rules (so as not to incur in any of the disciplinary measures provided by the rules) is not advised because the likelihood that investors will reject the deal is relevant as they would not see any specific strategic action to implement (namely sustainable investments, acquisition, access to new markets or new business line, etc..), which might increase and improve the club’s economic and financial performance.

Ending up, we may argue that FFP rules and capital markets actions :

do not fit each other as long as a club is promoting a capital markets action with the purpose of being fully compliant with FFP rules: as if the capital raised via capital markets were employed to repay existing debts or current expenditure.

Fit each other as long as a club is promoting a capital markets action with the purpose of promoting sustainable investments which are supposed to make the club more financially sustainable: capital raised via capital markets are expected to boost further the club strategy and therefore its economic and financial performances.




A – Revenues

a.1: revenues from commercial activities

As shown above, the Bundesliga demonstrates undisputed leadership in terms of commercial revenues attributed to social media (assuming the number of Facebook likes as key indicator): 19,2 times, higher than the average of other major football leagues (11,5x), although the number of followers is remarkably lower than the other major leagues.

The multiple Commercial revenues/fb likes recorded by La Liga (3.7x) is significantly lower than the average multiple (11,5x) notwithstanding an impressive number of social media followers. Looking at the concentration of social media followers among the most popular clubs, it must be observed that:

  • 88% of La Liga social media followers are concentrated in the two must popular clubs (Real Madrid and Barcelona);
  • Almost the same for Bundesliga (83% among Bayern Munich and Borussia Dortmund);
  • Premier League shows a more homogeneous distribution of followers as Manchester United and Chelsea absorb nearly 50% of the social media population; and
  • 69% of Serie A followers are concentrated among Milan and Juventus.


a.2: revenues from ticketing (matchday)


The English Premier League and Bundesliga show the highest load factor, around 95% and both with a growing trend over the last three years.

La Liga and Serie A (respectively 69% and 56%) are notably below either the above mentioned leagues and the average level (81%).

As for ticket prices, Serie A (€ 26) in particular and Bundesliga Clubs (€40) are considerably below La Liga (€ 69) and Premier League (€49).

The average capacity of German stadia is higher than English ones (43.000 seats Vs 35.000); Spanish (37.000) and Italian (38.000) are basically in line with the average of the major leagues


a.3: revenues from broadcasting rights


As shown in the table above, broadcasting rights represent the most relevant source of revenues for most of the premium leagues; the sole exception is Bundesliga (29%), whereas are Premier League (63%) is notably over the average of 44%.

A business model that is overexposed to broadcasting rights may not be positively evaluated by investors as it is generally thought that there is “no way (or very few ways) to improve autonomously” on such a revenue stream, as broadcasting rights are distributed among clubs according to fixed rules.

The negotiation of broadcasting rights follows, for most of the premium European leagues, a centralized system where each league sells the media rights of all clubs collectively and income is shared among all clubs, basically taking into account parameters such as:

  • Equal share;
  • Merit awards based on how the clubs finish in the table in last 3/5years.
  • Resource generation ability of clubs (for example fees related to live televised matches)

In addition to the above, the participation in European competitions (Champions League and Europa League) allows clubs to benefit further from income generated from broadcasting rights, as the qualified clubs are entitled to share revenue with UEFA. As such, the potential size of broadcasting rights depends largely on exogenous and endogenous factors, namely the intervention of the league on behalf of each club in the negotiation process along with and the results on the pitch recorded by each club, which makes this source of revenue difficult to predict year over year.

B: Marginality

Ebitda margin of Premium league clubs is significantly affected by Payrolls whose impact on Turnover is around 55% for Premium Leagues. Premier League and La Liga show the highest Payroll level (67% and 58%) and, therefore, embody the most relevant potential improvements (respectively €m 324 and €m 120) moving towards the average Premium Leagues Gross Ebitda (46%).

C) Balanced Financial Structure


Net Debt/Equity:

  • The D/E ratio indicates how much debt a company is using to finance its assets relative to the amount of value represented in shareholders’ equity.
  • A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt.
  • A well balanced financial structure would suggest a company D/E ratio around 1.

Net Debt/Ebitda:

  • The net debt to EBITDA ratio is a debt ratio that shows how many years it would take for a company to pay back its debt if net debt and EBITDA are held constant.
  • Ratios higher than 4 or 5 typically set off alarm bells because this indicates that a company is less likely to be able to handle its debt burden, and thus is less likely to be able to take on the additional debt required to grow its business.


23 All data are referred to season 2015-2016



ANNEX 2: Fun intervention model

a) The German Model

As a consequence of the adoption of the 50+1 rule a number of football clubs have moved to the Aktiengesellschaft (AG) structure24.

The AG is the German equivalent of the public limited company, or American corporation. An AG is characterized by a dual board structure. The supervisory board (Aufsichtsrat) is elected at the shareholders’ general meeting. The Aufsichtsrat is charged with appointing, consulting and supervising the managing board (Vorstand). A member of the Aufsichtsrat is forbidden from membership on the Vorstand in order to eliminate conflicts of interest. German law also limits the terms of members of the Aufsichtsrat to five years to ensure that stockholders have the opportunity to choose whether to continue with the current management composition.

The Vorstand is charged with managing the operations of the AG. German law does not provide a limit to the number of Vorstand members, but does provide that the term of a member may not exceed five years without reappointment. In AGs with a wide range of business interests, each member of the multi–person Vorstand may be given different responsibilities. The members of the Vorstand act jointly for liability purposes and, therefore, all members of the Vorstand must agree on an action unless the articles of incorporation provide otherwise. Because of its popularity in German business, German law provides a well-defined corporate structure for organizations that adopt the AG model.

a.1) Bayern Munich25

Bayern Munich serves as a model for demonstrating how the 50+1 rule (and therefore the involvement of a large number of fans) may result in a mutually beneficial situation.

As mentioned in section 6, paragraph 6.b.1 Bundesliga rules state that 50 per cent plus one share of a club’s professional football division must be owned by non-commercial and nonprofit parent club.

Therefore, Bayern Munich’s 130,000 members pay an annual fee of €50 to belong to Bayern Munich e.V. which is the main shareholder of Bayern Munich AG which owns the professional part of the club.

Here is a table showing the current Bayern’s shareholder structure:

FC Bayern Munchen e.V. (members or fans): 75,00%
Adidas AG: 8.33%
Audi AG: 8.33%
Allianz SE: 8.33%


The members of Bayern Munich e.v. elect their president –currently Karl Heinz Rummenigge. By virtue of its 75% stake in Bayern Munich AG, the e.V. complies with the Bundesliga’s 50+1 control requirement. As required by law, Bayern Munich AG is governed by an Aufsichtsrat and a Vorstand.

Bayern Munich AG’s articles of incorporation provide for a nine member Aufsichtsrat. Significant members of the Aufsichtsrat include representatives of Adidas and Audi (two relevant Bayern’s shareholders). This ensures that the most powerful shareholders can oversee the company and how Vorstand’s members are operating the business. Bayern Munich AG is ultimately run by the five members Vorstand, chaired by Karl–Heinz Rummenigge, a former Bayern Munich player.

b) Portsmouth F.C.26

Another interesting case of integrating a football club’s fan base into a shareholder structure is after a club has undergone insolvency proceedings or is about to become insolvent. In this case the club definitely would not be able to meet all of its financial obligations.

The Portsmouth Football Club is based in the city of Portsmouth, England. Portsmouth's home matches have been played at Fratton Park since the club was founded in 1898. Portsmouth have been champion of England twice, in 1949 and 1950. The club also has won the FA Cup on two occasions, first in 1939 and most recently in 2008, when the Club subsequently qualified for the 2008-09 UEFA Cup (now Europa League).

Due to serious financial issues the club was relegated to the League Championship in 2010 (the English Second Division), to League One in 2012 and again to League Two in 2013. In April 2013 the Pompey Supporters Trust (PST) took over the Club, making Portsmouth the largest fanowned club in England. The PST is a democratic, not-for-profit organization of fans with the objective of developing a model of a professional football club owned by its fans.

On September 2014, just 18 months after the PST took control of the club, Portsmouth paid back all creditors and was able to declare itself debt-free. Today Portsmouth is playing in League One (English third division). Very recently (as of August 201727) it was announced that the Tornante Co. purchased the Club for about $7.5 million and committed to an estimated $13 million in future investment. Tornante Co. is a Beverly Hills-based company with interests in media and entertainment, which co-owns trading card company Topps Co. Inc., which has licensing deals with U.S. sports leagues and soccer’s English Premier League. PST, which held a 48.5 percent stake in the club voted to sell its shares to Tornante three years after its intervention.

Portsmouth, therefore, represents a successful and exemplary model of “fan integration”, where the commitment of fans (supported by a skilled and effective management team) saved and restructured the club, making it possible to continue to compete at a professional level (although at lower tier divisions) and raising the interest of premium international investors.


24 Until the late 1990s, the typical Bundesliga club was organized as an eingetrager verein (e.V.).The e.V. has legal personhood and provides for restricted legal liability for its members. The e.V. has a limited set of requirements that includes at least seven members, a board, and a charter. The e.V. is attractive to a more informal grouping of individuals because it has no capital requirements, no accounts publication requirements, and no fixed organizational structure other than the requirement of a board. Another advantageous feature of German corporate law allows for an e.V. to own profit–seeking enterprise.




ASSET: An asset is a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit. Assets are reported on a company's balance sheet, and they are bought or created to increase the value of a firm or benefit the firm's operations. An asset can be thought of as something that in the future can generate cash flow, reduce expenses, improve sales, regardless of whether it's a company's manufacturing equipment or a patent on a particular technology.

CAGR: Compound annual growth rate (CAGR) is a business and investing specific term for the geometric progression ratio that provides a constant rate of return over the time period. CAGR dampens the effect of volatility of periodic returns that can render arithmetic means irrelevant. It is particularly useful to compare growth rates from various data sets of common domain such as revenue growth of companies in the same industry.

EBITDA: stands for earnings before interest, taxes, depreciation and amortization. EBITDA is one indicator of a company's financial performance and is used as a proxy for the earning potential of a business.

EQUITY: Generally speaking, equity is the value of an asset less the amount of all liabilities on that asset. It can be represented with the accounting equation: Assets -Liabilities = Equity.

FIFA: The Fédération Internationale de Football Association is a private association and an international governing body of association football, futsal, and beach soccer. FIFA is responsible for the organization of football's major international tournaments.

IPO: An initial public offering (IPO) is the first time that the stock of a private company is offered to the public. IPOs are often issued by smaller, younger companies seeking capital to expand, but they can also be done by large privately owned companies looking to become publicly traded

LIABILITY: A liability is a company's financial debt or obligations that arise during the course of its business operations. Liabilities are settled over time through the transfer of economic benefits including money, goods or services. Recorded on the right side of the balance sheet, liabilities include loans, accounts payable, mortgages, deferred revenues and accrued expenses.

NET FINANCIAL POSITION or Net Debt: the difference between total cash position (cash, cash equivalents and marketable securities) net of total financial debt (bank overdrafts, current portion of long-term debt and long-term debt).

NET PROFIT: also referred to as the bottom line, net income, or net earnings is a measure of the profitability of a venture after accounting for all costs. A common synonym for net profit is the bottom line. This term results from the traditional appearance of an income statement which shows all allocated revenues and expenses over a specified time period with the resulting summation on the bottom line of the report.

NYSE: The New York Stock Exchange is an American Stock exchange located at 11 Wall Street, Lower Manhattan, New York City

REVENUES FROM BROADCASTING RIGHTS - Money earned from TV Rights deals. The more the club is on TV, the more money they earn.

REVENUES FROM COMMERCIAL - Money earned from advertising and partnerships with other brands promoting brands through shirt logos and banners. It also includes revenues from merchandising, the promotion of goods and/or services that are available for retail sale.

REVENUES FROM MATCHDAY - Money earned from ticket sales, food and hospitality relating to the football clubs. This is generally money earned from fans of the football club.

UEFA: The Union of European Football Associations is the administrative body for association football in Europe. UEFA consists of 55 national association members. UEFA represents the national football associations of Europe, runs nation and club competitions including the UEFA European Championship, UEFA Champions League, UEFA Europa League, and UEFA Super Cup, and controls the prize money, regulations, and media rights to those competitions.



A special thanks to Professor James Santomier, Sacred Heart University (USA, Connecticut) for having morally and professionally supported this initiative.

The Author

  • Currently Senior Manager and member of Board of Directors at Baldi Finance S.p.A. ( where I am heading Ipo origination and execution activities.
  • Experienced Senior Manager with a demonstrated history of working in the financial services industry.
  • Skilled in Business Planning, Corporate Finance, Investment Banking, Equities, and Capital Markets.
  • Strong professional background being graduated from Bocconi University (Milan) and IE Business School (Executive MBA with specialization in Sport Management).

For more details see my full profile on Linkedin:


All of the information presented in this whitepaper is tentative and is subject to change at any time. None of the information herein should be construed as legal, accounting, or investment advice of any kind.

This document does not represent a solicitation for investment, nor does it represent an offering or sale, public or private, of any kind of financial instrument, security or otherwise, in any jurisdiction.

This whitepaper is provided as-is, for informational purposes only, with the intention of describing some potential opportunities to make it possible to football clubs financing and supporting their strategy and plans.

Published: March 2018 l ©2018 Antonio Alessandro Boccia all rights reserved l Photo: haizon -



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