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Newcastle and Liverpool chiefs get green light for six deals amid £379m news from America
There is a finite number of investors wealthy enough to run clubs like Liverpool and Newcastle United, and the latest news from the sports business world underscores just how small that number truly is.
Since October 2021, Newcastle have been owned by the Saudi Public Investment Fund, the richest owners in all of sports who have spent billions on Tyneside and beyond.
Liverpool’s Fenway Sports Group meanwhile are one of just two ownership groups to feature more than once in Sportico’s recent valuation of the top-50 most valuable sports franchises in the world.
The pair’s respective ownerships have wildly different motivations for entering sports.
FSG view Liverpool, the Boston Red Sox, the Pittsburgh Penguins and all their other investments as capital appreciation projects and will one day flip the teams for a profit.
PIF by contrast have aims which are more geopolitical in nature, with Saudi Arabia ramping up their efforts to cement themselves in the world of football ahead of hosting the World Cup in 2024.
As part of Saudi Arabia’s Vision 2030, the nation is attempting to diversify away from fossil fuels and has pumped billions into sport.
But the likelihood of making a return on Newcastle is slim, unlike other sports investment opportunities that have presented themselves to the sovereign wealth fund in recent days.
Liverpool and Newcastle investors get NFL boost
Last year, FSG sold a significant minority stake in Liverpool to the US private equity firm Dynasty Equity.
In turn, FSG have also sold a chunk of their own equity to another private equity company called Arctos, who are investors in Paris Saint-Germain, Atalanta and Sevilla.
And it emerged earlier this summer that both Arctos and Dynasty Equity were in talks with America’s National Football League about potential investment in its franchises.
Now, as reported by the , the NFL will now allow private equity investment for the very first time, making it the last of the American major leagues to do so.
Investments will be capped at 10 per cent, meaning that the average buy-in will be around £379m based on the average value of NFL franchises.
Significantly, private equity companies will also be able to buy into as many as six teams at once.
Arctos and Dynasty Equity are one of six firms who have been granted permission to talk with franchises.
Following the landmark news, it has also emerged that sovereign wealth funds such as Newcastle’s PIF, as well as other financial institutions, will be allowed to own up to 7.5 per cent of the firms in question.
This gives the owners of both Newcastle and Liverpool the chance to create formal links with the NFL, the most lucrative sports league in the world.
How will the NFL news affect Liverpool and Newcastle?
The NFL news is single biggest change in the sports investment regulatory landscape in recent years.
At a time when interest in Premier League clubs from Stateside financial institutions is waning, the NFL continues to generate record profits.
Multi-sports ownership is now the most common model in the Premier League, with over half of the ownership groups in the division linked in some way to the likes of the NFL, NBA or other leagues.
As well as creating a more diversified and therefore safer portfolio for club owners, there are also commercial advantages to sharing owners with teams in other sports.
For example, Liverpool launched a club-branded range of merchandise in collaboration with minority shareholder and NBA legend LeBron James.
Some analysts also suggest that, in future, homogenous sports empires with multiple teams playing under the same badge in different disciplines could allow teams to pool costs.
There are anxieties around this model too, however.
Many feel that the unique identities and cultural importance of community-based football clubs is under threat.
Others worry about the long-term implications of private equity involvement on football’s sporting integrity – perhaps via pushing the Premier League towards a closed-shop, Super League-style model.