27 June 2023
European football clubs, once viewed as trophy assets held by wealthy individuals, are now firmly on the radar of US financial sponsors who have identified untapped commercial opportunities in the sports industry. Clearlake Capital's $5.3 billion acquisition of Chelsea Football Club and Elliott Management's takeover of AC Milan brought private equity's involvement in European football firmly into the spotlight. Yet, headline-grabbing buyout deals are only the tip of the iceberg. A significant number of private equity investments in the sector are structured as minority investments, with the private equity firm taking a non-controlling stake in the target football club or in a more specific asset of the club (such as its media rights or similar revenue streams). Notable examples include Silver Lake's acquisition of a 10% stake in City Football Group (which includes Manchester City, amongst others), Oaktree Capital's acquisition of a 31% stake in Inter Milan and Ares Management's acquisition of a 34% stake in Atlético Madrid.
In this article, we set out the various commercial factors that are driving US private equity investors' growing interest in European football and also explore the strategic considerations that make minority investments attractive. We also provide an overview of the key structural and legal considerations which underpin these transactions.