Who Won And Who Lost When Real Estate Investors Bought Soccer Teams?
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There is an old joke that the way to make a small fortune owning a football team is to start out with a big one.
Owning a soccer franchise can be a tricky business — the sums coming into the game from TV can be huge, but so are the wages and salaries of players who do not always perform as expected.
Still, people from the real estate industry regularly roll the dice by purchasing a team. Some have done exceptionally well in the world of football, financially or in terms of keeping smaller, well-loved teams afloat. Others have fared less well. We broke down 11 examples.
1. The Glazer family, Manchester United
A big part of the Glazer family wealth was built up through real estate, principally shopping malls. But the family is better known for its ownership of sports teams, and its purchase of Manchester United is by far the most successful foray of any real estate investor into football.
The Glazers bought the club for £790M from 2003 to 2005, using £525M of borrowed money that was transferred on to the club, which essentially paid the interest on its own purchase.
Journalist David Conn estimates the debt loaded on to the club has cost United more than £700M in interest, fees, etc., over the past 10 years. The rest of football can only thank the Glazers — who knows how much United might have won if that money had been invested in the team?
Forbes estimates United is now worth around £1.7B, and last year the family paid itself an £18M dividend from the club.
2. Ellis Short, Sunderland
Ellis Short is one of the savviest investors in real estate. He was an early investor in Lone Star, and in 2013 he set up his own opportunity fund manager, Kildare Partners, which has raised more than $3.5B of equity since then — almost unheard of for a new business.
Football has been less kind to him. He bought Sunderland in 2008, not for much money, possibly as little as £30M although the figure was never made public. But it has cost him a lot since, as he has funded any shortfalls when the club takes a loss. Accounts from 2016 show the club owes him £58M and suffered a £33M loss last year. Attempts to sell the club for £100M faltered and last season the club was relegated from the Premier League, reducing the price. Short is still trying to sell, but a German consortium is rumoured to be offering just £50M.
3. David Simon, Crystal Palace
It is a little-known fact that Simon Property Chairman and CEO David Simon is a minority investor in Crystal Palace. U.S. private equity investors David Blitzer of Blackstone and Josh Harris of Apollo Global Management are the public face of a consortium that includes Simon. Since the consortium bought a stake in Palace for £50M in 2015, the club has consolidated its Premier League position and the Premier League’s TV deal has increased, so Simon should be sitting on a nice profit.
4. Colony Capital, Paris St. Germain
U.S. opportunity fund manager Colony’s involvement with Paris St. Germain was at once a win and a loss. It bought the struggling club for €41M in 2006 and sold it to the Qatari government in 2012 for around €100M. Today PSG is one of the most famous clubs in the world, having more than doubled football’s transfer record for Brazilian striker Neymar.
But it must still be viewed as a missed opportunity, as Colony’s main interest in buying PSG was to undertake a major commercial development planned around the Parc des Princes. But in 2013 its consortium with construction firm Vinci lost the rights to the project to the new Qatari owners, and Colony missed out on a major potential investment.
5. David Gold and David Sullivan, West Ham United
The first British owners on the list made their money in left-handed magazines but the vast majority of their wealth now resides in property companies Roldvale and Conegate.
They had mixed results as owners of Birmingham City FC, but have done spectacularly well through their ownership of West Ham. They bought the club in 2010 in a deal that valued it at £105M, but it was valued at least £250M last year. A big part of the value comes from the fact that West Ham leases the former Olympic stadium for just £2.5M a year, which gave the club an increased stadium at very little cost. The old ground Upton Park was sold to a housebuilder for £35M. The fans do not like the new ground but it is a very profitable deal for the owners.
6. Peter Heard, Colchester United
Heard was one of the co-owners of U.K. specialist retail leasing broker Churston Heard before it was sold to JLL for around £20M in 2008. He was also the well-regarded owner of League Two club Colchester United from 1997 to 2006. During his ownership, Colchester went from the fourth tier of English football to the second, the Championship, before heading down again. The local newspaper — never shy to criticise owners of the local team — remarked on his prudence in running the club.
7. Kevin McCabe, Sheffield United
McCabe made one of the best property deals of the last cycle, selling his business, Scarbourough, for more than £850M at the top of the market in 2007.
His ownership of Sheffield United has been more of a roller coaster, with the club having tasted life in the Premier League but also fallen as far as League One before gaining promotion last year. The highest-profile period on his watch was in 2007. United was relegated from the Premier League on the final day of the season when Carlos Tevez of West Ham scored the winning goal against Manchester United to keep the club up. It later turned out that Tevez’s transfer had broken Premier League rules, and United sued for £45M in lost revenue. It got £18M, but has not been back to the top division since.
8. Starwood Capital, AS Roma
Starwood is looking to pull off the kind of deal Colony failed to do with PSG. In 2014 it bought an undisclosed minority stake in famous Italian club Roma for an undisclosed amount, in order to become the development partner for Stadio della Roma and Tor di Valle, a 2.7M SF mixed-use development comprising a new stadium and a huge commercial development on an abandoned racetrack next door. The path has not run smoothly — it was supposed to be finished this autumn but only received planning permission in February and the commercial element has been halved. But unlike Colony, it is still in the game.
9. James Brent, Plymouth Argyle
The mild-mannered Brent was head of real estate investment banking at Citigroup until 2008, then set up a hotel property company. He bought Argyle in 2011 because of his love of the city of Plymouth and saved it from extinction, although the club still has very limited means and sits in the fourth tier of English football. Some of his hotel properties went under due to high debt levels following the financial crisis but his clothing company, Saltrock, is doing well, making £40M in revenue in 2015.
10. Darrah MacAnthony, Peterborough United
Irish entrepreneur MacAnthony made his fortune selling Spanish residential real estate to the British, and funnelled some of his wealth into Peterborough United, buying the club from flamboyant former manager Barry Fry in 2007 after watching a documentary about him. At 30 he was the youngest owner in the league and took the club from the fourth tier to the second, although it has since slipped back a division.
11. Steve Morgan, Fosun, Wolverhampton Wanderers
Liverpool fan Morgan dreamed of owning the club he grew up supporting and made several offers in the 1990s, but the takeover bids of the founder of housebuilder Redrow were consistently rejected. Instead in 2007 he bought Wolves for a nominal fee and an agreement to invest £30M in the club. In 2009 it was promoted to the Premier League and spent three seasons there before being relegated to the Championship, where it remains.
In 2016, Morgan sold the club for £45M to another entity well known in property, Chinese investment conglomerate Fosun. Fosun’s relationship with football super-agent Jorge Mendes has been called into question.