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PSG/Qatar: football expands financial sphere of influence

In “keepie uppie”, footballers aim to defeat gravity’s pull on the ball for as long as possible. Owners of top clubs, such as Paris Saint-Germain, are playing the same game. PSG’s Qatari proprietors have discussed selling a minority stake of up to 15 per cent, targeting a total valuation for the club of €4bn (£3.44bn). At least two other teams recently arrived in the shop window, Liverpool and Manchester United.

When club owners dine together they can toast the rising arc of valuations. The PSG figure would top the £2.5bn achieved by Chelsea Football Club earlier this year. That towers over the €70mn the Qataris paid back in 2011 for the Paris side, before they began to invest heavily in players. It would put PSG on seven times trailing revenues of €556mn, more than Chelsea received.

The Qatari investors say they have no intention of selling out. They simply want more expertise inside the supporters’ tent. Could they not hire that knowledge?

This is needed on the financial side. The club has lost money recently, even at the ebitda level. Despite generating a quarter less in sales than PSG, Liverpool reported a sizeable ebitda gain in the season ending 2021. That partly comes down to unremunerative broadcast contracts in France’s Ligue 1.

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The popularity of minority stake sales is striking. Of the 40 stakes bought in the top five leagues since 2017 through October this year, more than half were minority ones, according to Deloitte. In September, Silver Lake increased its stake in Manchester City by over a quarter to 14.5 per cent.

Some private capital valuations are returning to earth, as tech enthusiast Tiger Global revealed this month. Yet football clubs still have a lighter than air quality.

You could theorise that this reflects the success of football as an entertainment business. There is a blunter, more circumstantial explanation. The prices of trophy assets usually leap when an auction room is visited by cash-rich whales. More than a decade of rising asset values has created plenty of these.

Lex recommends the FT’s Due Diligence newsletter, a curated briefing on the world of mergers and acquisitions. Click here to sign up.


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