“For Americans, French clubs are undervalued” / France / Business / SOFOOT.com

OL, Red Star, Valenciennes, Nancy, Saint Etienne. There are numerous French clubs that have just entered or should be entering a multi-club model through new investors, often Americans, who are already involved in foreign clubs and especially English. Worrying phenomenon or financial windfall for French football? Talk with Tim Keech, co-founder of MRKT Insights, a football consulting firm that helped US investors take over European clubs.

Why has the multiclub system become so popular in recent years?
It has mainly to do with the fact that the English clubs that do not have the resources of the Big 6 are at an impasse. Their best young people leave for Manchester City, Chelsea or Liverpool very early, then get loaned out and for the most part never go pro at these big clubs. West Ham or Everton must then buy these players, their players, for a high price, at 15-20 million euros. Whereas if they had a partner club in France or Portugal they could lend their youngsters there, promising to give them playing time in a foreign championship and keep them that way. Having a satellite club is one way to create a pool of players. Brexit has also accelerated interest in this model as with the new points-based work permit it is very difficult for English clubs, especially in the Championship, to sign a European player over 21 years old. The multiclub system is the ideal answer to this. You can sign a player to a partner club in the European Union, while he gains experience, and thus points, before signing him in England, without spending too much money and without fearing that his work permit will be refused.

“With a good shareholder you can make Saint-Etienne a club that regularly plays in the Champions League, where in England you can only do that by buying very expensive clubs that already play in European places.”

Are French clubs therefore destined to become satellite clubs of the Premier League and the Championship?
What I can tell you is that there are many discussions along this line and currently all English clubs are looking at this model and are interested in France, Portugal and Belgium. This multi-club system already exists to some extent in France: Metz at Seraing in Belgium and at the Generation Foot Academy, Marseille at Diambars in Senegal. Except that with the new models being introduced, French clubs will no longer necessarily be the ones at the top of the ladder. However, not all multiclub strategies are created equal. There is that of the City Group with a dominant club and satellite clubs, that of Red Bull, with clubs that have all their information about scouting, exchange players and staff, and have the same training methods and playing style. And then you have a model that is more like John Textor’s. He invests in stable clubs with a good economic model, such as in Lyon, without necessarily being in the majority, because he believes that football is an undervalued industry and that clubs can gain in value.

Why is France so attractive to investors, especially Americans, who are trying to build a multi-club system?
Firstly because the cost of buying clubs is quite low, about 15-20 million euros for a Ligue 2 club. And with a good shareholder you can make Saint-Étienne a club that regularly plays the Ligue champions, where in England this is only possible by buying very expensive clubs that already play for European places. Then because France has an incredible reserve of talent and an efficient training system. Look at Toulouse, where Red Bird has invested. In two years they have almost paid off the cost of buying the club by selling players. In France the U16, U17 or U19 internationals are spread over all Ligue 1 and Ligue 2 clubs, while in England they almost all belong to five or six clubs. France also has a unique bond with young African talent, as does Portugal with South America. Finally, Americans look at French clubs and think they are undervalued and can easily make a lot more profit.

“The Americans believe that European football does not generate enough profit in relation to the media attention. There is no other industry where you can have 20 pages about your business in the local papers every day. †

Why do American investors think there is money to be made in French football?
In general, they believe that European football does not generate enough profit in relation to the media attention. There is no other industry where you can have twenty pages about your business in the local papers every day. Whether it’s marketing, partnerships, Naming and use of stadiums, jersey sales, branding of the club, according to them everything could be operated financially much better. And once several clubs are acquired and developed, the TV rights may increase. All this while we have fans, who are also customers, who we are sure will remain loyal from 7 to 77 years old.

Could the resurgence of stadium violence and threats against leaders deter some US investors?
You might think so, but investors tell themselves they minimize this risk by respecting the club’s culture and being intelligent in their approach to supporters. Above all, from the investor’s somewhat cynical point of view, seeing such passion, such affect even for the club, makes these fans very loyal customers and it is therefore something that can be positive from an economic point of view if we don’t give them alienate.

How to explain the persistent rumors of sales for certain clubs, Saint-Étienne, Nantes, Marseille without there being a sale in the end?
You should know that all the clubs in the world have a ten page investment file explaining why this club should be bought and what the cost is. And many middlemen use it to find a buyer with the hope of getting 5% commission if the sale is made, when they have no mandate. I know that for Saint-Étienne there were at least twenty sales proposals through intermediaries who promised the potential buyer that they were about to get a mandate. Except that the buyers might only be offering 50% of the club’s value and the current managers didn’t even know someone was trying to sell their club behind their backs.

Interview by Gaétan Mathieu

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