F1 team owner branches out into football
Throughout the recession football has continued to attract investors, although they often seem to be rich individuals with money to burn. But there are those who think that with shrewd investment it is still possible to turn a profit.
The owners of the Lotus F1 racing team are setting up an investment vehicle to spend as much as €500m on acquiring clubs. Gerard Lopez and Eric Lux have set their sights on about five second tier European clubs as well as a dozen football-related businesses such as player agencies, academies and media rights management companies.
Lopez and Lux have been attracted by the sport's large revenues, global reach and potential for better management and bigger profits at smaller clubs. Mr Lopez said, 'Big-name clubs are inherently risky and very difficult to turn around. We would rather take a club of €40m turnover than one with high aspirations and huge debt. This about buying clubs and making them profitable. They just need to be better managed.'
That may be so, but football clubs face inherent challenges that are not encountered in other businesses. Stadiums are substantial capital assets with high maintenance costs for which it is not easy to find alternative uses. An expensive player can all too easily be injured and there is intense competition for even promising players which pushes up prices.
To get round Uefa's restrictions on investors buying more than one club, they will only buy clubs in different leagues. A problem could still arise if clubs were to be successful enough to compete against each other in Uefa competitions.