00:00From celebrities to venture capitalists, investors are spending millions to tap into the next
00:09sports gold rush — soccer teams.
00:11I'm involved in sports ownership, there's a soccer club in the U.K. I'm a part of.
00:16Unlike other professional sports investments, soccer teams can have a much lower barrier
00:20to entry, with the opportunity for bigger returns later down the road.
00:25And it's not just in Europe.
00:28The world's game has really gotten a foothold in America.
00:32But there are risks.
00:33It takes almost as much work and money to have a team that doesn't perform as much
00:37as it does to have a team that does perform.
00:39Here's an inside look at the rewards and perils of investing in the other kind of football,
00:44and what's driving the growth of this multi-billion dollar industry.
00:47Ryan and Rob, how would you sum up that experience tonight?
00:52I'm not sure I can actually process what happened tonight.
00:56In 2021, Ryan Reynolds and Rob McElhenney bought the Welsh football team Wrexham AFC
01:01for some $2.5 million.
01:04It's an underdog story, and it's about interconnectivity between the club and the community.
01:09Just three years later, the Wrexham team is worth about $11 million, a more than four-fold
01:14increase.
01:15They're part of a growing group of A-listers to throw their support behind European football
01:19leagues.
01:20There are opportunities to invest in foreign clubs at a substantial discount relative to
01:25what the franchise fee is for a major league soccer.
01:27Brett Johnson is the CEO of Benevolent Capital, a Los Angeles-based venture capital firm that
01:33specializes in professional sports investments.
01:36Johnson is part owner in several soccer clubs both in and out of the U.S., including Itswich
01:41Town FC, a football team that dates back to the 1870s.
01:46What makes the sport so interesting overseas is the risk of relegation or the carrot or
01:53the allure of promotion.
01:55The relegation and promotion system is a cornerstone of European football culture.
02:00Sants, two years ago, we played so bad.
02:02We had to drop down from the Premier League to a lower league that was called...
02:06The Championship.
02:07See, that don't make sense.
02:09Teams play in different divisions and have the opportunity to be promoted up or relegated
02:14down based on their performance.
02:16With promotion and relegation, there are opportunities to buy lower-level clubs relatively speaking
02:21at discounted valuations.
02:23In the U.S., buying a team in the NFL or NBA typically costs billions of dollars.
02:29Meanwhile, a mid-tier European soccer team can be purchased for just a fraction of that,
02:34offering a relatively low entry point for would-be investors.
02:38So as an example, when we bought Ipswich, we bought it at League One, so the third level
02:42in the soccer pyramid.
02:43Since Johnson's group acquired the team, Ipswich has been promoted twice, rising through
02:48the ranks to the Premier League.
02:50The Premier League is the top level, and I would argue the most prominent league in
02:53the world.
02:54So the benefit, again, of promotion is you can look at buying lower-level clubs, discounted
02:59prices.
03:00If you are so fortunate to get them promoted, you could see that appreciation increase substantially.
03:05You also have the risk that you buy a club at any level and can see it relegated.
03:09The Premier League is the world's largest revenue-generating football league.
03:15On average, most Premier League clubs can expect well over $100 million in media rights
03:20payouts per season, while MLS clubs receive about $8 million per season.
03:25The difference in terms of media rights, the difference in terms of revenue, in terms of
03:29gravitas for a team that's promoted to the Premier League is staggering.
03:34Now U.S. investors want a slice of the growing pie.
03:39Just 20 years ago, there were no majority American owners in the Premier League.
03:43Now nine of the top 20 teams are controlled by U.S. investors, from billionaires like
03:47the Glazer family to massive conglomerates like Fenway Sports Group.
03:51Some of these investors are betting on further growth when it comes to media rights.
03:55Ah yes, you're in it now, the Premier League.
04:03Even though the Premier League has one of the largest fan bases in the world, it only
04:07brings in about $4.2 billion in annual media deals.
04:11With just a fraction of that fan base, the NFL takes in more than double that amount,
04:16about $10 billion each year.
04:19Some investors are hopeful that greater investment will come from streaming services, looking
04:23to cash in on the Premier League's massive global audience.
04:27Peacock is the streaming home of the Premier League.
04:31Now investors are finding opportunities in the U.S. soccer space.
04:36Like at Los Angeles Football Club, or LAFC.
04:40As long as you are taking it seriously, running it like a business, the valuations tend to
04:46go up.
04:47Larry Friedman is the co-president and CEO of LAFC.
04:51He's been a part of the club since it first began in 2014.
04:55We are in a great market that enables us, with the building we built and the investment
05:00we made in the building, we're able to drive one of the top handful of average ticket prices
05:08in the league.
05:09In 2024, LAFC became the most valuable Major League Soccer team, with a valuation of $1.2
05:15billion.
05:16But it has taken a long time for LAFC, and Major League Soccer, to get to this point.
05:22This league started back in the mid-90s.
05:25The first 10 plus years was a struggle, and then some things started to click.
05:33And you saw soccer-specific stadiums like BMO Stadium getting built.
05:38But over the last five years, U.S. soccer viewership has skyrocketed.
05:42In 2022, the FIFA World Cup Final drew 26 million U.S. viewers, more than the NBA Finals,
05:48the World Series, Stanley Cup, and even the Winter Olympics.
05:52Just two years later, a record-breaking 12.1 million fans attended Major League Soccer
05:57matches in the U.S.
05:59That's more than a three-fold increase since 2010.
06:02This is an incredible time to be invested in soccer.
06:06The World Cup is coming back in 2026.
06:09Lionel Messi, the greatest player certainly of this generation, and arguably the greatest
06:14player of all time, now plays for Miami.
06:17All levels of United States soccer are doing very well.
06:19This growth is also reflected in the skyrocketing expansion fees to join the MLS.
06:25We acquired our expansion rights for the city of Los Angeles for $110 million.
06:31A year and a half, two years ago, the ownership group in San Diego acquired expansion rights
06:37in MLS for that market for $500 million.
06:40Still, U.S. soccer isn't always a lucrative business.
06:43Less than half of MLS teams actually turn a profit.
06:46LAFC has managed to stay ahead of the curve by finding creative ways to maximize its stadium space.
06:5217 home MLS games does not a business model make.
06:57We are in the food and beverage business.
06:59We are in the merchandise business.
07:01We are in the customer experience business, the live entertainment business.
07:05Go LAFC!
07:07Tech giants are getting in on the soccer frenzy, too.
07:09In 2022, Apple acquired exclusive rights to stream MLS matches in a $2.5 billion deal.
07:19It wasn't a deal for a rights fee, like all of the other leagues typically do.
07:26It was a partnership so that the more we succeed together, the better off we both will be.
07:34And the growth goes beyond Major League Soccer.
07:36Other divisions, like the National Women's Soccer League or the United Soccer League,
07:40provide opportunities for smaller-time investors.
07:43I think an alternative way of looking at sports investing is like what I'm doing and what
07:48a lot of other people are doing, which I would call kind of emerging sports, emerging leagues.
07:52The franchise fees are much lower for United Soccer League versus Major League Soccer.
07:57So it provides, if you will, a lot more oxygen for the capital that you would raise and you would invest.
08:02Still, investing in any professional soccer league, whether in the U.S. or abroad, is a risky business.
08:08So plenty of examples of investors that have bought Premier League clubs and seen themselves relegated.
08:13They bought League One clubs, seen themselves relegated.
08:15So there's clearly an inherent risk.
08:18If a team drops in the rankings or falls into a lower division, they may lose top players
08:22and coaches as they cut costs.
08:24While U.S. teams don't face the same volatility tied to a relegation system, the stakes and
08:29the returns on investment aren't as high either.
08:32From my perspective, the lack of what I would call promotional relegation in American sports
08:37means it turns off your fan base in most instances.
08:41And also you get a lot of ownership groups that will literally effectively just dial it in.
08:45Don't spend a lot of time putting a good product on the floor.
08:49Don't put it on the pitch.
08:51There's no fear of relegation, but I would argue that it makes the product less compelling.
08:57That's why when it comes to soccer leagues, investors are willing to play the long game.
09:01It's not that long ago where the NBA wasn't all that.
09:05And you look at it now and the NBA is an incredible global property.
09:10I expect that coming out of 2026, there is going to be a substantial increase in the
09:17interest in our league.
09:19It's a lot of work.
09:20It's a lot of capital.
09:21It's a lot of time.
09:22I just always try to caution people that you're not always going to get promoted, you're not
09:26always going to win the trophy, you're not always going to get the huge sponsorship and
09:29media rights deals.
09:31It all takes time.
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