As an investor, it is always smart to look for new investment opportunities that allow you to diversify your portfolio. For many people, investing in a football club will be appealing, especially if they are a fan! While it is the super-rich that are able to own football clubs, it is possible to invest in these clubs which are, essentially, businesses at the end of the day. So, is investing in a football club a good idea?
How do football clubs make money?
First, it is important to understand how football clubs make money. You should never invest in a business if you do not know how it makes money and it is no different for a football club. One of the best reasons to invest in a football club is that it has a wide range of revenue streams, including:
- Match tickets
- Sponsorship deals
- Merchandise sales
- TV broadcasting deals
- Stadium hiring fees
- Prize money
- Player transfers
The power of the football club brand
It is also important to recognise football clubs as enormous global brands. In today’s day and age, it is not sales from match day tickets that nets clubs the most money and instead, it is coming from merchandising and sponsorship. You could be practically anywhere in the world and it would not be surprising to see someone wearing the Liverpool home kit and this should pique the interest of any investor. This is also evident with the number of followers on social media that the top clubs in the world have – Manchester United has an eye-watering 61.7 million, which is more than twice as many as Apple.
Do they make good investments?
So, do football clubs make good investments? With football clubs becoming enormous global brands generating enormous amounts of revenue each year, it is certainly worth considering for any investor looking to diversify their portfolio. Of course, the club that you invest in will also play a major role. Manchester United is one of the highest-earning clubs in Europe with revenue of around £835 million and paid out £23.3 million in shareholders in 2020, but this is not common. Additionally, share performance can vary greatly and be hard to predict. Therefore, investing in a football club can bring risk and it is important to be aware of this and ensure that you diversify if you decide to invest.
Many fans want to invest in their favourite football club as a way to show support as well as potentially make some money. With some football clubs becoming enormous global brands creating staggering revenue each year it is easy to see why, but it is still a risk and it is important to do your due diligence and ensure that you are investing with your head and not just your heart.