- Tom Brady has become the latest US sporting icon to invest in British soccer.
- The legendary quarterback has acquired a minority stake in Birmingham City.
- Brady joins the likes of Jordan Spieth, JJ Watt, and LeBron James by buying into English football.
What do JJ Watt, Jordan Spieth, and Tom Brady have in common besides being quite good at their day jobs?
They have all become – to varying degrees – co-owners of British soccer teams.
Former NFL star Watt bought a minority stake in Burnley FC, in May. PGA Tour golfer Spieth became a part owner of Championship team Leeds United last month. Now, legendary quarterback Brady has unveiled a minority stake in Birmingham City.
The trio has followed on from the likes of LeBron James, a stakeholder in Liverpool FC-owner Fenway Sports Group, and actor and producer Michael B Jordan, who bought a stake in AFC Bournemouth last month. However, they may have been more inspired by Ryan Reynolds and Rob McElhenney’s venture into the little Welsh town of Wrexham, as documented in their Disney+ docuseries.
Brady, the seven-time Super Bowl champion, became the latest high-profile name to buy into English soccer, partnering up as a minority owner with Birmingham City’s holding company, Knighthead Capital Management LLC.
The rise of across-the-pond partnerships raises a question: what is it about British clubs that has suddenly captured celebrities’ imagination?
Brand power can unlock big payoffs
The biggest names in sports can bring a charismatic influence and brand identity with whom fans can engage, according to Simon Chadwick, professor of sport and geopolitical economy at Skema business school.
“We know Brady is now associated with Birmingham and Reynolds is associated with Wrexham, and it’s a bit like the face of L’Oreal, the face of Ralph Lauren – and that in itself is significant,” he told Insider.
“He inevitably brings competence – but he brings other assets in terms of image and reputation and status and that helps to build equity in the minds of key stakeholders.”
The rewards for success in the English Premier League can be astronomical. TV revenue has traditionally been a critical source of funding for all clubs competing in the top division of the game.
The broadcast rights are sold to several providers including Sky, BT, and more recently, streaming competitors such as Amazon Prime. The money is then divided up between the twenty Premier League clubs using the following ratio: 50{1652eb1ffa4184925f6a63a9c04ea6b421acb7a78117241e7d4325cdca8339fa} divided equally between clubs, 25{1652eb1ffa4184925f6a63a9c04ea6b421acb7a78117241e7d4325cdca8339fa} on performance, and 25{1652eb1ffa4184925f6a63a9c04ea6b421acb7a78117241e7d4325cdca8339fa} as a facilities fee for televised matches.
Manchester City, in their 2021-22 title-winning season, took home £153 million (around $195 million) as the spoils for finishing top of the league, per the Athletic.
Christina Philippou, sports finance expert at Portsmouth University, said that Reynolds and McElhenney’s ultimate ambition is to have Wrexham AFC compete among the elites despite it currently sitting in the fifth division of the English soccer pyramid.
“Their long-term aim is to get it to the Premier League – that’s the ultimate aim for everyone. And once you have a Premier League team, we’ve seen what sums those can go for these days,” Philippou said.
A gap in the market
US investors are eyeing the chance to streamline an untapped British territory. Revenue maximization has rarely been the priority of British clubs, and this has led to an outdated and inefficient system of income channels – one that Americans can explore.
“I think one of the inefficiencies, actually, of English football and European football and football in general – is that for decades, it’s been a very closed community, not willing to open up to outside influence,” Philippou said.
“They [US investors] recognize the inefficiencies and they recognize how they can potentially profit from fixing what they see as problems in the system.”
When compared with the more mature product that US sports have developed, the UK industry pales in comparison.
“There is a view amongst people who make money from sport in the United States that clubs are punching below their weight,” Chadwick added.
“Even the most traditional British football fans would say: ‘We do want this customer-centric approach, we do want to be treated better, we do want to have better facilities, better stadiums, better players, better food, but also we want to be listened to.'”
A way to stay involved in the sporting world
The career of an athlete is short and peaks early, and athletes have a long history of getting themselves into financial trouble after retiring.
“There is a realization of this period when your earnings are at a peak,” Chadwick said. “That’s never going to happen again, so I think we are seeing athletes take investing in long-term revenue-generating assets much more seriously.”
For money and for love of the game, the opportunity to stay involved in the sporting world could be a key factor behind the rise in boardroom roles among retiring sportspeople.
“Apart from the obvious investment and profiting, I’m sure there’s an element of social responsibility, of giving back to sports,” says Philippou. “We’ve been seeing that a lot, particularly the ones who retire, they’re interested in sort of remaining involved. And there’s not always that opportunity in your own sport.”