Celebrity Investors Paving the Way for New Avenues of Funding: changing the profile of the traditional investor in football clubs

The recent influx of celebrity football club investors is reflective of the evolution of the global investment landscape, as investors with diverse backgrounds and motivations seek to gain exposure to new asset classes. Football clubs have always been a lucrative and booming business but have recently gained the attention and investment interest of celebrities, such as, LeBron James who invested $6.5 million in Liverpool FC in 2011, retired NFL star J.J. Watt who this year invested in Burnley FC, and most notably Ryan Reynolds’ and Rob McElhenney’s recent success story of Wrexham FC.

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While there are endless opportunities for football clubs to gain attention from ultra-high-net-worth individuals, businessmen, and, recently, private equity funds, the celebrity investor may present a unique opportunity to fully maximise the business potential of football clubs.

Celebrities Scoring Big in the Investment Game

Recent success stories of celebrity investors are gaining greater traction for their ability to uniquely impact football clubs, shifting away from the traditional investor.

Celebrity investors are uniquely placed to provide access to free marketing, advertising, and sponsorship deals. Wrexham FC’s growing profile as a result of the recent $2.5 million investment from Ryan Reynolds and Rob McElhenney has turned into tangible revenue for the club as it has increased revenue streams from merchandise, media rights, and sponsorships. The club has seen a tenfold increase in revenue as a result of its recent sponsorship by TikTok and Expedia. The duo has also created remarkable opportunities for the club, including an FX documentary series, ‘Welcome to Wrexham’, as well as investment in better players, such as, Paul Mullins (star striker) and Ben Foster (an ex-England goalkeeper). Their commitment and dedication to the club has enabled Wrexham to be promoted into the English Football League for the first time in 15 years, remaining unbeaten in the last 17 games on their home turf, dispersing the myth of celebrities being short-term investors accused of viewing football clubs as merely an investment opportunity which they will eventually sell on.

Football clubs can also benefit from the new networks and resources that celebrity investors can bring. LeBron James initiated significant possibilities for Liverpool FC by extending its recognition to the United States and secured lucrative endorsements with brands such as Nike and deals with Beats Electronics. According to Forbes, the new kit deal with Nike is said to be worth over $39.5 million annually. Further, Will Smith’s investment in an Australian football club – Sydney FC – has helped the club gain a following among US fans, while Ed Sheeran actively promoting shirt sales for Ipswich FC raised more revenue for the club. It is apparent that the vast audience outreach and marketability a celebrity investor brings can greatly benefit a football club’s visibility. All of this can lead to increased publicity and revenue, while the diverse range of investors may bring new approaches to corporate governance, including a push for greater transparency and accountability for the way in which clubs are run.

Hollywood Hype or Sound Business Strategy?

It has been widely reported that LeBron James’ investment in Liverpool FC has increased in value since his initial investment in 2011. By highlighting a handful of examples, it is clear that a celebrity investment may appear lucrative to the industry. However this strategy may also raise concerns about celebrity investors seeing their role as merely profit-making. The Wrexham investment was faced with scrutiny as to whether the two high-profile celebrities would prioritise short-term success or personal interests over the long-term development of the club. This has the potential to lead to volatile ownership and volatile ownership structures as celebrity investors may be more likely to sell their shares or divest from their teams if they encounter any issues. It is vital, therefore, that any investments are well-structured and reflective of the shift away from the traditional investor.

It is questionable to what extent Reynolds’ and McElhenney’s success story is sufficient to alleviate traditional concerns associated with the celebrity investor. Yet the trend of celebrity football club investors is gaining momentum. Michael B Jordan is the most recent celebrity to follow the trend with his investment in Bournemouth FC, hoping to promote the club’s global reach.

As the investment landscape continues to evolve, it will be interesting to see how celebrity ownership in football and other asset classes continues to shape the market. Until then, celebrity ownership in football clubs will remain a double-edged sword for investors and fans alike.

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