In recent years, the world of football has undergone a major shift, not just on the field but behind the scenes, where mergers and acquisitions (M&A) now play a key role.
The sale and purchase of football clubs, often valued at billions of pounds, involves complex legal, financial, and strategic considerations. One of the most recent and high-profile examples is the partial acquisition of Manchester United by Sir Jim Ratcliffe through his company, Trawlers Ltd, earlier this year. This was a landmark deal offering insight into the complex world of sports M&A.
The Unique Nature of M&A Transactions in Sports
M&A transactions in sports, and especially in football, are unlike traditional corporate deals. While any corporate acquisition involves many of the same phases, football club sales introduce an additional layer of complexity. This is because clubs like Manchester United aren’t just companies; they are global brands with millions of fans and complex ownership structures operating in a strict regulatory environment.
In the case of Ratcliffe’s partial acquisition of Manchester United, we saw a deal that was not a straightforward takeover. Ratcliffe’s and his company, Trawlers Ltd, negotiated for a 27.7% stake, positioning Ratcliff as a significant shareholder and has taken over sporting control of football operations, whilst the Glazer family retain a controlling interest. Ratcliff is CEO of INEOS, which owns various sporting clubs and teams including FC Lausanne-Sport and the INEOS Grenadiers cycling team.
This type of partial acquisition is a common strategy in high-value football club transactions, where the incoming investor seeks influence without taking full control. This allows investors to shape the club’s direction strategically while reducing financial risk and maintaining operational continuity.
Key Legal Considerations in Football Club Acquisitions
1. Due Diligence
Football clubs are unique assets, often carrying legacy debts, broadcasting and player agreements that can span many years, complex sponsorship arrangements and large assets such as stadiums. Conducting meticulous due diligence on a football club’s financial health, legal and regulatory risks and liabilities, and commercial rights is crucial to ensure that buyers and sellers are entering into negotiations fully informed.
2. Ownership Structures
In the Manchester United deal, Ratcliffe’s decision to acquire a minority stake allowed him to secure a significant role without committing to full ownership. This reflects an important trend in M&A transactions, where partial sales can offer financial relief to the existing owners while still offering strategic influence to the buyer.
The appropriate structure for each deal will depend on the circumstances, including the aims and risk appetite of the buyer in respect of their investment and the aims of the incumbent owner with regards to retaining or handing over control.
3. Regulatory Compliance
Football clubs are governed by a combination of national and international regulations, including those set by the FA and FIFA, as well as league specific rules such as those applying to the Premier League. This complex web of regulations impacts everything from ownership eligibility to financial sustainability requirements. It is vital to ensure that all aspects of the deal are compliant with relevant regulations, otherwise, the transaction risks being disrupted by fines or sanctions.
4. Valuation
Valuing a football club is notoriously difficult. Clubs like Manchester United have intangible assets such as global fan engagement, brand value and social media presence, which don’t fit neatly onto a balance sheet. It is common to work closely with valuation specialists to ensure a fair and accurate valuation of the target club, and to ensure both parties are fully informed ahead of negotiating the deal.
5. Financing
Financing requirements will depend on whether the transaction is a full acquisition, transfer of a partial stake, or a joint venture. Acquisitions can be financed through various methods, including private equity, debt financing, and other strategies. Structuring the deal optimally is crucial to ensure it remains sustainable and meets the needs of both parties.
6. Stakeholder Management
In football, owners and shareholders are just part of the equation. Fans, players, sponsors and governing bodies also hold a heavy influence on the success of a deal. The Manchester United deal, for instance, sparked significant attention from fans and media outlets worldwide.
Managing stakeholder relationships is therefore crucial, especially in high-profile acquisitions. It is often necessary to engage in a holistic strategy which not only manages the legal and regulatory requirements, but also seeks to handle the transaction transparently, to engage with and gain the support of the wider stakeholders involved.
7. Post-Acquisition Support
Once the transaction is complete, consideration must be given to aspects such as corporate restructuring, contract negotiation and compliance management that may be required owing to the change in ownership and/or structure.
Comments
The partial acquisition of Manchester United by Ratcliffe and Trawlers Ltd is just one example of the many complex transactions that shape the modern-day business of football. As the regulatory environment in which clubs operate becomes more complex over time, the task of financing and ensuring regulatory compliance during a take-over will become ever more difficult and obtaining the right legal and operational support is key. As sports clubs, and football clubs in particular, continue to be viewed as valuable ‘trophy’ investment opportunities, we expect the demand for M&A in this space to endure, despite the risks and complications.
At HF, our experts specialise in M&A transactions and financial structuring within the sports industry and are skilled at managing the legal intricacies and unique challenges these transactions present. For assistance with buying or selling a club, or in respect of any other M&A transactions, contact Peter Millican, Head of Corporate, Peter.Millican@h-f.co.uk or Angelika Jankowska, Corporate Solicitor, Angelika.Jankowska@h-f.co.uk.
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