The football season kicks off this weekend but surprisingly investors appear to be moving away from the appeal of the Premier League, choosing to move their interest and money to smaller clubs outside of the top flight
Around 40% of clubs outside of the English Premier League have received formal or informal approaches from potential equity investors in the last year.
Accountancy and business advisory firm BDO conducted 49 interviews with finance directors in the Premier League, English Football League Championship (FLC), Football Leagues One (FL1) and Two (FL2) and the Scottish Premiership (SP) as part of an annual survey of football clubs.
Football Leagues One and Two show how a clear strategy and business model can attract investors who are keen to invest their money into the clubs. Financially, no League One club considers their clubs finances to be in need of attention, and of those in League Two that do, all are confident that they will operate within Financial Fair Play parameters.
Nearly three quarters of clubs in League Two have received an approach from potential investors in the past year. This suggests a more medium to long term strategy from investors recognising potential for future value growth, which is something that is not necessarily available in Premier League clubs.
Premier League clubs will earn between £100m and £150m in TV rights allocations in this season alone with 75% of clubs reporting very healthy financial positioning and 88% expecting to make a profit this year.
About 23% of FLC and 40% of SP clubs claim to have finances in need of attention or a cause for concern.
Investor interest is not only home grown as the curiosity in lower league English football is increasing across the globe.
Ian Clayden, head of professional sports at BDO LLP, said: ‘We appear to be witnessing a greater distinction between the three different sub-sectors of English football. The healthy international brands of the Premier League are a contrast to the still very attractive, but financially precarious, Championship clubs. Meanwhile, Football Leagues One and Two are operating a financially stable business model, attracting significant global investor interest.
‘The wealth gap between these divisions may be widening but, with increasing stability, the financial gap within individual leagues appears to be narrowing. With greater emphasis on competition in the field, this promises to be a compelling season in all divisions as English and Scottish football further cements itself as the most exciting, competitive and lucrative in the world.’
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