Zapping But! Football Club AS Saint-Etienne: Batlles, a good choice for the greens?
Aim ! : Olivier, while some countries such as England and Germany have already begun to emerge from the crisis following the Covid. How to explain that in 2022 we are witnessing an upsurge in American investments in French football?
Olivier Jarosz: The reason is ultimately quite simple and can be seen from a purely economic prism. The current economic situation reminds us of the 1970s when we generally witnessed two years of growth economy followed by one or two years of stabilization. Since 2020, we find ourselves with two crises: first the Covid and then the war in Ukraine. Two crises that upset the classic economic scheme. 2022 is a so-called “funds securing” year. In the stock market, this is not the year to make risky bets. We are looking for much more stable investments.
And football clubs are stable investments?
For investors looking to secure their capital, yes. Football is perfect for that. Clubs are considered at the same level as public goods with States always ready to support them. We have seen this during the various confinements where governments have multiplied aid (loans guaranteed by the State, exemption from charges).
When we look at the clubs listed on the stock market, what did we notice during the Covid? These are organizations whose value has remained very stable. For investors, it works. We must also add to this that, from the point of view of American investors, the real value of clubs in Europe is still largely undervalued compared to the franchises that govern the sport in North America. For the big fortunes who buy clubs, it is ultimately a small investment and it gives real growth prospects. Despite the crises, football will always be there and there will always be supporters.
We are still talking about buyouts which can in some cases exceed 100 M€…
Today, North American franchises sell for billions. Last week, in NFL (American football), the Denver Broncos sold for 4.65 billion dollars. Finally, what is it to buy a football club in France at 20, 30 or 50 M€?
“Blitz? He is halfway between the enthusiast and the businessman.
What is the typical profile of an American investor in European football today?
Without stopping at the passport, American or otherwise, there is no standard profile but there are four groups of investors in European football. We can find the “fan investor” who wants to have fun and buy a club to enjoy the weekend – they are rare but they exist -, the “enthusiastic” who likes football and invests for contact with people, and two business schools. Those who seek to make money by reselling the club with added value and those who will use football to do business on the side, to enrich the address book and reach local businesses. You have to be aware of the visibility offered by a football club. A few years ago, a Marseilles newspaper published a study and we realized that Frank McCourt was better known in a few months than Jean-Claude Gaudin, who had been the Mayor of the city for more than 20 years. .
But how can a leader know that he is selling to the right project?
As the Romans said, “pecunia non olet”: “money has no smell”. Since the Covid crisis, most clubs are on sale. Everyone is at least open to the arrival of new investors. Today, there are many more sellers than buyers. It is the latter who are kings. One of the problems of these clubs which pass from hand to hand is that there is no mechanism at European level which controls the profile of buyers. Football not being a product like any other, with more fans to seduce, this raises real questions about the ambitions and interest of investors.
Where do you think David Blitzer, the businessman who wants to buy the Greens, is?
For me, it is between the “2” and the “3”. He is someone who has moved forward in the shadows because he has the means. He is halfway between the “enthusiastic” and the “businessman” who wants to make money with the many football clubs he buys. David Blitzer is not someone who only invests in football. We also find his name in new technologies, in “growth” companies, whose incomes generally increase very quickly. In 2022, it has become a risky sector and the fact that we see him embarking on the acquisition of football clubs (Salt Lake City and ADO Den Haag in 2022, editor’s note) shows that he is looking for more security. in his investments. Moreover, David Blitzer also invests a lot in more traditional companies: in energy, in companies that provide 2-3% dividends… It’s not a lot but it’s guarantee money .
With David Blitzer, we are clearly in a timeshare model with at least 9 sports clubs, including 7 in football (Real Salt Lake, Crystal Palace, Augsburg, Alcorcon, ADO Den Haag, Waasland-Beveren, Estoril)…
Timeshare is a very recent phenomenon. In 2021, this involved 156 clubs around the world, all divided into 60 MCO (Multi-Clubs Ownership) groups. 75% of these MCOs concern only two clubs and this is the consequence of the growth of football in recent years. The hypothesis is that investors surfed on a phenomenon of opportunities. Just look at the performance indicators of the City Group and Red Bull, which are not the same. We can think that there are political issues on the side of Dubai for the City Group or commercial image issues of a brand (branding) for Red Bull. The level of satisfaction is not just a purely sporting question.
Some people think that it is enough to have several clubs to do business between its clubs but it is not as simple as that. In fact, there are very few centralized management models and it is almost impossible: you cannot manage a club at 25%. Moreover, this is why the majority of MCOs stop at two clubs because they have realized that we are not in a synergy of 1 + 1 = 3. An effective synergy is very complex to implement.
At the sporting level, there is also a risk in relation to UEFA regulations…
Indeed, UEFA prohibits the participation of two clubs of the same shareholder in its competitions. In Europe, there is no point in having two competitive clubs. We are more likely to find ourselves in a situation where one of the two clubs will be blocked. The risk for an owner of having to arbitrate between club A and club B. Whether you support club A or club B, you don’t care what will happen to the other club. And losing the license just for that is hard to hear…
But Red Bull managed to get around the problem with Salzburg and Leipzig…
People assume it’s the same club but it’s not… And everything is done in a very simple and legal way. Admittedly, the logo with the bull appears on the coat of arms but, in Germany, where there is the rule of “50+1” in the ownership of the club, the name of Red Bull does not appear in the legal terms: it is the Rasen Ball. In reality, they are two very different entities. The clubs of the Red Bull group share scouting data via a computer system common to all subsidiaries around the world, but apart from that they do not advise each other on a day-to-day basis. When New York detects a very high level player in the USA, it will not call Leipzig directly even if it is the most exclusive club because it plays in one of the five major championships…
“In Saint-Etienne, relegation lowers the price”
Coming back to David Blitzer, what is the point of having so many clubs and adding AS Saint-Etienne to them?
I don’t know what his real intentions are, but I would say that we are in a scheme aimed at doing business through football, a bit like stock market investments. I buy 30% of a club. It costs me 10 million euros. I sell 10 percentage points a few years later and I recover my stake while still having shares in the club… I think he is in this state of mind. Otherwise there may be other interests. Perhaps some of his non-football businesses would have an interest in the industry in Saint-Etienne or the region. Perhaps also the fall in Ligue 2 and the drop in price creates an opportunity to be seized. We have known for a very long time that Bernard Caïazzo and Roland Romeyer wanted to sell the club. Relegation lowers the price.
What is the difference between an American project which succeeds like RedBird in Toulouse or another which fails like GACP in Bordeaux for example?
Appointing the right people is the first thing. Americans often make the mistake of taking people who trust them with a very American view of sport. People who are very competent in their starting industry but who do not manage to register immediately in the particular ecosystem of football. In addition to being business specialists, you also have to manage the dialogue with the fans so as not to take the risk of losing sponsors because of a bad result or a degraded image. The second thing is to have a plan (a roadmap) and follow it by having your teams and shareholders follow you. You have to manage everything, have a 360° vision. That’s why the best thing is still to be able to rely on leaders who know the local reality.
In Toulouse, it works because RedBird has bet on a Damien Comolli – Olivier Jaubert ticket, each of whom has experience at L1 and international level in their field. They were given time to work without putting undue pressure on them despite the relegation.
Generally, when it talks too much about commercial at the beginning, we clearly feel that it is purely a business project. In Bordeaux, we started on a drastic change. We wanted to express a trading model. This weakened the model in place while the formation was quite successful. GACP arrived by unbalancing the pillars and had set too aggressive development objectives. In football, in the early years, there are a lot of losses. You have to be able to take it. Just look at Franck McCourt, who must not be far from the 400 M€ spent since his arrival…
