Former Liverpool chairman Sir Martin Broughton believes that nation states are more appropriate owners of football clubs than private equity funds.
Broughton was chairman of Liverpool in 2010 and was seen as a key figure in expediting the sale of the club to Fenway Sports Group (then NESV) following the ruinous Tom Hicks and George Gillett regime.
Last year, the former chairman of British American Tobacco and British Airways, now 75, was part of a consortium that included American billionaires David Blitzer and Josh Harris, former London 2012 Olympic chairman Lord Sebastian Coe, and Indian billionaire and owner of the Sacramento Kings NBA team, Vivek Ranadive, that tried to acquire Chelsea following the sanctions placed upon former owner Roman Abramovich and the subsequent sale process that followed.
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But Broughton saw his consortium fail in their bid for his boyhood club Chelsea, with Todd Boehly and Clearlake Capital winning through.
Broughton also told the ECHO last month that he had sought interest from potential investors in a stake in Liverpool stake at the end of last year without making progress.
While FSG’s interest in bringing on board a minority partner had initially drawn rumour of a potential sale of the Reds to a sovereign wealth fund, Manchester United’s current sale process has attracted interest from wealthy individuals with links to government through the bid made by Sheikh Jassim bin Hamad Al Thani. He is a member of the Qatari royal family and son of the former Qatari prime minister.
The controversial purchase of Newcastle United in 2021 by the Saudi Arabian Public Investment fund raised questions around whether nation states should be able to take such interest in football clubs. With regards Newcastle, PIF were able to argue their case successfully to the Premier League that they had enough separation between themselves and the crown, with the British government aiding the waving through of that particular deal.
While interest from sovereign wealth funds in football has increased, born not simply from the notion of enhancing reputations of nations with poor human rights records through ‘sportswashing’, but due to the desire to diversify revenue streams away from traditional things such as oil and gas, and open up greater trade routes and investment channels into Europe, so, too, has private equity arrived on the scene in a big way in football in recent years.
With sports team valuations growing and football at the elite level proving to be remarkably resilient through the pandemic, with valuations continuing to rise, buoyed by huge media deals and the perceived upside that exists through greater media rights moving forward and better monetisation of emerging markets, private equity has placed billions into European football.
Clearlake Capital, the co-owners of Chelsea, are one of the most prominent examples of private equity ownership in football. And while the spending has been heavy at Stamford Bridge since the arrival of the new ownership, the end game for Clearlake is to see a return on that investment by putting a compelling, successful team on the pitch.
But Broughton, speaking to the BBC, believes that nation states are a better fit for football than private equity. “Private equity is an unsuitable owner of sports' teams,” he said. “The US doesn't let them buy any sports franchise.
"The standard operating procedure is buy with as little equity and as much leverage as possible, get your equity back as quickly as possible through dividends, then flip it as soon as there is a good profit.
“Nothing wrong with that process in other industries, but it is so far from what the fan wants. Football clubs are community entities. They are emotional assets. The fans want equity and no debt.
"Nation states are more appropriate. They take a longer-term view, tend to invest on higher equity, lower debt basis and don't have a need-to-sell time frame.
"People might not like the particular nation state, but philosophically, I have less concern with a nation state owning something than private equity."
When speaking to the ECHO last month, Broughton admitted he did float the idea about investing in Liverpool to a consortium, although Blitzer and Harris, whose HBSE firm have been linked with a minority stake in the Reds since FSG’s intentions were revealed back in November, weren’t spoken to.
Broughton said: "I didn't speak to Josh Harris and David Blitzer, as they have gone back to Crystal Palace, but I did speak to the other people in our consortium and Chelsea I spoke to, in case there was an interest in becoming a co-investor, not to acquire, but to become a co-investor.
"But they are already foreign billionaires with a pad in Knightsbridge or Chelsea or Kensington and they came to London fairly regularly and when they came to London it was to watch Chelsea.
"So they are all Chelsea fans and not in the 68-year way going down there to watch them in the way I am but that is their team and they enjoy going down there. They were attracted by the idea of investing in a football team and Chelsea specifically.
"When I approached them about Liverpool - and I didn't approach them about Manchester United, I would never approach them about Manchester United - but the result would have been the same. [They would say] 'Well, I've got a pad in London'. So that's not the type of person that is going to come in really at Liverpool.
"So I wasn't keen enough to go out and search for investors, new investors again. I think if anybody wanted my assistance in it, I would be willing to consider it but not actively."
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