Thomas Peeters, Sports Economist at Erasmus School of Economics, explains an interesting phenomenon in an article by Het Belang van Limburg, a Flemish newspaper. Following the decision of the Red Devils Witsel, Fellaini and Chadli to invest in football club Standard Liège, Het Belang van Limburg takes a closer look at the investment choices of football players.
Many wealthy football players choose to invest in a football club. International stars like David Beckham are involved with Inter Miami, Zlatan Ibrahimovic with Hammarby and Eden Hazard with San Diego 1904 FC. Since these investment decisions occur all the more frequent, the following question may be posed: why do footballers invest more and more in football clubs? According to Peeters, one of the explanations is the following: during the last decades, footballers were to receive increasingly larger paychecks for their services. One of the other, significant reasons, is that footballers have a home advantage in the football sector. Ronaldo will probably be less successful while trying to gain influence in a software company by investing in it, whereas football clubs would be very enthusiastic about the prospect of welcoming Ronaldo to their ranks. Obtaining a seat at the board of a football club is thus easier.
Standard Liège
Football players such as Axel Witsel and Nacer Chadli, players in the team of the Red Devils and having been brought up in the ranks of Standard Liège, choose to invest part of their wealth in Standard by means of silent participation. One of their investments is in Sclessin, the football stadium of Standard. According to Roland Duchâtelet, one of the wealthiest Belgians and, among other things, investor, it is a positive development that football players invest in the club they owe a lot: there are a legion of clubs barely able to be profitable. On the other hand, players receive large salaries without many downsides.
Peeters points to the current construction of Standard Liège: ‘[…] at Standard, there has been a constant outflow of capital during the last ten years’. Fixed assets, including Sclessin, have been transferred to another corporation. When investors would show their interest in participating in the future, the current construction might pose as an obstacle. Since Standard has to rent the stadium from the other corporation, its liabilities have increased and investors have less influence over the business operations.
Influence of football players
To many people it might seem improbable, but football clubs are relatively small in comparison with big companies in the corporate world. This means that footballers can acquire a large share in a football club relatively easy. Great players earn salaries of (tens of) millions. To put this in perspective: the biggest football club in the world, Real Madrid, has a yearly turnover of around 840 million euros. The profitability of football clubs is more often than not not as appealing to investors, as risks are significant in the football sector. If footballers are willing to invest in football clubs, their wealth enables them to.
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You can download the full article from Het Belang van Limburg above.
