AFC Bournemouth investment deal can be a catalyst for new wave of football business, say experts

Out-Law News | 10 Nov 2015 | 5:29 pm | 2 min. read

A US-based group's minority stake investment in AFC Bournemouth could be the "catalyst for a new wave of football business", two legal experts involved in the deal have said.

On Monday AFC Bournemouth announced that Chicago-based PEAK6 Investments had acquired a 25% stake in the club. The deal, two years in the making, will see PEAK6 operate in partnership with existing shareholders, including club owner Maxim Denim. Pinsent Masons, the law firm behind Out-Law.com, advised PEAK6 on its investment in the club.

Under the new arrangements, PEAK6 co-founder and chief executive Matt Hulsizer, who has existing experience in the US sports market including as owner of NFL side Minnesota Wild, has joined the AFC Bournemouth board along with colleague Jay Coppoletta.

Trevor Watkins and James Earl of Pinsent Masons said the deal could awaken competition between other prospective international investors in European football.

"This agreement reflects the increasing importance of global reach in the sports business," Watkins said. "We are seeing significant interest in the sector, underpinned by a desire to build strategic relationships through investment across sport, whether that be in clubs, venues, technologies or similar, This deal demonstrates that notwithstanding the work needed to complete a transaction, that deals will be done in the English and European football markets. It also shows existing club owners that there are innovative strategic partnerships possible that involve broadening the investor base whilst also expanding their club's opportunities for growth in international markets without those arrangements involving them relinquishing control."

"We have already seen a model of US-based or other international investors coming to English football and buying a club out-right as a consortium  but this minority stake deal is a fresh approach that will likely change the perception that taking majority control is the usual way forward.  With recent rumoured new overseas investments in clubs such as Aston Villa, Crystal Palace and West Bromwich Albion failing to materialise this transaction is likely to encourage potential purchasers to look again at how they approach opportunities," he said.

Earl said that now that a precedent has been set with regards a minority stake investment in an English club, other international investors will become more alive to such opportunities.

"The English football market is already an attractive one given the climate of rising sports rights valuations and increasing commercial alignment between the US and UK sporting markets in particular," Earl said. "We believe that the agreement between AFC Bournemouth and PEAK6 could therefore serve as a catalyst for other minority stake investment deals involving existing Premier League clubs or ambitious clubs operating in the Championship. Indeed, this is also likely to be the case further afield in Europe given there is a finite number of strategic, well-priced investment opportunities which currently exist in English football."

Earl said that investment deals will, though, remain complex transactions to complete.

"These deals happen infrequently for good reason. A large number of factors need to be present for football investment deals to be successfully finalised," Earl said. "Investors need to have a deep understanding of the constituent parts of a club they are looking to invest in as well as of the investment landscape. There also needs to be an alignment in the strategic interests of investors and existing club majority shareholders and for price valuations to be realistic. A lack of expertise, knowledge and a finely attuned approach can, and often does, cause deals to fail. The AFC Bournemouth and PEAK6 deal, however, managed to delicately balance all the right factors, and also provides a benchmark for future agreements."