Three Football Business Stories You May Have Missed This Week
Over the past week or so, Premier League clubs have found new ways to keep building their million and billion pound businesses beyond just their team performing well on the pitch.
Sunderland revealed an unusual strategy for growing their American fanbase, Chelsea underwent another major ownership change at a valuation of around £5 billion, and Tottenham launched a programme designed to turn their stadium and commercial operation into a testing ground for growing technology companies.
Sunderland Are Looking to Detroit, USA, for Their Next Generation of Fans
Sunderland have begun looking towards America in an attempt to build their international fanbase following their return to the Premier League last season.
The Black Cats haven't just targeted America's largest cities, but are focusing on places like Detroit, Pittsburgh and Philadelphia, with the club believing similarities between their histories could help establish a connection with potential supporters.
Sunderland as a club has always been about the working class people that helped build it, with its identity shaped by shipbuilders and coal miners. Many of the American cities being targeted have experienced their own periods of industrial growth and decline and share similarities with Sunderland and its communities.
Chief executive Tom Burwell told the Financial Times that the similarities became particularly noticeable during Sunderland's preseason tour of the United States, with the club believing its history resonated with supporters in those areas.
Sunderland have also taken a more unusual route into American culture through a partnership with the Elvis Presley estate. The club used Graceland to promote an Elvis inspired away kit, allowing American fans to connect with the club by combining one of the country's most recognisable cultural brands with football merchandise.
The strategy clearly indicates how Premier League clubs are increasingly attempting to expand their commercial revenues internationally through sponsorships, merchandise and overseas supporters.
Financial regulations also reveal why clubs like Sunderland are able to grow their business substantially after gaining promotion last year, with their spending power closely linked to the revenue they generate.
Competing globally with teams such as Manchester United, Liverpool or Real Madrid for supporters would be difficult. But Sunderland's approach of targeting a more specific audience and smaller cities, with the aim of finding communities that may recognise something familiar in the club's story, could help elevate the Black Cats as more than a promoted club.
Why Chelsea Is Now Valued at Around £5 Billion
The recent breaking news that Todd Boehly and Mark Walter have left Chelsea is another major ownership change in West London, with the pair agreeing to sell their stakes in the club to Clearlake Capital.
Boehly and Walter each owned approximately 12.8% of Chelsea, with Clearlake agreeing to pay around £950 million in cash for their combined 25% holding. According to the Financial Times, the transaction values Chelsea at around £5 billion including debt.
Clearlake already controlled 61.5% of the club and will now become Chelsea's dominant owner following the transaction. Swiss billionaire Hansjorg Wyss is expected to remain a minority shareholder, while Boehly will step down as chairman.
The valuation represents a slight increase from the price paid when Chelsea changed hands four years ago. Russian billionaire Roman Abramovich was forced out of the Blues, which meant the Boehly Clearlake consortium could purchase the club from him for around £2.5 billion in 2022, while also committing a further £1.75 billion towards investment in areas including the stadium, academy and women's team.
Since then, Chelsea have become one of football's biggest spenders, but disagreements between Boehly and Clearlake over the direction of the club have regularly attracted attention.
One particularly important issue has been the future of Stamford Bridge, where Chelsea's relatively small capacity compared with several Premier League rivals restricts potential matchday income.
The new valuation is even more surprising when considering Chelsea's recent accounts, with the club recording a £262.4 million pre tax loss, yet investors have still placed a value of roughly £5 billion on the business.
However, Chelsea's global fanbase, Premier League status, commercial revenue, global reach and long term stadium opportunities all contribute to what investors believe the club could eventually become worth, especially if they get back to what they once were.
Why Tottenham Want to Become a Testing Ground for Startups
Tottenham have taken another approach to try and increase revenue at the club beyond just football by launching Hotspur Labs. It is a new programme designed to connect the club with growing technology businesses.
Created alongside athlete led venture capital firm The Players Fund, the programme will allow selected startups to use Tottenham's facilities and commercial network to develop and test their products.
The club describes Hotspur Labs as the first venture programme of its kind operated by a Premier League team.
The programme will focus mainly on companies at Series A and beyond, particularly businesses operating across areas such as AI, data, retail, hospitality, infrastructure and fan experience.
Chief revenue officer Ryan Norys has stated that Hotspur Labs forms part of Tottenham's attempt to diversify revenue and create commercial value "beyond traditional sponsorship".
Tottenham offers an unusually developed environment for startups looking to test products within sport and entertainment. Spurs' Premier League status, global fanbase and one of Europe's most advanced stadiums provide an environment that many traditional startup accelerators cannot offer.
The Tottenham Hotspur Stadium already hosts far more than football, with NFL fixtures, boxing, concerts and other events all on the calendar in North London. These have helped turn the venue into a year round entertainment business, making it a potentially useful environment for companies developing technology for major sporting and entertainment venues.
Hotspur Labs, if proven successful, could be another example of how modern football clubs are increasingly trying to operate as entertainment and commercial businesses rather than solely focusing on what happens on the pitch.
