Publications
02/01/2024

Public funding of sports clubs – the example of football

Sports clubs, and football clubs in particular, can currently choose between many different sources of financing. In addition to the traditional resources of TV rights, merchandising, player transfers, ticket sales and sponsorship, other types of funding are emerging.

These new ways of financing clubs involve reorganising their legal structure and, more specifically, their share capital.

Although clubs are traditionally owned by a majority shareholder, such as the sovereign wealth funds of Qatar and Saudi Arabia, which own Paris Saint-Germain and Manchester City respectively, new forms of financing are developing.  It can take many forms, including indirect stakes in a club’s share capital through a supporters’ association (I), direct stakes reserved for certain supporters (II), or stakes open to all through a stock market listing (III).

This new type of shareholder brings new cash into the company, thanks in particular to supporters, putting an end, in some cases, to the financial difficulties encountered by the club.

I.Fans’ indirect shareholdings in clubs

The first method of public funding involves bringing new players into the club’s capital: its fans.

They invest indirectly in the club through an association of which they become a member. A number of French clubs have tried this approach to put an end to their financial difficulties.

This is particularly true of FC Sochaux-Montbéliard, which on 22 July 2023 launched a fund-raising campaign to raise capital for its company from its supporters.

The funds were raised through a newly created association, Sociochaux. The initial aim of the association was to save the club from bankruptcy with the help of socios, or ‘fan-shareholders’. Today, this fundraising has enabled the club to retain its professional status and its training centre.

This type of financing appears to be a tool that clubs can use to obtain new money quickly.

Sochaux is not the first French club to seek to raise fresh cash by bringing in supporters. En Avant Guingamp has done the same and has set up a number of ‘socios’ known as ‘Kalons’.

What the socios of these two clubs have in common is the creation of a an association of fans. Socios do not invest directly in the club’s share capital and are not direct shareholders in the club. Instead, they become members of an association, which in turn invests in the club’s capital.

Capital is brought into the club through the payment of an annual subscription by all the members of the shareholder association, which then invests the money in the club.

The “socios” are represented within the club by the elected representatives of the association’s executive committee.

This model is very different from the one used in Spain by clubs such as FC Barcelona and Real Madrid.

II. Fans’ direct shareholdings in clubs

In Spanish clubs, the typical model is that of the supporter-shareholder, the socios, who invests directly in the club’s share capital. This type of financing allows for a homogeneous group of fans, previously selected by the club on the basis of objective criteria, to invest in the club’s capital.

For example, since 1912, FC Barcelona, has had socios who, among other things, choose the club president.

FC Barcelona’s socios are a very exclusive group of fans who invest directly in the club’s capital (rather than through an association). There are around 143,500 socios, all Catalan, and all of whom acquired a stake in the club through a family member.

The socios are part of the very essence of the FC Barcelona club, enabling it to remain profitable year after year. The 143,500 Socios pay a total of €167 every year, representing a total of €18 million at the end of the financial year.

The €18 million is the club’s net profit.

Unlike the socios at FC Sochaux-Montbéliard or En Avant Guingamp, the socios at FC Barcelona play an active role in the life of the club. They all have voting rights, and they elect the club president. They therefore play an essential role in the life of the Catalan club.

FC Barcelona has also introduced another form of crowdfunding, with another type of supporter-shareholder, those subscribing to the “Committment card”. This card allows its holder to invest in the club and obtain the status of socios of FC Barcelona after 3 years (if they meet all the conditions to obtain this status).

III. Direct investment by the general public

Clubs can still opt for a stock market listing, like Olympique Lyonnais, the only French football club which is currently listed. The ambitious club is even considering a listing on the New York stock market in the near future.

Listing on the stock exchange enables clubs to obtain financing on the financial markets and to obtain liquidity from investors operating on these markets. This financing opens up the club’s share capital to many potential investors.

While Olympique Lyonnais is the only French club to have opted for this type of public funding, other European clubs have also chosen this option, including AS Roma, Ajax Amsterdam and Borussia Dortmund.

This form of public financing allows for significant capital inflows into clubs. It allows any type of person, whether they are a fan or not, to acquire a stake in the company and contribute cash.

****

Public funding of sports clubs seems to remain specific to the world of football and, for the moment, has been exported relatively little to other sports.

However, it is worth noting that this method of financing has made some inroads in the world of rugby, with the clubs of Dax and Brive being prime examples.

In any case, shareholder-supporters seem to be a guarantee and an alternative to “footbusiness” insofar as, even if they are in the minority, they could appear as a new form of control over the management of clubs and their shareholders, in the image of FC Barcelona.