Welcome to the first edition of our weekly roundup of the most notable moves in European sports business! This week, we cover the frenzy over Wrexham’s supposed hundred-million euro valuation, the expansion of Kylian Mbappe’s budding investment portfolio, and Cadillac’s much-awaited industry to Formula 1.
The Sport Investment Studio is an investment and advisory platform dedicated to transactions a the intersection of Sport, Media and Entertainment based in Paris.
Bedlam in Wrexham: €100 million valuation cited, but many questions asked.
🏴 What: A Bloomberg report claims that Ryan Reynolds and Rob McElhenney’s Wrexham AFC are now worth a whopping 100 million euros, a number unheard of in the English third tier, where they ply their trade. Given that the club was bought for around 2 million euros three years ago, this possible return on investment is raising lots of eyebrows.
💰 Why: News of the valuation comes from the purchase of a 15% stake in the club by the New York-based Allyn family. Though exact details of the stake are undisclosed, they reportedly put the club’s valuation at €100 million.
Unsurprisingly, the supposed valuation has raised some questions. This is very well illustrated by sports finance professor Rob Wilson, who argues that despite having strong financials (revenues touching 20 million pounds) and a solid brand, Wrexham are still a loss-making club in a league where money simply isn’t that easy to come by. The club lost 5 million pounds last year, and has 9 million pounds in long term debt, so it’s not as if its financials are ironclad.
📰 Read more:
The original Bloomberg report on Wrexham’s valuation (Bloomberg)
Prof. Wilson’s analysis on the valuation (Invest In Soccer)
A great overview of how finances work in the English Football League, away from the glitz and excess of the Premier League (Deloitte)
Cadillac finally joins Formula 1
📺 What: After years of deliberation, General Motors has finally received the nod to enter Formula 1, through Cadillac. Cadillac will be on the grid starting 2026, and aims to be a powertrain producer by the end of the decade.
🤔 Why: Formula 1 has established itself as one of the properties in sport, with team valuations, media rights and fan interest all soaring over the past few years. For an automaker, there is no greater marketing ploy than having two cards on the coveted F1 grid, and America’s grand old car manufacturers have been trying to get in on the action for a while now.
Entry was by no means cheap. GM had to pay a fee of over $450 million to enter the grid, a number that is twice as high as usual anti-dilution fees. The entry also comes at a key time for the American car industry as a whole. Faced with competition from China and falling behind other auto giants on the global level, it needs to reinvent itself, and this could be a valuable step in doing that.
📰 Read more:
The FIA’s official press release on Cadillac’s entry into F1 (Formula 1)
A report on soaring valuations in Formula 1 (Sportico)
An overview on why exactly General Motors have wanted a Formula 1 team for so long (The Race)
Kylian Mbappe invests in French SailGP team, adds to investment portfolio
📺 What: Kylian Mbappe, through his Coalition Capital venture, has become a co-owner of the French SailGP team. This marks his second investment in professional sport, following the acquisition of Ligue 2 team SM Caen. The stake has not been disclosed, but is said to be ‘significant.’ Mbappe’s charity fund, Inspired by KM will also become a sponsor of the team.
🤔 Why, and what is Sail GP?: Founded in 2019, SailGP is supposed to be water motorsport’s answer to Formula 1. A competition consisting of sailboat races in high profile cities, the league has expanded rapidly since its founding.
Originally, the league’s competing franchises were owned by the league itself. However, there has been a drive to sell off these teams to interested investors, and it has gone quite well. Only four of the 12 teams are now in league hands, with one of them being the French team that Mbappe has acquired a stake in.
SailGP has been expanding quickly, and with the wealth of the rich growing rapidly over the past five years, there is definitely room for another HNWI-centric sports property in the market. The boat-racing E1 series is another example of this; backed by the Saudi PIF and with a laundry list of celebrity investors. This makes the investment a smart one for Mbappe, due to the opportunity to get in early on what is potentially the next big motorsport.
📰 Read more:
A primer on SailGP and how it works (SailGP)
An overview on Mbappe’s business interests and his stake in the French SailGP team (New York Times)
A great overview on SailGP’s business prospects and recent investments in it (SportsPro)
Other headlines to keep an eye out for:
The Monarch Collective, a flagship $150 million fund for investments in women’s sports, has expanded its size to $250 million, buoyed by continually optimistic sentiments around women’s sport. Led by venture capital heavyweights Kara Nortman and Jasmine Robinson, the fund counts a number of key American franchises in its portfolio. These include NWSL franchises San Diego Wave and Angel City FC (which is touted to the world’s most valuable women’s sport franchise), as well as the incoming Boston entry into the NWSL. Read more
Sponsorship is not just about putting logos on shirts, apparently. The European sponsorship market is now valued at a record high of €23 billion, crypto firms are back in business (although let’s see how long that lasts), and with new properties popping up in both traditional and new sports, interest will only increase. However, this consequentially also means that saturation will increase, and companies will look for new ways to monetise and promote themselves. Some properties, like Formula 1 have understood this, and there are definitely some pioneers among Europe’s elite too. Take Juventus for example, who are now championing space exploration and sending themselves to the moon, along with American space agency Lunar Outpost.
It’s Christmas. UEFA’s annual European Club Finance and Investment Landscape report has dropped, and as ever, it is replete with tons of digits that populate newsletters like ours. Annual revenues have hit another record, but the industry still makes a considerable loss. Broadcasting is now second to commercial revenue, and has only grown 3% in the past 5 years. PSG (3) and Marseille (20) were among the top 25 clubs by revenue, all forms of income bar broadcasting were up, and UEFA incomes as well as proceeds from transfers have kept the league somewhat competitive. However, Ligue 1’s wage-ratio is the highest of the top European leagues, 2 of the 10 highest operating losses out of all European clubs were attributed to PSG and Lyon, and the league’s net operating result is the worst in the continent.
That’s all for our inaugural weekly roundup! For more content, follow us on LinkedIn, and if you’re interested in learning more about us, please visit www.sportinvestmentstudio.com