Why Sports Teams Are the Ideal Investments for the Extremely Rich

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While professional sport has long been regarded as a playground for rich people, it has not always been clear why those individuals have chosen to splash the cash.

In terms of football, club owners were traditionally wealthy businessmen who saw this as an innovative way to strengthen their ties with the local community.

Fast forward to today, and the Premier League is awash with foreign owners from a wide range of backgrounds, each of which wants to be associated with the ‘best league in the world’.

Read on as we take a closer look at why sports teams are widely viewed as being ideal investments for the extremely rich.

The Cash Cow Angle

In the list of richest football club owners compiled by Sportslens, the Glazers are ranked in the top 10 in terms of overall wealth.

However, their acquisition of Manchester United has not found favour with the fans, particularly with regards to how the deal was financed.

The club is now saddled with a massive amount of debt, although that is largely offset by the fact it is now worth around four times what Malcolm Glazer paid for it in 2005.

The biggest bugbear for fans is that despite their global worth, the Glazers are effectively using United as a cash cow to line their own pockets.

The Vanity Project

For some owners, buying a club is a vanity project – something they do because they want to bask in the glory of being associated with top-class sport.

That was certainly the case where Simon Jordan was concerned, who invested heavily into Crystal Palace after selling his mobile phone business for £78 million.

Things didn’t work out as expected, with the club going into administration in 2010 and Jordan losing a big chunk of his wealth.

Despite this, he remains a multi-millionaire and continues to enjoy a prominent public profile due to his association with football.

The Political Perspective

The global popularity of football has attracted a new breed of owners in recent years, none of whom are in the sport to make a profit.

Clubs such as Manchester City and Paris Saint-Germain have benefited massively from investment from Gulf states, thus changing the landscape in their respective competitions.

Their owners use the sport as a tool to increase the global appeal of their nations and stabilise their positions in a volatile region.

However, many critics see their ownership as ‘sportswashing’ - a tactic used to deflect attention away from political issues such as human rights abuses.

The Brand Element

Another element that often factors into sports teams being seen as lucrative investments is the positive impact that this can have on the owner’s other business interests.

For instance, Venky’s takeover of Blackburn Rovers in 2010 has proved to be disastrous from a football perspective, with the club now drifting along aimlessly in the Championship.

However, the kudos of being involved in the sport has clearly paid dividends for their brand, with the company’s share price currently four times higher than when they bought Rovers.

While fans will argue that the club is a shadow of the one that enjoyed massive success under Jack Walker’s ownership, the bigwigs at Venky’s won’t be batting an eyelid.

Conclusion:

Although there have been plenty of examples of wealthy owners who have failed in sport, the pros generally outweigh the cons for anyone wishing to get involved.

Buying the right club at the right time can be hugely beneficial, especially if its circumstances fit with the overarching aims of the individual or organisation concerned.