To keep asking? Why would they keep asking? Beyond the initial investment requirements for the purchase and any infrastructure investment, why would they need to raise further debt?
And it is hard to project the ROI on this project. We don’t know what revenue projections have been put on this over the next 10-15 years. A lot of industry insight suggests that there is huge untapped potential in overseas markets, especially in mobile streaming rights, so what we see as an asset that has close to exhausted its growth potential, may well be seen as investors as an asset which has barely begun to explore its untapped potential.
The ROI on this project is unlikely to be measured in the payback period or annual ROI, it’ll likely be on long term asset value growth with an eventual exit strategy in mind. I would also anticipate that it’ll incorporate substantial real estate development as part of that valuation projection. An upside that could be substantial.
Without seeing the 3, 5, and 10 year pro formas and the business plan, I’m really just speculating. A safe assumption is that any for profit investment group buying the club, will have identified substantial revenue growth potential, new revenue streams, have the inside track on any expected disruptive changes to the market (such as a breakaway league), and factored in the substantial infrastructure investment required (and its potential upside).
Football clubs are typically valued at a much higher multiple of EBITDA than most other industries, which does suggest that there are more factors than just ROI which go into the consideration of asset value. But I think it would be naive to suggest that anyone investing close to 6bn in an asset, won’t be acutely aware of the market conditions and realities, growth potential, and won’t have utilised substantial industry expertise and data to determine the feasibility of the investment.
People use the parallel of the Glazer’s original LBO as a standard bearer for the evil of investment groups, but we are talking about relatively paltry sums compared to what it being discussed today.
Of course this will all likely be moot anyway, when the club is bought by a state backed sports washing machine.