Rangers deal underlines appeal of Scottish football in US

The Herald Scotland

2 days ago

Dundee, Dundee United, Hibs and Livingston are also majority-owned by US investors (in addition to the recently relegated St Johnstone), mirroring a pattern which can be seen in the top league in England, where Arsenal, Aston Villa, Bournemouth, Chelsea, Crystal Palace, Fulham, Manchester United, and Liverpool are owned by investors from across the Pond.
In some cases, this pattern of US ownership is clearly producing on-field dividends. In England, Liverpool won the Premier League. Crystal Palace triumphed in the FA Cup, the first major trophy in the history of the South London club, and Aston Villa got to the quarter-finals of the Champions League while securing further European football next season, qualifying for the Europa League. Bournemouth came ninth in the Premier League, equalling its best-ever finish in the top division of English football.
Results of American-owned clubs in Scotland have perhaps not been so spectacular, though with respective finishes of third and fourth in the Scottish Premiership, Hibs and Dundee United are not faring too badly at all under US ownership.
Rangers fans are certainly hoping the shift to the Cavenagh-49ers consortium will herald a brighter age for a club that has struggled badly to compete for the top prizes in Scotland over the last decade and more.
Like all football supporters, that hope is rooted in an expectation that new owners will provide an injection of funding that can transform the club's fortunes on the field while maximising revenue off it. As yet, it is unclear how much investment will be made to achieve that end. In a statement announcing completion of the deal on Friday, the new owners committed to invest £20m into the club 'at this time' by underwriting a fresh rights issue. That will be voted on by shareholders at a general meeting on June 23. Of course, it should be noted that this £20m is over and above the sum – reportedly £75m – the consortium paid to acquire a 51% holding in the club.
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While the focus of Rangers fans, and indeed supporters of any club in a similar situation, will naturally fall on how the team can improve, it is worth reflecting on why investors in the US are drawn to invest in football clubs on this side of the Atlantic.
In the case of clubs in the English Premier League, the business case seems clear. The most recent domestic TV rights deal secured by the Premier League will be worth a record £6.7 billion for the four years from the 2025/26 season. The deal entitles broadcasters Sky and TNT to show up to 270 live matches a season, and also takes in highlights on the BBC's Match of the Day, MOTD2, and Football Focus.
The exposure guaranteed by a deal of this magnitude gives Premier League clubs in England the opportunity to leverage a host of lucrative commercial sponsorship and advertising deals, which in turn allows them to cherry-pick the best players from around the world. With access to such a rich seam of revenue, any investor looking to buy into one of these clubs will have to stump up a pretty penny – the price tag for elite clubs is now measured in billions of pounds – but the prize on offer is huge. Regular access to the Champions League offers tens of millions of pounds of revenue, and opens up the possibility of building a global brand around a team.
Some of the deals for English clubs arguably fit into the trend that has been building over recent years of American investors buying up major UK companies on account of favourable exchange rates, which has allowed buyers from across the Atlantic to pick up clubs for comparatively cheap prices.
And even though it would cost an American buyer hundreds of millions if not billions of pounds to buy an elite football club in England, those valuations pale into insignificance compared with how much it would cost to buy into an American football franchise. As such, UK football clubs offer cheaper access for US investors to the world of professional sport.
When it comes to Scottish football, the arithmetic is a different ball game. Here, the commercial potential is significantly more limited than in England, with the most recent TV deal – agreed with Sky Sports - worth £150m for the period between 2024 and 2029. That deal is worth around £30m per season for each club over the period.
The prize money on offer for winning the Premiership is paltry, too, amounting to less than £5m.
In this regard, the key attraction for anyone investing in the Scottish game lies in qualifying for the Champions League, which is where the real money can be earned.
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The new Rangers owners will clearly have this in their sights as they plot not only to bring trophies back to the Ibrox club, but to ultimately achieve a return on their investment. Celtic raked in a whopping €32 million from participating in the league phase of last season's Champions League, eclipsing the reported €13.5m that Rangers earned from its run to the quarter-final of the Europa League.
The imperative for Rangers' new owners to reach the league phase of the Champions League next season, therefore, could hardly be stronger, and the pressure on whoever is brought in as head coach, and the new-look squad that is expected to be assembled, could hardly be greater by the time the first qualifying round comes around in late July.
In the past, local businessmen – and it was men more often than not – invested in their local football club for the love of the game. Some did it to gain kudos or influence in their local area.
Now, the ability or willingness of business people based in Scotland to become involved seems a good deal more limited, with a few exceptions such as Dave Cormack at Aberdeen or Billy Bowie at Kilmarnock.
And it is perhaps no surprise. In these highly uncertain times, the stakes are a good deal higher, especially for those who have shelled out millions of pounds, if not billions, for a seat at the table.