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April 13, 2023

American Money Flowing into Lower Levels of English Football

Much has been written about U.S. private equity firms and

American billionaires

investing in England’s most prominent football clubs.

“But there’s a drive to the lower leagues at the moment [too],” Adam Sommerfeld (managing partner, Certus Capital Partners) said.

U.S. investors have backed upwards of a dozen League One, League Two or non-league clubs in recent years, a list that includes Ipswich Town, Barnsley, Portsmouth, Plymouth Argyle, Lincoln City, Wycombe, Walsall, Leyton Orient, Crawley Town, Cambridge United, Gillingham and Wrexham.

“It’s easier to say who has not been bought,” Sommerfeld said.

And the trend line is showing no signs of abatement either.

“Two or three more [clubs] will likely go [to U.S. investors] very soon,” Sommerfeld said.

The hope with all these investments is that the club gets promoted to the Championship and ultimately the Premier League.

“At that point, you’re talking over 100 million pounds of television media revenue a year,” Brett Johnson (director, Ipswich Town) said. “It’s like getting an option to own an NFL franchise.”

Most of the investment activity in lower-level English football is coming from high net-worth American individuals, not the increasing number of U.S. based private equity firms viewing sports as an asset class. 

That is because institutional investors tend to “like steady, revenue based [businesses] and that comes from a big media contract, which the Premier League has [but the lower leagues do not],” Sommerfeld said. The concept of promotion-relegation also keeps risk-adverse investors at bay.

There are profits to be made with investments in lower-tier clubs, if they can be acquired cost effectively and managed prudently.

“But very few [investors are doing] it for immediate EBITDA returns,” Sommerfeld said.

Nearly every club ownership group is putting every dollar earned back into the club in an attempt to get promoted.

Promotion comes with an increase in valuation.

“Teams in the Championship are worth substantially more than teams in League One,” Johnson said. 

However, “the big prize with being in the Championship is you’re within [arms’ length] of getting to the Premier League,” Johnson added.

For informational purposes, Ipswich is in sole possession of the second guaranteed promotion spot with seven games left in the League One season.

COVID-19 increased the number of opportunities that existed for wealthy Americans to invest in English football.

Clubs faced “a number of financial challenges [as a result of the pandemic] and were forced to consider wide-ranging capital options [to account for them],” Sommerfeld said.

Prior to March ‘20, EFL clubs were far less receptive to taking on investment capital, let alone foreign investments.

There are a host of reasons why U.S. citizens have gravitated towards lower division clubs.

Some are investors in MLS or USL franchises and are looking to pick up best practices from clubs that have been around for a century or more. Others, like Johnson, value the potential player trading partnerships and/or access to an English team’s academy.

Johnson is co-founder of the USL expansion franchise, Rhode Island FC (playing in 2024), and co-founder and former co-chairman of the league's Phoenix Rising FC.

The trend of American investment in Premier League clubs has drawn more attention to English football and Hollywood has played a role too. 

“The Ryan Reynolds piece [

Welcome to Wrexham

], believe it or not, has been incredibly influential,” Sommerfeld said. “We have it quoted by very serious investors who were watching it in their downtime and it caught their attention.”

Wrexham is on course to return to the English Football League (League Two) for the first time since 2008. The club is three points clear with a game in hand.

The same could be said about the 2018 Netflix documentary

Sunderland ‘Til I Die.

That show followed Sunderland A.F.C. through the 2017-2018 season, its first in the Championship post relegation.

“Seeing what was possible piqued [investor] interest,” Sommerfeld said.

The romanticism associated with turning long-established communal assets into winners has also been a “significant” factor.

Americans “like the idea that it’s grassroots to an extent, [the idea of] immersing [themselves] in the community,” Sommerfeld said.  

And the price of clubs is right.

“Investors like that they have an opportunity to compete and pick a winner without having to deploy hundreds of millions of dollars,” Sommerfeld said.

Johnson’s group has never publicly stated what it paid for Ipswich. However, the club director said League One teams start at roughly $10 million.

That estimate does not include the working capital required to turn the team into a winner.

While some clubs have experienced presumed value increases under American ownership, there have been few, if any, notable exits by U.S. investors from teams that started at League One or below.

But that has more to do with timing than anything.

“Majority owners will usually have [control] for 7-10 years minimum,” Sommerfeld said, and this trend is newer than that. The short-term ‘flipping’ of clubs is highly frowned upon by regulators.

That does not mean lower league investments are guaranteed to deliver positive returns. They are akin to early stage investments given how far they must go on their journey.  

However, there are things investors can do to stack the deck in their favor.

“Coming into a strong academy system, a good stadium, solid local engagement and being located in an attractive part of the country are highly beneficial to the long-term outcomes,” Sommerfeld said.

“That alongside prudent financial management from previous owners and a brand that can be built upon, will give incoming acquirers a head start on the competition,” he added.