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Holding structures for football clubs, are they workable?

Football has evolved a lot in recent years. The figures for the signing of Cristiano Ronaldo by Real Madrid recently, which was around one hundred million euros, caused big expectations. Nowadays, we are more and more getting used to see these figures for a transfer in the soccer world. We know that it is a sport with high economic costs for those who want to invest and enter the business. Today we want to talk about the viability of holding structures in a football club.

Before going ahead with our thoughts on this topic, we offer the following links leading to posts about holding companies, thus providing you with more information: Holding.

Holding structure at a Football Club, the City Football Group

One of the great pioneering clubs causing revolution in the way of structuring their company has been Manchester City, the team currently coached by Pep Guardiola. To properly analyse the reason for this change, we must look a little closer at its history. The English team changed ownership in 2008, with Mansour Bin Zayer, deputy prime minister of the United Arab Emirates, taking over the club. This change came about due to the huge financial losses that the “Citizens” were making, taking over the 800 million euro losses that the club was making at the time.

In order to turn up the club's revenues and revolve the situation, Manchester City was transformed into the City Football Group (hereinafter CFG). In other words, a holding company. One of the reasons for this is to bring together the shares of several football teams under its structure.

What advantages does a holding structure offer to a football club?

This new structure offers plenty of benefits. Moreover, in this specific case it allows them:

  • The possibility of having several teams to attract talent from all over the world.

  • A network that helps to sustain the economy of their club.

At the time this City Football Group project was initiated, there were many doubts about financial issues; but nowadays, investment funds support their model. The reason is the progressive offer of higher marks to their management. Moreover, the group has been incorporating increasingly large investors such as Silver Lake, which invested around 420 million euros just 3 years ago.

Which companies are incorporated in the CFG's holding structure?

Currently, CFG owns or co-owns more than 5 teams around the world:

1. Manchester City (England).

2. New York City FC (United States).

3. Girona FC (Spain).

4. Club Atlético Torque (Uruguay).

5. Yokohama F. Marinos (Japan).

6. Melbourne City FC (Australia).

In fact, a new acquisition by this group is also in the pipeline, as they are now trying to take 51% of Brazilian giants Atlético Mineiro, a club that has recently produced great talents such as Vinicius.

Useless to say that, when innovation works, the model is followed by the rest. This case underlines this assumption; we can see that big clubs such as FC Barcelona have already taken note of this new organisation and are trying to replicate the model with some clubs in Latin America.

How to achieve management of so many clubs?

In City Football Group's ground-breaking model, there is a very well-defined administrative structure that helps to have everything very well organised. Each team has an organisation in which the CFG includes a president who is in charge of financial matters and a sports director who is in charge of the different sporting responsibilities of each club.

In addition, the model allows a network in which frame the clubs exchange both footballing and financial knowledge. Regular meetings between the teams where, for example, new tactics are exchanged or players can be loaned or exchanged if one of them is not qualified to play in England but good enough to play in Australia, are reported.

Success on the field always brings benefits off the field

If we want to increase our profits in the world of sport, we have no choice but to be successful on the pitch, because sporting and commercial success always go hand in hand in this context.

The earlier mentioned holding company already reported profits of $616 million in 2017. These profits are the translation of the winning period that the English club started in 2013/2014. Since then, it has earned a total of 14 trophies; this in turn has excited many Manchester City fans and attracted the interest of new investors.

Would you like to learn more about all the advantage a holding structure offers? Please do not hesitate to contact us.

Do you have doubts if a holding structure can help you? Our specialised holding and sports department at Carrillo Asesores will be delighted to assist you. Solve your doubts right now!

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