FootBiz newsletter #20: Arsenal seek Edu replacement, La Liga under fire and a new way to invest in sports

This newsletter comes to you from New York, where a few days full of meetings should hopefully keep the mind off a fairly consequential vote that is happening around me.

As much as you may dislike one side (or both) in the US election, there is always the positive ideal to fall back upon that they are practicing the democratic ritual of having a vote and abiding by its result. Though maybe we’ll have to wait and see about the latter.

In football, it’s been nearly a decade since Gianni Infantino swept into FIFA as the great reformer, promising to fix world football’s governing body after decades of corruption that had ended in dawn raids and numerous indictments by the US Department of Justice.

So confirmation in a Dutch newspaper interview this week that the 2030 and 2034 World Cups will be rubber-stamped shortly without so much as a vote poses many questions, even if it is not particularly a surprise.

Yes, there are no longer any other bidders for those tournaments but pay even the slightest bit of attention to how that became the case and it is clear why it leaves such a bad taste for many.

At a time when governing bodies are facing legal challenges over their decisions, abandoning even the impression of being a democratically run entity is a peculiar choice.

Though I guess they could at least argue they’ve successfully managed to stop the trading and selling of votes that tainted the 2018 and 2022 bid processes. A bit like amputating a leg to cure an ingrown toenail.

Anyway, on with the show….

Table of Contents

• Edu leaving Arsenal

• 115 charges update

• The Athletic gets profitable

• For Fox sake

• Index fund for sports?

• M&A murmurs

• La Liga under fire

Edu leaving Arsenal

Arsenal sporting director Edu shocked many when it was revealed on Monday that he was leaving the club to take up a position with Evangelos Marinakis’ multi-club group.

But the devil, as ever, is in the details and with the Brazilian about to treble his £2m salary (per The Independent) to take on a broader CEO role, and Arsenal could not really compete with the offer. Marinakis’ interest in Edu dates back years and overtures were made last season (and possibly even earlier).

The controversial Greek magnate owns Nottingham Forest, Olympiakos and Rio Ave but is looking to add to his stable of clubs. One industry source quipped that in moving to Forest (currently in third in the Premier League) that Edu was not just moving up to a team higher in the table but also with more continental pedigree, given their back-to-back European Cup wins.

Snark aside, the move appears to have been seen as a bigger blow to Arsenal by fans than those with knowledge of the club’s inner workings. Edu was certainly a key backer of Arteta when flashpoints occurred earlier in his reign, most notably in moving out underperforming but influential high earners, but the two were not “attached at the hip” according to one agent who has regular dealings with the club.

The Telegraph have reported that Arteta will have input into the hiring process to replace Edu, which is not tremendously surprising given he is very much at the centre of the sporting project at Arsenal but it is a little reminiscent of how Liverpool and Jurgen Klopp evolved after the departures of Michael Edwards and then Julian Ward from the same role as Edu. At Anfield, Klopp used both opportunities to seize more power over recruitment and other departments - and not always in a way that made the club better.

Arsenal will need to strike a delicate balance.

115 charges update

In another illustration of the enormity of the case, the Cabinet Office are requesting regular updates on Manchester City's disciplinary hearing over allegations that the club broke spending rules on 115 occasions

City's defence against 115 charges of breaching Financial Fair Play rules is currently being heard by an independent commission and has been widely described as an existential threat to the Premier League, but it is also clearly of significant importance to the UK government.

City's Abu Dhabi owners are major investors in the United Kingdom, as well as foreign policy allies in a volatile region, and a guilty verdict for their club could have significant ramifications. The Abu Dhabi investment company Mubadala, which is overseen by City owner Sheikh Mansour, signed a Sovereign Investment Partnership with the UK Office for Investment three years ago which committed the UAE to investing £10 billion in Britain over the next five years and relations have remained close.

In June this year the Financial Times reported that then Deputy Prime Minister Oliver Dowden had visited the UAE the previous month on a diplomatic mission after the government had blocked a bid from Sheikh Mansour to buy the Daily Telegraph newspaper. The Cabinet Office responded to the reports at the time by describing Dowden's visit "as a way of deepening and strengthening our diplomatic and investment ties."

Last week a Freedom of Information request from The Times revealed that then Foreign Secretary James Cleverly asked for a written update on the case in September 2023, while the British Embassy in Dubai made a similar request in May this year. The emails obtained following the FOI from The Times show that the Foreign Office are insistent that the City trial is an independent process run by the Premier League over which it has no involvement.

Given it is a confidential process, the Premier League are unable to provide any details to the government about the City hearing, but can offer informal guidance on the likely timetable for it to be concluded and when the outcome will be made public.

Press reports have suggested the hearing will last around 10 weeks with a verdict expected in early 2025.

The Athletic gets profitable

The New York Times has announced that The Athletic, the sports-focused outlet it acquired for $550m in February 2022 is profitable for the first time.

Founded in 2016, The Athletic grew quickly backed by venture capital and passed 1 million subscribers in late 2019, making it the fastest-growing subscription publisher of all-time but operating at a significant loss.

The NYT had planned to make it break even within three years of acquisition and announced an operating profit in its Q3 results.

For Fox sake

Fox Corp CEO Lachlan Murdoch specifically called out football as he announced an 11% YoY uptick in revenue (to $3.56bn) for Q1 of this year.

The parent company of Fox Sports credited their “Summer of Soccer” as part of Fox Sports’ success, with the wall-to-wall coverage of Euro 2024 and the Copa America driving record viewership, and with it increased advertising revenue and affiliate fees.

Fox will broadcast the 2026 World Cup in the United States, Mexico and Canada where it will, quite understandably, break all records on audience and advertising. In Connecticut, ESPN insiders still bristle at the way FIFA awarded the tournament to Fox without any tender process after Fox had complained about the 2022 World Cup being moved to winter where it clashed with the NFL and College Football.

Index fund for sports?

Morgan Stanley is introducing an index fund (loosely) tied to the sports industry.

Their wealth management division said it had the idea when a client asked them to draw up a portfolio of companies with strong connections to/support of a particular sport, which they then broadened out to the wider sports ecosystem.

“We saw that there was a bigger opportunity to do something here,” said Sandra Richards, managing director and head of Morgan Stanley’s Global Sports and Entertainment Division.

“This one person represents many, and multiples of many that are looking to invest in sports as a fan looking to get engaged.”

The fund will feature a curated index of companies that have either strong sponsorship, media or partnership ties to the world’s most prominent sports leagues.

With a minimum investment of $250k, this isn’t a product with mass market appeal but it may be attractive to either those who want to buy into a sports team but don’t have the money or sports industry bulls who are already invested more narrowly in the industry and who want to diversify.

M&A murmurs

John Textor’s minority stake in Crystal Palace has attracted two concrete bidders, according to newspaper reports in England, though we have heard interest is a little bit softer than advertised.

Keith Harris’ consortium SportsBank is a group of many smaller investors and is still looking to raise the money necessary while DoorDash founder Andrew Tang considers the asking price to be too high.

The Mail were the first to report SportsBank had put in a £230m bid for Textor’s ~46% interest in the south London club. Most industry insiders feel this is a generous valuation when you consider it has such scant influence on club matters, though Palace are seen as having a lot of potential given their relative stability in sporting terms as well as a desirable London location.

(For context: I have been in conversations where foreign owners looking at clubs in the north-east of England have discussed moving their training base to near London to make it easier to attract talent. The magnetism of London for overseas investors is not to be underestimated.)

In addition to the sale of his stake, Textor is planning a $1.1bn recapitalisation of Eagle Football Group ahead of its planned IPO on the New York Stock Exchange in Q1 of 2025.

Red Bull are looking into adding a Serie A side to their network of clubs, but Torino president Urbano Cairo has denied reports that the Turin outfit would be next to come under the Austrian energy drink company’s umbrella.

Italian newspaper La Stampa reported last week that the two parties, who already have an agreement for Red Bull to Torino’s energy drink partner, were exploring a wider deal to become a main sponsor of the club with a view to equity and even control.

But Cairo rotundly denied the reports, calling them “false” and saying he had “never met anyone from Red Bull to discuss the option of selling Torino.”

While the path and structure of the reported deal is notable for mimicking Red Bull’s entry into Leeds United, Italian media has since linked Red Bull to Genoa, a far more easy target for acquisition.

Genoa are one of the portfolio of 777-owned clubs being sold off by Moelis to pay back debts owed by the Miami-based… scheme.

La Liga under fire

Quite some misjudgement from La Liga, with the Spanish top flight postponing just two of its ten matches this weekend despite the floods that have devastated the Valencia region and beyond.

A year’s worth of rain fell in just eight hours late last week, resulting in hundreds of deaths and many more lives being ruined. Games involving Valencia and Villarreal, two clubs from the area, were called off but the rest of the league played as usual.

“It makes no sense. But we’re in a place where they tell us to carry on and so here we are, carrying on,” said Diego Simeone, manager of Atletico Madrid.

"Football has to stop,” said Carlo Ancelotti, Simeone’s counterpart at Real Madrid.

"But we are not the decision-makers. We have to follow the instructions of those who are in charge.

"There are so many ways to help. Football should have stopped and then help. Everyone has been clear about it - nobody wanted to play."

Beyond the coaches, the players have been deeply affected with some from the affected region - such as Barcelona’s Ferran Torres - telling their teams they were not mentally fit to play. “I totally understood,” said his coach Hansi Flick.

There appears to have been a lot of understanding among players and coaches, with clubs willing to find an alternative, but the league decided to push ahead and is now seeing a backlash from all of the above.

This feeds into a wider public anger with the local authorities, who it is felt could have done more to prevent and/or mitigate the disastrous flooding, perhaps saving dozens of lives and certainly tens of millions in damages.

La Liga president Javier Tebas claimed “the best message is to carry on” but who exactly are they sending that message to? The water? The mud?

An avoidable mis-step from the Spanish league that has caused further pain where it was least needed.