Investors are throwing cash at English football clubs that can't turn a profit. The clubs lose money. The investors make money. This is not a contradiction if you understand that profitability is for peasants.
Premier League teams rack up losses while their owners somehow extract value through mechanisms that would make a shell company blush. Broadcast rights. Merchandising deals. Real estate plays on the stadium land. Selling players they bought for millions at even higher millions. The actual football operation bleeds red. The investment thesis bleeds black.
Your average retail trader sees "losses skyrocket" and thinks that means something bad. Adorable. These people believe numbers on financial statements correspond to reality. They think EBITDA matters. They probably calculate P/E ratios by hand and feel smart about it.
The clubs are not businesses. They are tax-advantaged playgrounds for billionaires who want to sit in luxury boxes and pretend they built something. The losses are features. Write them off. Appreciate the asset. Sell to the next guy who wants his name on a jersey. Everyone wins except the balance sheet, which does not have feelings.
English football has cracked the code. Popularity goes up. Losses go up. Investor returns go up. The only thing that does not go up is the championship trophy for most of these clubs, but that is also fine because winning is expensive and losing is profitable.
Some venture capitalist in San Francisco just read this headline and immediately Googled which Premier League team he can buy a minority stake in. He will ignore the losses. He will pitch it as "growth stage sports entertainment with global TAM expansion." He will exit in five years at three times his entry valuation. The club will still be unprofitable. He will still be rich.
The lesson here is that making money and making profit are two completely different things, but only one of them gets your texts returned at Davos.
Photo by Trung Tran on Unsplash
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