Deals Review – June 2016
Thursday 16th June 2016
In partnership with the Business Desk, several of our experts will comment on significant deals every month. For June, partner Simon Mydlowski comments on the purchase of Bradford City by a German consortium led by investors Edin Rahic and Stefan Rupp.
If ever there was a script to follow for a football club, Bradford City have done so in recent years, making two trips to Wembley for the League Cup final and League One Play-Off final in 2013, and beating Chelsea at Stamford Bridge in the FA Cup in 2015.
A team that secures one of the highest average gates in League One is the envy of some Championship clubs, and it is easy to see why.
When you look underneath the surface and take a different angle from that of a fan, you also realise that this is a successful business that has been brought forward from some dark times in 2002 – when the club entered administration – and is now an attractive proposition to investors in 2016.
A pair of shrewd chairmen in Julian Rhodes and Mark Lawn have managed the nigh-on impossible task of running the club and being long-standing fans at the same time. The club made some bold financial steps in order to drive the fan base, including the £99 season ticket which – at its inception – shocked the Football League.
However, the regular large crowds in attendance on match day helped to create a ‘12th man’ that influenced other clubs to reduce ticket prices and try to replicate the financial and marketing benefits Bradford City has enjoyed.
Now the lengthy speculation of the takeover is confirmed, the question is: What would drive a pair of German investors to make such a move? And why would anyone invest in a football club?
The truth is that a club is a business, and – if run correctly – can be a very lucrative one. Everything from performance on the pitch to merchandising has the ability to create revenue and clubs with a large fan base are the perfect vehicle for savvy investors.
In recent interviews, Rahic and Rupp shared their vision for the club, which is to harness the enthusiastic fan base and make the model of affordable football work on and off the pitch. It may well be that the Germans’ knowledge of the Bundesliga – where the average ticket price of a game is £8.95 – will help increase crowds further still and assist the club with achieving this season’s (narrowly missed) goal of promotion.
A fine line will need to be struck between managing the expectations of the fans and making the business model work – something that Rhodes and Lawn achieved and which the new investors will need to replicate and build on in order to meet their ambitious but achievable goals.