Liverpool Chairman Martin Broughton will team up with his son to invest in sports after leaving his post upon the sale of the 18-time English champion. One place they won’t be putting their money is in soccer clubs.
Broughton oversaw the 300 million-pound ($487.6 million) sale of Liverpool to the owners of Major League Baseball’s Boston Red Sox. The 63-year-old, who is also chairman of British Airways Plc, will work two days a week with his son Michael and Nic Couchman, a lawyer with 20 years experience in the industry, to find profits in sports.
Their Sports Investment Partners, which was delayed for six months because of Broughton’s role in Liverpool’s sale, will start meeting potential backers this month. Spending in the sector in Europe, Africa and the Middle East will increase to $46.3 billion in 2013 from $39.4 billion in 2009, according to a PricewaterhouseCoopers LLP report.
“It was certainly put back by Martin’s six-month adventure,” Michael Broughton, 32, said in an interview. “He’s our chairman so we weren’t going to go to market and look to raise funds from direct investors unless he could commit the time to it he should.”
Red Sox owners John W. Henry and Tom Werner completed the purchase of Liverpool on Oct. 15, and Martin Broughton will stay on as chairman temporarily to help the transition.
Broughton, a former chairman of British American Tobacco Plc, headed the company’s Formula One team and was also chairman of the British Horse Racing Authority. His involvement in Sports Investment Partners is the first time the father and son have worked together.
‘Batted Me Down’
“I have always wanted to work with him one way or the other,” Michael Broughton said. “He’s always batted me down and said no way and this idea kind of interested him.”
The new company has gotten pledges of about 200 million pounds from private equity and is planning to raise more after a series of investor presentations.
Broughton may need all his powers of persuasion to convince investors to part with money as the global economy remains sluggish following the 2008 financial crisis, according to Chris Lee, head of Barclays’ sports business group.
“I don’t think the market for sport is fantastic at the current time,” Lee said. “It’s a challenging area.”
Sports Investment Partners is planning to take significant minority or majority stakes in small to medium-sized businesses worth as much 100 million pounds. Couchman and Broughton refused to name targets, saying they are looking at sports technology suppliers, betting and gaming companies, support service businesses and sports brands.
Teams Not Targeted
They don’t plan to buy stakes in teams. The majority of the 20 clubs in English soccer’s Premier League operate at a loss even though the competition is richer than its European rivals.
Sports companies in the region have increased in value, although executives haven’t really kept up, the men said. Liverpool, the U.K.’s most successful soccer team, didn’t have a commercial operation until former owners Tom Hicks and George Gillett bought the club in February 2007.
Still, costs remain an issue. Investors including Robert Kraft, owner of the National Football League’s New England Patriots, say they won’t buy into the English league because it doesn’t have salary cap.
“That’s a difficult area of the sports marketplace,” said Couchman, 45, who’s worked in 25 sports with clients including Nike Inc., the International Olympic Committee and European soccer’s governing body UEFA. “What we’re looking at are frankly the much more sustainable business models in sports.”