European Super League: What Does It Mean For Football & Investment Opportunity?

Okay, very good afternoon. It's Anthony here, Amplify Trading. It's 21st of April. I've been off the desk actually Monday and Tuesday of this week. Now, one of the things I kept seeing just pushed on my notifications on my phone or my watch was about the Football Super League, or the apparent creation of, and, and now it's obviously changing a little bit. But I've got Sam, who's the head of our trading development, on, and the reason for that is Sam is probably what you'd classify as a football purist, having been a player himself in a former life as well. So I thought he'd be a great guy to get on to get us up to speed, Sam, on like, first off, what's going on, but then we can talk about the business side of this proposed deal and then perhaps the investment opportunity as well along with it. So yeah, what is happening at the moment? What's the latest?

Yeah, it's fascinating. And you say football purist, it's the technical term the Super League have given us, uh, our legacy fans, which we'll talk about in a bit. But yeah, there's the Super League, um, 14 founding members, uh, heads by— well, it's run by Florentino Pérez, the, the main man at Real Madrid, who as a, as a club are in financial trouble, as have many been over the last year because of COVID They're struggling to pay wages, they need to clean their books. But anyway, this, this Super League has has come about, been in the works for a couple of years, and it shook the football world. I'm sure anyone that's been following it, certainly in the UK, has seen Gary Neville and Jamie Carragher lose their rag over it. But yeah, it's basically that these clubs who, for participating in, say, the Premier League, you get about 100 mil a year for the Champions League if you make it, and AT100. They're basically being told now that they can get €350 million a year guaranteed to enter this competition where they cannot get relegated. So these are seen as the, the sort of the Super League team. So you've got Barça, Real Madrid, Atlético Madrid, 6 from England— Manchester United, Arsenal, Liverpool, Tottenham, Chelsea, Manchester City, uh, Juventus, Inter, AC Milan— some of the teams that are in it. Um, and they've been, you know, told they can guarantee to get in this, no relegation, and there'll be 5 extra teams that could have got in, qualified each year. But it shook the football world. UEFA, FA have come out and said, well, they're going to expel the teams from their competitions. The fans have had a massive backlash. It's, uh, you know, the, the UK fans that go, the ones that go to the game, have, have, have lost it. They've turned up at stadiums in their plenties and uh, yeah, really try to force some of these owners to, to backtrack. And last night we saw many of those teams do exactly that.

I, I guess one of the things that I've always enjoyed about, uh, say, a Champions League is the opportunity that you can get shocks and surprises and things like that. But I guess from a financial business point of view is that if where you finish in your domestic league or an international tournament, let's say, or, uh, UEFA tournament, then how do you financially plan for the future when you don't even know? If you lose first round to Monaco in your, your Man United, it's a bit of a problem there because now you've got a deficient shortfall of what, in excess of tens of millions of pounds for the forward-looking season? Absolutely.

And chuck a pandemic on that, right? You know, where no fans are going into the stadium. A lot of these clubs make money on match days for sure. They've got big, big player wage bills. They wanna, you know, take their clubs to the next level. And if they, you know, they can't guarantee success, no one can. This potentially was a way to at least guarantee the money, which football has proven, those who spend the most money generally do the best.

Okay, and who's financially backing this? I've heard JP Morgan mentioned. So are they the architect behind this?

JP Morgan, yeah, I think they're putting, uh, $5 billion into it. Um, the now— well, he's retired, he's resigning at the end of season— Ed Woodward, Manchester United's chairman, he, um, was a former JP Morgan employee, so he's kind of been forced out. There's rumors he was already stepping down at the end of the season, and I'm sure more will come to light on that. But yeah, JP Morgan, uh, have crunched the numbers. They proposed this along with Florentino Perez to these clubs who, um, yeah, they've all obviously come out, certainly in the UK, and they said they don't want a part of it anymore. And they've all sort of said the same thing— they didn't want to get left behind was their reason for, uh, you know, accepting the invite. Um, but reputations may be ruined short-term, potentially, for these clubs. I mean, Manchester United's share price on the announcement was up 10%. We reversed that whole move now, uh, following last night on there.

But I guess, I guess I think you said this before, that the, the seed is planted now. And so is this not inevitable? Because you've just mentioned Man United share price. So Man United, Juventus, other teams, these are listed companies that are run, you know, even for me, not as a football fan, I know that a lot of them are run at the top on a board level by financial people, businessmen. And so the priority of the loyal legacy fan is probably not at the forefront. And so there's a couple things here. I just put together a couple numbers and I was trying to find some market research, you know, being an analyst, to kind of like, okay, how do you validate this type of decision-making about a Super League proposal? So a couple things to get your thoughts on. Now, what— this is a bit old, it was 2017, so you have to imagine these numbers have gone up Yeah, right. So they probably increased. But the Premier League, I don't think it comes as a surprise, on a global international level, by far is the most followed football league when it comes to China. Yeah, right. So I've got a stat here: 56% of all Chinese fans follow a Premier League team. The second one is the Bundesliga, which is 34%. So it's definitely a Premiership story here. Man United's viewership is 42%, significantly outperforms then AC Milan and Bayern Munich, which were down at around 33%. Most popular player, I don't think it goes without much difficulty, Cristiano Ronaldo is still the most popular player. Now interestingly then, culturally, what this survey I was reading found, and I can attest to this as well, having seen it, having family in China and friends Chinese and so on, but the nature of Chinese football fanship basically culturally, fans are less likely tied to one club, right? You know, it's like if you're a, if you're a Scouser, you're Liverpool, right? Or you're Everton. Like, you cannot deviate. You can't support Arsenal.

No.

If you're born in Liverpool, like, that's sacrilege.

Doesn't run.

But in China, supporting an English football club, that, that bloodline doesn't cut deep, right? So actually, it's not uncommon for them to support multiple teams. So now instead of saying your fan base is X, now you've potentially got 4 times your fan base, let's say, because they can support 4 different teams. So then you get a lift automatically there anyway. Then you start talking about merchandise and products, and I was trying to find some facts about what's the proportionate revenue uplift that a lot of these these, you know, you said matchday ticket sales, but then merchandise side, and obviously that's a massive thing. And, and 88% of the most avid fans in China bought merchandise, so nearly 100% of them when committed by, yeah, Heimsport teams. And there's a much higher uptick as well, given as well the technological difference about things like, um Ant Group and all the different devices and technology with new finance that they have in China. So without the legacy like Barclays, NatWest, you can do everything on your phone, right? So you go on to just the latest phone software, you can do your private banking, your stock trading, everything. And actually the number's way higher where Chinese fans purchase sponsor products. So not just team products, but there's also uplift to the sponsors who are also then willing to put upfront money because they get a better click-through down to purchase their goods and services. Real Madrid, this is back in 2017, signed a deal with Alibaba, obviously one of the most infamous of this, and that took their potential reach in 2017 to 600 million customers, potentially. Right, and we're talking about what UK population— bring it back down to the population of Liverpool to the actual fans going down, or Manchester, right? The numbers are pretty compelling. And actually, I was looking at Man United's, by far the most biggest team, their fan base— again, slightly dated figures, but it's said to be around 1.1 billion.

Incredible number.

1.1 billion. The largest increase of that followership, the Asia-Pacific region, right? And you've got a new emergence of a middle class, people who are becoming more affluent, who have disposable income in countries like China, which is only going one way at this point in time. To me, it seems business sense to be having this conversation at this point in time. And as much as I'm absolutely going to really annoy football fans, whoever watches this, I can feel the dislikes coming. I can't see how you can justify from a business point of view putting fans first when the, the prospect of increasing your revenues is so high. And then we, we haven't even talked about the players. So how much, how much does Ronaldo get paid Well, they—

how accurate this is, you, you don't know. I think some things are still a little secret, but the, the main reports are suggesting he's on £900,000 a week playing for Juventus. He's definitely— him and Messi are number 1 and 2, but €31 million a year.

Okay, you gotta think that— I mean, what was it you're saying? They're gonna put in the kitty already £350 upfront million guaranteed, plus now you've got the sponsorship which you're reaching a targeted open marketplace that's like 100 times larger than your existing. Plus now you've not even begun to have discussions with online streaming and social media, which is where the main consumption of Chinese football watching comes from.

Yeah.

So yeah, you throw in Netflix throwing around their multi-billion news, let's enter the sports— let's enter the sports streaming market. Amazon's already in that space with Prime.

Yeah, right.

You've got to think Ronaldo then. If you turn around to Ronaldo and say, right, do you play football for the fans? He said, I play football for the fans. And you say, okay, I get paid £900,000 to play football for the fans. That's great, Cristiano. Okay, how about I pay you £9 million a week? How's that sound? How about you come play in the Super League? Yeah, I mean, could you turn that down?

I don't think you could. I don't think— I mean, the, the argument is you know, do they need any more money? Look, football is a short career, and you know, you mentioned earlier that the dislikes are coming. They might not be. And I'd be interested— we get quite a wide-ranging audience in the chat, guys. Let us know what you think about this, because it seems certainly in this country, in the UK, the fans are fuming. Football's been taken away from them. That, that dream of your club battling it through to the very top and competing against the top sides is gone, potentially. Even though there was 5 teams that could qualify, it's gone. That end, that competition element is over. There's still competitive games in the NBA, NFL, when you can't get relegated, but the idea that competition is gone, not getting to this top league on merit is gone. But that's the UK, that's the people that go to, you know, the, the 92 clubs that are in, in this country. Business sense, you're right, it— the numbers are incredible, the reach that they want to, to get to, certainly in the Asia-Pac region. Is, is where to go, are amazing. The numbers for these clubs and these owners are insane. American owners— United, Liverpool, Arsenal— they are after one thing and one thing only by running these companies, and that's to make money as a business. They don't care about winning the trophies, really. Um, so yeah, could a player turn it down? Well, you've seen so many players go to China in a less— a way less competitive league, right? Yeah, yeah, way competitive. And people going there in the prime of their career— if you look at Oscar Carasco, who's now back at Atlético Madrid. They've gone in their prime. So to say it's now the most competitive league in terms of players and the most money, who's turning that down? I don't know.

Yeah. And okay, so let's pivot this to then the investment opportunity, because some of these come— some of these football clubs are listed. We've seen, you mentioned at the beginning, stock price fluctuation. As we know that a lot of stock price comes in the market opportunity. So we don't need to even wait for this leak to happen. It could be that just the overall investment opportunity, that the fact that this is going to happen or could happen, could be enough. So from what we've just discussed, is ManU just the clearest play on this for the long term?

Yeah, absolutely. I mean, I can share my chart if you want, or should we leave it? If you want to leave it as this, It's fine, but, um, I'll let you share.

Let me give you, um, there you go.

Let me, uh, let me bring that in then, because you've got to bear in mind when looking at this chart, there's still— there's been a bit of, um, post-Mark that you can see here. But I mean, it's pretty much trading where it finished last night. It's down maybe maximum a percent at the moment. So here is his Sunday is 10% higher on, on the news, and the unwind of things have brought us back to where we are. So you've seen the possibility of what happened. And if we look at Manchester United on the longer time frames here, weekly time frame, so the high going back to 2018, so they're off their high for one, which is always quite an interesting, uh, way to look at things because they've got to get back to there at some point over time. Stocks go up, Man United—

and you also said that, yeah, you also said Man U at this point in time is, you know, they're not like the Alex Ferguson heyday.

But no, they're not performing well at the moment, which they're going to get back to their football. Like you, we said earlier, it's cyclical. They're top 3 clubs in the world, top club in England, most, you know, highest following numbers. Like you said, in China are crazy. It's, it, for me, it's a, it's an opportunity in the coming weeks, uh, especially on any downside, to get long this market. I mean, you can see historically where we, we traded last year, multi-year low in the pandemic. Like with many stocks, it was an opportunity to— or a generation to buy. But if we can, you know, get back a tiny bit lower, for me it's an opportunity to drive it to the all-time high and more. The, the Premier League as well, on this point, you know, just as we, we come back to the main screen, the Premier League, there's rumors that they offered these Super League Premier League teams money to actually come back they know the value of Manchester United and Chelsea and Arsenal and all these clubs. That is how the Premier League is what it is, because of these clubs and the reach that they get. They need the Premier League teams back in the Super League team. So the way football is going, the— with the numbers, uh, that could potentially be there, it seems inevitable. And for me, Man United is a buy. It is something that's going to smash through that all-time high over the coming years, maybe not months now, but you've had a little taste just from that 10% push higher of, of this, just for, you know, the short term. And if they get good again and they get these type of players that the money will drive and the wages they'll be able to offer and their competitiveness in the transfer market again, and then when they start winning the trophies and the titles, it's only going one way for me. Short term may be different, but long—

yeah, it's kind of, it's kind of like it— I mean, I'm a more of a basketball fan, but if you had this, if you had like teams that were like all star teams. I mean, to bring in, you know, we're talking about a definable audience of fans, but if you had, say, top players, like world-class household names, that would bring in other sports fans.

Yeah, absolutely.

I mean, about the broader market, we're almost transferable, right?

You're a basketball fan, I'm a football fan, but I appreciate, uh, basketball like you do football. I don't support a team in basketball. I support players. So if Steph Curry goes to the Lakers, I'm looking out for the Lakers as well. I look out for LeBron James. Now Brooklyn Nets have got the Globetrotters. I'm looking out for them because, you know, they're exciting players, they've got big followings. And, you know, why do I follow a team? You know, if anyone is New York Knicks, they're terrible. I'm looking elsewhere. And, uh, that's absolutely what could happen here in football. I think it's the reaction that the fans have done is, is amazing, by the way, to, to get this pulled back. But it seems like it's a bump in the inevitable road, especially if the Premier League rumors that they paid these clubs to come back is true as well. You know, there, there's, there's also a rumor, by the way, of the new Champions League reform was also going to help these top teams through a coefficient that they're going to qualify anyway as well. So, you know, look, opportunity-wise, you know, it's a buy for me.

Cool.

Yes.

How much does that pain you as a loyal Arsenal fan to say that?

Well, you know what, it's, uh, it's like when I bet— if I bet on Chelsea to win and they lose, it's a win-win. So if I go long Manchester United and it fails, you know, that's usually— that's going to be because their, their business is running poorly as well as their results. So I can get over that. Cool.

All right, we'll end it there. Thanks for— thanks for that, Sam.

Cheers. Pleasure to be on.

Yeah, and look, let us know your comments, good, bad, and the ugly. We're happy to engage in the comment section.

Bring it on. I'm really intrigued to see what everyone thinks. Absolutely.

Yeah, thanks, guys.

Take care.