Creating upside: Four lessons for Australian football from US investors in Europe

It is often said that the United States has the biggest and best sporting market in the world.

According to the latest number from Forbes, the average value of a franchise in the National Football League (NFL) is $3.48 billion USD, a 14% increase on 2020.

In the NBA, the average franchise value is $2.202 billion USD, having steadily risen year-on-year since 2015 which was the first year that the average value crept over the $1 billion USD mark.

Even in the much-maligned MLS, the average franchise value is a cool $550 million USD up from $319 million USD in 2019 – a remarkable 72% increase.

So, with such a booming sports economy on their own doorstep, why are American investors turning to European football?

That was the question The Athletic Football Podcast hosts, Mark Chapman and Matt Slater, sought to answer in the latest episode of their podcast.

In two revealing conversations with US sports investors Michael Kalt and Brett Johnson, there were some potentially interesting lessons for Australian football to learn.

Kalt, who rose to sporting fame as part of the investment group that helped transform the fortunes of the Tampa Bay Rays in the MLB, now leads consortiums investing in European football clubs with current investments in AS Nancy in France and Oostende in Belgium.

Johnson is co-owner of Ipswich Town and also the owner and director of Phoenix Rising Football Club, which plays in the second tier of US football.

So, what do they like about European football?

Why don’t they invest the same sizeable funds into MLS teams?

What can Australian football learn?

Below we highlight four key lessons.

Upside Counts

The majority of clubs that Kalt and his consortiums look at investing in are loss-making businesses.

They don’t make money.

So why, when you have significant investment capital and can invest in a booming domestic sports market, do you choose to take your money to Europe and put it in loss-making clubs?

For Kalt, there are three things a club has to have to prove its investment value.

  1. Asymmetric Upside via promotion or European qualification
  2. Room for commercial improvement
  3. Training profits (EG: Player Transfers)

On the first point, Kalt explains the uniqueness of promotion and relegation and continental competition created pockets of value in Europe that offered much lower costs of entry in Europe.

“Can you buy them when you’re up underlying your downsize risk, meaning you’re not paying full price for a club that is recently promoted or in the top league or coming off European competition and you’re paying full price,” he said.

“If you look at the clubs we bought, we’ve bought clubs like Nancy, historically a club that has been in Ligue 1 and bounced back and forth. It has the infrastructure of a Ligue 1 team. It should be a first division, mid-table club, so there’s headroom there and not a lot of downside risk.

“That’s the sort of situation we look for, where there is an asymmetric upside, either through promotion or European qualification in a smaller club where we think we can compete in the top four or five teams.

On what he termed, “Training Profits”, which most readers would refer to as player transfers, Kalt thinks it’s incredible that a club could generate a sizeable portion of its overall value simply by trading players.

“This is a massive mover in this,” he said.

“When you create that value in American sports, the only way to really monetize it on the player basis is to make like exchanges. To say, I have a player that has demonstrated his worth and the market will pay way more for him. He’s got three or four years left of club control … your only path to monetization is to keep that player and hope the club plays better and people show up and you generate more revenue in the stadium.

“Or you go and try and trade the player for younger, more controllable talent and hope that that talent does the same thing.

“In Europe, you create value, and the market comes to you and says ‘okay, today we’re willing to pay ‘x’ for that player, and, by the way, that ‘x’ might be some significant portion of what you played for the club!’

“That system, combined with analytics to create that value, which is how we started looking at this … is why it’s so intriguing.

“You reinvest some of that back into the club and you can reduce your downside.”

Europe’s football culture and ecosystem are, obviously, significantly more developed than that of Australia or the United States.

But what is interesting to take from the conversation is the factors that make for a worthwhile investment for Kalt and his ilk.

They want to invest in clubs that have room to grow.

None of this is to suggest that the incorporation of promotion and relegation in Australia is going to send a flood of overseas investors ready to throw their money at ‘B-League’ or National Premier Leagues clubs.

But it does inherently create potential upside in investing in the secondary tiers of Australian football, particularly for local investors.

We have already seen in the most recent round of A-League expansions that there was potentially a lot of money left on the table by unsuccessful bidders looking for a way into Australia’s top flight.

The implementation of promotion and relegation could unlock similar pockets of value in Australia.

The addition of a domestic transfer market will also go a long way to increasing the upside of clubs in the A-League and potentially below.

Franchises Limit Upside

When discussing MLS specifically, Kalt believes one of the major obstacles facing the growth of MLS was to be the American attitude of, generally, not being as interested in watching sports that are not “the best”.

But perhaps the most interesting thing Kalt had to say about the investment value of MLS franchises is that their value was largely being grown by the expansion of the competition and the prices being paid for new licenses, dragging the value of the existing licenses up by association.

“Valuations five, six, seven years ago you had a 50 or 60 million cost of entry, which – candidly – still seems a little high given the economics of these clubs,” he said.

“But when you see these club trading at 200, 300, 400-million-dollar valuations, it’s hard for me to get my head around and I know it’s hard for a lot of people in the business to get their head around.

“I think a lot of it, historically, was justified on, ‘well, you buy in now because the next expansion franchise is going to be worth ‘y’’.

“But you’re not going to have a league with 60 clubs, so you’re running out of the ability to do that.”

This sounds alarmingly similar to the A-League, where hopes for the growth of the sport are so consistently pinned on expansion.

They might equate to growth for the value of A-League licenses and the value for the investors who own them, but it’s not enough alone to drive true value in football.

MLS’ One Big Tick

It wasn’t all bad for the MLS. Kalt had to give credit to the MLS for at least one thing.


“The amazing thing that they’ve done is that they’ve created the infrastructure for soccer in the United States that never existed before.

“They’re not just sticking teams in and hiring a bunch of over the hill stars and having them play in football (NFL) stadiums and hoping they can sustain it.

“They’re doing the right thing and the league is sustainable, whether at half-billion-dollar franchise valuations is a more debatable proposition.”

This is a crucial lesson for the A-League.

Over 15 years into this journey and there remains embarrassingly little football-specific infrastructure.

There has been some good ground made in recent years by some clubs, but overall, after 15 years one gets the feeling there is very little to show for all the investment made in the A-League.

We’ve had some great seasons, some great matches and some great players grace the league…but if the league collapsed tomorrow, what proof would there be that the A-League and its clubs actually existed?

This has to be urgently addressed.

Gratification Bonus

Another reason cited as key for both Kalt and Johnson in their investment in European football was the sense of gratification of investment in clubs and their surrounding communities.

Now let’s not get carried away. No one is suggesting for a second that these investors aren’t backing in European football for humanitarian reasons.

They’re in it because they see value in their investment.

But can they make themselves feel good about making money in the process?

Well, that’s a bonus. The benefits for the community, however, can be very real and tangible.

Research from 2019 shows Manchester City’s involvement in the title chase with Liverpool was worth £220 million to Manchester’s economy.

According to the think tank Centre for Economics and Business Research (CEBR), spending on match-day tickets, merchandise, and hospitality can boost a city’s economic growth by 1.1 percentage points.

At the lower level, Ipswich Town co-owner Johnson felt there was a great sense of satisfaction to be taken from investing in the surrounding community.

“It’s critical to be engaged with the community,” he said.

“I view [these clubs] as beacons. In England, these communities live and die by the success of these clubs and it’s been painful for these fans have been watching this beautiful asset punch below its weight class.

“It’s not just enough to win, you have to try and make improvements broadly.”

A big part of Kalt’s model was being able to choose clubs with room for improvement because it would be easier to keep the fans onside as things improved.

“Coming into a club that is perfectly run as the next owner is not a situation I would ever want to be in,” he said.

“You want to come into a situation where there’s headroom … you want to have some goodwill built in.

“We’re going to stabilise this, and you know your club is going to be around in a year.”

The question for Australian football is, how do we create value and the feel-good factor around our clubs that encourage the investment they require?

Matthew Galea is a sports journalist with Soccerscene. He reports widely on football policy and industry matters, drawing on his knowledge and passion of the game.

Allambie Beacon Hill United FC’s Steven Gravemade gives account of the Local Sport Grant process and its benefits

Two historic clubs from the Manly Warringah Football Association – Manly Allambie Football Club and Beacon Hill Football Club – have amalgamated to create Allambie Beacon Hill United FC (ABHUFC) in the 2024 season.

Since the decision last year to merge together, the Club has been busy streamlining and preparing its operations in its inaugural campaign.

As part of their expansion, the ABHUFC have recently been approved by the Local Sport Grant Program form the NSW government.

They have successfully received two grants, helping to get a new coffee machine for the clubhouse and new flags for the numbering of fields costing just above $7,000.

With the new fields and more club members, these purchases have become important cogs in the building of this new Club’s culture.

Soccerscene spoke to ABHUFC’s grant advisor Steven Gravemade who saw a great opportunity arise through the grant.

How did you find out about the grant?

Steven Gravemade: I usually find them posted on social media adverts and many committee members forwarded stuff they find from social media.

We always need to keep our eyes open for any grant offers.

What was the process to get the grant?

Steven Gravemade: You need to start with the right documentation especially invoices and quotes for the products, such as the expected cost, and what they are needed for, club info.

Then you need to complete a lengthy online form with the details of the grant on the app called SmartyGrants.

This grants app then forwards the information to whichever grant program is requested. Us being the Local Sport Grant Program.

The Senior Men facing Narrabeen.

Was it a hard process to go through or straight forward?

Steven Gravemade: It was not lengthy and not hard. You need to know what you are doing in the sense of creating a quote for the grant and following a similar well-created format. You do have to work methodically through the form.

There was positive correspondence for 3-7 weeks before it hit the accounts. This means we can go out and purchase the products now and keep the invoice.

The final stage of the grant is putting back into the app system the purchase, and this should finalise the whole process.

It is dependent on the grants, these were smaller grants than others. Though we did two separate grants which added time but overall, a similar experience and therefore a fluid task.

There is obvious difficulty added when you are applying for grants that involve infrastructure zoning as it takes many months and is very taxing,

You’ll have to go through other systems as well including the local council and this naturally makes it a longer process.

Whereas with this grant it can be done just by the club without the association or council involved. Just through the app.

“Now he’s done it a couple of times for both infrastructure and smaller grants. I think we’ve become pretty efficient.

Do they think the funding was a good amount and adequate for the Club?

Steven Gravemade: In this particular case, it was exactly what we requested,

The form also asks if you are willing to contribute which can help gauge the grant, but for us, it was more than adequate and perfectly suited to what we had wanted.

How do you think this will benefit the club overall?

Steven Gravemade: These grants are a big help and help save valuable fundraising, that can go elsewhere.

For example, it was a big bonus in helping us with the processes that needed other funding such as our completely new purple kits, training equipment, updating facilities and club image.

It’s a massive help to the club and to the budget. Every little bit helps.

ABHUFC’s Women’s First Grade team against Manly Vale.

For the bigger picture and first-hand experience, do you see this program as a positive plan for grassroots football?

Steven Gravemade: Yes, we feel supported through grants like this as a club. You obviously need to work hard to get it.  Though the process was fluid and for our club, any grant is appreciated.

On this topic, do you think enough clubs/associations are aware of these grants?

Steven Gravemade: They do pop up, where mailing systems are also around and the main way to know of these grants and how to get them, a lot of clubs I presume are on them.

However, you still need someone proactive in the clubs to get the ball rolling such as a grants officer.

This one came up before the start of the season so maybe many weren’t looking then”.

We found out and applied for this one before the start of the season.

Also, if you look at all the grants there are a lot given out to all sports clubs, and they only show the grants that got accepted.

You can only guess how many actually applied for a grant and maybe could not be accepted.

However, I think a lot also don’t apply in the end. Overall, for me, I think these grants are beneficial.

ABHUFC’s mixed grading day in February.


The Local Sports grant was a massive project from the NSW government to help fuel the growth of the many codes within NSW.

The positive effect this has is massive on the infrastructure for the game and the quality and experience of grassroots sports.

The grants also show that the NSW government is invested in the growth of community football and wants to actively encourage and financially support the ambitions of these grassroots clubs.

How the J.League rose from 10 clubs to 60 across Japan’s islands

Starting as a modest 10-team league, the J.League has expanded into a formidable three-tiered structure, boasting 60 professional clubs spread across Japan’s islands, stretching from the southern reaches of Okinawa to the northern city of Sapporo is an achievement to be proud of.

They adopted the traditional aspects of European football, envisioning a unified pyramid structure where any team could aspire to reach the pinnacle. Simultaneously, they excelled America’s emphasis on commercialism and merchandising, aiming to establish a football powerhouse in one of the world’s rapidly expanding economies.

In this interview with Soccerscene, J.League Media Officer, Hisao Shuto discusses the dream that Saburo Kawabuchi had envisioned in the early 1990s, the collaboration with Optus Sport, the approach for developing homegrown players and how the J-League promoted its community based-clubs in J2 and J3.

Japan Football Association General Secretary Saburo Kawabuchi had a dream of creating a “social revolution,” can you please explain to me what that involved?

Hisao Shuto: In order to improve the standard of football in Japan and to promote widely, it was thought that professionalisation was necessary. It was also considered necessary to establish sports clubs, following the example of European sports clubs, to create a culture in which all generations can enjoy their favourite sports, not only football, whenever they want, and to build a safe and comfortable sports environment with stadiums where they can experience top-level games and grass fields.

In addition, to contribute to friendship and exchange in the international community through football, which is played all over the world, these are the missions of the J.League.

What challenges did the J.League come across in that period of time?

Hisao Shuto: To make J clubs an indispensable presence in each hometown. To share the importance of social contribution in each hometown with the clubs and to expand their efforts. Another challenge was to stabilize the management of the clubs after the J.League’s inaugural boom had passed.

What do you think about the collaboration with Optus Sport? Has it been a success overall?

Hisao Shuto: Since 2020, Optus Sport has provided a valuable platform for the J.League to reach audiences in Australia, and we’ve appreciated the opportunity to engage with a new audience in the region and promoting the league outside of Japan. We are proud of our collaboration which has been beneficial for both parties and successful in driving new fans to the sport.


Can you please explain to me how the promotion and relegation setup is run across the three division? Has it been a success in your opinion?

Hisao Shuto: According to the annual ranking of J1, J2, and J3 (20 clubs each), three clubs in each category will be promoted or relegated. For promotion from J2 to J1 and J3 to J2, the top two clubs are automatically promoted, and the remaining one slot is decided in a playoff.

The promotion playoffs will make the league more exciting until the last day of the season, as many clubs will still have a chance to be promoted until the end of the season. The promotion playoffs have been a success with large spectators at each stadium.

One of Japan’s greatest successes in football has been its breeding ground for home grown players, what was the approach by becoming a hub for developing these kind of talented players?

Hisao Shuto: Prior to the start of the J-League, high schools were the primary training fields. The national high school championships, which attracted crowds of 50,000 for the finals, have long contributed to the strengthening and targeting of teenage football players.

After the establishment of the J.League, each club was required to have its own academy division for the purpose of raising the standard and promoting the spread of football. Academy players continued to compete in a selective environment, and the J.League has followed the European model by setting and managing standards for academy departments and allocating funds to support their activities to all clubs.

Each club academy created the position of academy director to clarify the role of development. In addition, many opportunities were provided for the academy generation to compete in cup competitions, league matches, and overseas tours.

Other measures included providing learning opportunities for coaches and subsidies (up to 4 million yen per club to promote the creation of opportunities for players and coaches to go overseas). We have also worked with the Japan Football Association (JFA) to invest in development activities, exchange information, and hold Elite Youth Course A coach training workshops.

We believe it is necessary to continue our development activities through ongoing learning for leaders such as academy directors and coaches, and by providing opportunities in the game environment.

What is Japan Professional Football League doing to increase the viewership so that more people from around the world tune in to watch the matches?

J.League recognises the importance of growing our global audience, and we are implementing various strategies to achieve this goal. These efforts include organizing friendly matches between J.League clubs and overseas clubs, activating on-ground promotions overseas, and actively engaging with fans on social media platforms in multiple languages. By enhancing accessibility and promoting the excitement of J.League football, we aim to attract more viewers from around the world.

Was there any type of barriers to overcome in creating J2 and J3? If so, what were they? if not, what did the Professional Football League do so well to not have any obstacles?

Hisao Shuto: There were no major barriers. The establishment of J2 was a natural step, as the creation of J.League clubs throughout Japan had been a goal from the beginning, and many clubs wanted to join the J. League after the establishment of J1. Many clubs thereafter wanted to be part of the J.League, and J3 was created to meet their needs.

How did the Japan Professional Football League promote the clubs in the J2 and J3 to the fans, considering a lot of clubs are community based? 

Hisao Shuto: J.League activities would not be possible without the support of each hometown. Therefore, since its inception, the J.League has emphasised social contribution activities in each hometown. These activities include not only the promotion of football, but also the promotion of other sports in the community, health promotion activities, and cooperation with government activities.

J.League also develops “Sharen!” program to address social issues (education, diversity, generational exchange, etc.) in cooperation with three or more parties, including companies and local governments in the hometown.

In addition, since last year, Club Support Division has been established within the league in charge of working with clubs to increase media exposure in their local communities to attract even more fans and supporters in each hometown.

What was the way for clubs to maintain their budget financially in the J2 and J3? Was it successful? Have any clubs been removed due to financial instability?

Hisao Shuto: J.League provides each J. League club with an equal allocation for each category.  In addition, a club license system has been in place since 2012 to ensure that clubs do not run beyond their scale of business and maintain sound management. This club licensing system aims to continuously improve the competitive and facility standards of football by setting standards in terms of competition and facilities, and to stabilize the management of clubs and improve their financial capacity and reliability by setting financial, personnel, legal, and other standards.

At the end of 1998, Yokohama Flugels was merged into Yokohama Marinos, which also has Yokohama as its hometown, due to the mismanagement and withdrawal of the investing company, but since then, no club has been removed due to financial instability.

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