Sport and Economics: Sports Investment as Part of the Transatlantic Relationship

by Viktoria Loidl (University of Illinois, Urbana-Champaign)

This blog post was written for the course "Current Issues in Global and EU Affairs", which took place from February 11-May 9, 2019.

Eden Hazard (Chelsea) taking on Jonny Howson (Norwich City)
Image Credit: Ben Sutherland, via Wikimedia Commons

Sport is not only good for our bodies but also the economy and transatlantic relations between the European Union and the United States of America. The sports industry is a large and fast-growing sector. Additionally, it creates a multitude of employment opportunities and contributes to EU gross value added. In sum, the industry contributes about € 294 billion to the EU’s gross value added and employs roughly 4.5 million people throughout a variety of different sub-industries. As roughly 3% of employment in the EU are within sport-related industries, the EU actively promotes growth in this sector through tourism, media, fitness, and education. Therefore, sport can be seen as a significant driver of growth for the European economy. It has a significant impact on many other industries, such as hospitality, health services, and the media. Sport by itself also accounts for about 2% of total GDP in the European Union.

However, the sports industry not only positively impacts the European economy but also nurtures transatlantic relations with the U.S. An increasing number of American businessmen recognize the attractiveness of the European sports industry. The ownership of European sports teams has become a rising source of foreign direct investment between the U.S. and the EU. Investing in a sports team abroad not only allows American businessmen to expand their influence internationally but also allows them to benefit from the fast-growing sports industry in the EU. Additionally, owning a soccer team, for instance, comes with the connotation of excitement for the prospective owners and can be seen as the infinite global opportunity as it can be identified as an “extraordinary exclusivity”. Investing in soccer clubs abroad can be a major step in becoming a significant global player, and therefore, naturally, American businessmen are interested in the English Premier League clubs, the most-watched sports league in the world. Examples of businessmen who invested in the European sports teams are Joel andAvram Glazer (Manchester United (Premier League Soccer) and Tampa Bay Buccaneers (NFL)), and Shahid Khan, owner of the automobile parts manufacturer Flex-N-Gate in Urbana, Illinois, the Jacksonville Jaguars (NFL) and Fulham F.C. (Premier League Soccer).  Also, companies that already own a huge share of sports teams in the U.S. decided to invest in European teams. For instance, StanKroenke, the owner of Kroenke Sports & Entertainment owns the English soccer club Arsenal (Premier League Soccer) as well as the Los Angeles Rams (NFL), Denver Nuggets (NBA), and many more. Additionally, the Fenway Sports Group is a company that invested internationally and owns the Boston Red Sox (MLB) and Liverpool (Premier League Soccer). Interestingly enough, not only affluent individuals or powerful companies in the industry are interested in European sports teams as a source of investment but also professional athletes. LeBronJames, an American NBA player for the Los Angeles Lakers, is a minority stakeholder of the Premier League club, Liverpool.

This shows that sports investment makes up a relevant source of foreign direct investment between the United States and the European Union. According to the European Commission, sport “brings people together [and] strengthens communities". Foreign direct investment, in general, is a significant aspect of the transatlantic relationship and the investment in sports teams not only benefits the American investors but also further strengthens transatlantic ties.

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European Commission (2018). Sport in the EU. Retrieved from http://ec.europa.eu/assets/eac/sport/library/documents/eu-sport-factsheet_en.pdf. Accessed 9 March 2019.

European Commission (2014). Sport keeps not only you, but also industry fit. Retrieved from http://europa.eu/rapid/press-release_MEMO-14-35_en.htm Accessed 9 March 2019.

Hines, N. (2013). English Premier League Is Now an American Billionaires’ Paradise. Retrieved from https://www.thedailybeast.com/english-premier-league-is-now-an-american-billionaires-paradise?ref=scroll. Accessed 9 March 2019.