Moneyball can't guarantee Brentford a ticket to football's elite

By Matthew Brooker for Bloomberg

Foreign interest in European football clubs remains resilient even though the market for broadcasting rights has cooled. US private equity firm Arctos Partners LP bought a minority stake in France’s Paris Saint-Germain this month at an eye-watering valuation of more than six times revenue. Across the English Channel, in the world’s richest football division, the next potential sale of a Premier League club may struggle to match that excitement.

Brentford FC has become the latest top-flight team to signal that it’s open to investment, with owner Matthew Benham considering possible offers for a stake and the club set to appoint a bank to advise on the sale, Bloomberg News reported last week, citing a person familiar with the deal. Applying a revenue multiple of four times — well below ratios for the Premier League’s leading teams — would indicate a valuation in excess of £500 million ($628 million). Manchester United Plc’s owners, the US Glazer family, are currently negotiating to sell a stake to British billionaire Jim Ratcliffe in a deal that values the club at more than £5 billion, or close to eight times revenue.

A Brentford sale, while much smaller, would offer a test case of what matters most in the world of football investment — glamour and exclusivity, or shrewd team and business management. Football clubs function simultaneously as several different things. They are businesses that can (though often don’t) yield attractive profits, but they’re also trophy assets, baubles and playthings of the ultra-rich. And, more recently, they’ve become vehicles to burnish the reputations of nation states with questionable human rights records. This complicates the process of valuation. Do you value a club by traditional metrics such as the growth, quality, and riskiness of its cash flows, or as a piece of art, where beauty is in the eye of the beholder? Both can matter.

London-based Brentford is exceptionally well-managed, having risen through the lower leagues while maintaining cost controls to return to the top division in 2021 for the first time in more than 70 years. The club, which is profitable, continues to hold its own in its third season in the Premier League. Central to its success has been a data-driven approach to identifying undervalued players, a model pioneered by Billy Beane at the Oakland Athletics and popularized in Michael Lewis’s 2003 book Moneyball, which was subsequently turned into a film starring Brad Pitt.

Team owner Benham, who studied physics at Oxford University and worked at Bank of America Corp. before making his fortune in the betting industry, is said to chafe at the Moneyball comparison, seeing it as overshadowing the human element in Brentford’s success. “You can fire as much data in as you like… it is the decision-making that is important,” he said in an interview posted on the club’s website in October. It’s hard to resist the parallels, though. Even Beane has acclaimed the achievements of Brentford, as well as Brighton and Hove Albion FC, the Premier League’s other principal exponent of Moneyball tactics.

The connection may give Brentford some purchase in the minds of US investors, who’ve been at the forefront of pouring overseas capital into English football (besides Manchester United, Premier League clubs with American owners include Liverpool, Chelsea and Arsenal, while Miami-based 777 Partners LLC is pursuing a takeover of Everton). It also might not hurt that Brentford is just across the River Thames from leafy Richmond, home of the fictional AFC Richmond in Apple TV+’s feelgood comedy Ted Lasso, which was a hit in the US though had less of an impact in Britain.

How much will all this count, though? The biggest obstacle to Brentford getting a big-money offer may be its lack of cachet. There’s no avoiding the fact that the club has the least glorious pedigree in a crowded west London neighborhood. Brentford has a long history, having been founded in 1889, but not much of a trophy record to show for it. Chelsea, a former league champion and eight-time FA Cup winner, has the glitz of being named after the capital’s richest borough (even if its stadium is actually in neighboring Hammersmith and Fulham). Queen’s Park Rangers and Fulham are less successful, but both have reached an FA Cup final; Brentford have never gone beyond the quarter-finals.

New dynasties can rise, of course, but any investor looking to catapult Brentford into the Premier League elite must consider the potential for growth. Chelsea has spent years fretting that its 40,000-capacity Stamford Bridge ground is too small; Brentford’s new stadium, which the club moved into three years ago, accommodates just 17,250. Average valuations, meanwhile, can mislead. Revenue multiples for the Premier League’s top six bunch at around 5.5-6, before gapping down to more like 3, using valuation figures from a 2023 survey by Football Benchmark, a former unit of KPMG. In 2021, Saudi Arabia’s sovereign wealth fund paid £305 million, or about 2.2 times revenue, for Newcastle United, a club in a one-team city with a 52,000-capacity stadium and a trophy-laden past.

A valuation of £500 million-plus is “not totally unrealistic” factoring in the value of Brentford’s squad, stadium and training center, Andrea Sartori, chief executive officer of Football Benchmark, told me. He estimated the club would command a revenue multiple of 2.4 to 2.8 times. It reported revenue of £140.9 million in the 12 months through June 2022, and has yet to post accounts for the most recent financial year.

Brentford might surprise again, achieving the kind of valuation that its progress on the field deserves. Equally, its stake sale may once again reveal the inequality at the top of England’s football pyramid. I’m cheering for the underdog.