It’s easy to see why corporate raiders might be drawn to a team like Atlético Madrid, Spain’s third-largest football club. Diego Simeone, the Rojiblancos’ longtime manager, treats sport as a “street fight”. Like those of many private capital firms, his tactics aren’t always pretty, but they can be very effective.
Fitting, then, that Atlético will soon be controlled by Apollo Global Management, which agreed to buy a majority stake reportedly valuing it at around €2.5bn. Apollo is the latest in a string of alternative asset managers pouring into European football, following Clearlake at Chelsea, RedBird at AC Milan, and Oaktree at Inter Milan.
The old joke — that the fastest way to become a millionaire is to be a billionaire who buys a football club — no longer applies, at least at the elite level. Top clubs are less financially unsustainable, as a result of deals struck with broadcasters and rules to rein in overspending. Atlético reported about €100mn in ebitda in the year ending June 2024 and scraped a €1mn pre-tax profit. Firms that got in early enough to ride this transformation — such as Elliott at AC Milan and Ares, which preceded Apollo at Atlético — made some quick wins.
But with valuations rich and growth expected to slow, new arrivals will need to play for longer. A much-circulated Deloitte report recently said clubs needed to get inventive if they wanted “material financial improvements”. Spending by broadcasters is plateauing and the influx of cash from selling players to Saudi Arabian clubs has fallen from its peak.
In this context, Apollo’s use of a “permanent capital” vehicle, which unlike traditional private equity has no deadline by which it must return investors’ cash, and its decision not to use debt to fund the acquisition, makes sense in two ways. There’s less pressure to produce quick dividends, and no risk of an eleventh-hour fire sale.
Apollo’s backers still need more than some good seats at the Metropolitano Stadium though. Atlético’s plans to increase profits revolve around the Ciudad del Deporte, an €800mn real estate project nearby. It should help that Al Tylis, who runs Apollo Sports Capital, spent most of his career as a property investor. Several English clubs are trying similar strategies.
That said, something that ultimately looks like a leisure and hospitality real estate fund with a football club buried in the middle — all long-term cash flows and steady dividends — is not quite as exciting as an old-school buyout.
As in any sports deal, what could really make a winner out of Apollo is finding a sports-mad billionaire who will buy the club later at a higher price than that it fetches today. That, of course, is not something that can be relied on. As prices climb the universe of potential buyers of such trophy assets is shrinking.
Apollo can’t be oblivious to the other source of value creation that comes from owning a successful football club: status. Success on the pitch is a pretty good way to secure face time with everyone from corporate sponsors to politicians and royals, and possibly unlock other juicy deals. But since such benefits flow as much to Apollo’s fund managers and executives as the clients backing its Atlético deal, don’t expect that to be a big part of the buyout firm’s pitch.
