Invest in International Soccer Clubs at Your Own (Relegation) Risk

Sam Porter, who co-owns Club Necaxa in Mexico and Club Deportivo La Equidad in Colombia, says sports teams are a “scarce asset class” and to think of one “like a Picasso.” But he also warns that investing in European football clubs is riskier than other sports teams. 

The main reason: relegation.

“You can buy a team in one league and you can end up in a different league, where the valuations are different, the revenues are different and the situations are different,” Porter told Front Office Sports in the latest episode of Portfolio Players. 

And because of the relegation risk, running a club requires lots of additional capital.

“Whichever league you are in… you are spending,” he says. “There’s no safety net of, if you finish last you get the number one draft pick. There is, very much, if you finish last, you’re going down, and then you’ve gotta spend to get back up.”

Porter is bullish on the continued global growth of soccer, but realistic about the challenges that come with investing in European teams. The concept of relegation, which sees teams that finish at the bottom of the standings in a given league getting demoted to a lesser league, is more common in Europe than the U.S. A team that has been relegated can later get promoted back into the higher tier if they perform well enough in a future season.

Porter, a former executive for MLS team D.C. United, now invests in franchises alongside his investment partner, real estate investor Al Tylis. He’s the co-managing partner for Club Necaxa, which plays in Liga MX, the highest level of the Mexican football league system, and co-chairman of La Equidad, which plays in La Categoría Primera A, the highest level of the Colombian football system. 

The Celebrity Investor Bump

He’s also a limited partner in Wrexham AFC—made famous by majority owners Ryan Reynolds and Rob McElhenney.

The contributions of celebrity owners can vary. Some may have invested just to have a little skin in the game. Others, like Reynolds and McElhenney, use their celebrity to pioneer creative projects, like their FX docuseries Welcome to Wrexham. 

“Not all celebrity investors are gonna be the same,” he said. “These guys do like to be involved. Now, they’re not talking to us about every player on the roster and what we’re going to do in every transfer window.”

There are also celebrity investors who display a propensity to drill down into the details, with Porter pointing to actress Eva Longoria, who is an investor alongside him in Club Necaxa. She helped interview head coaching candidates, Porter says. The club ultimately hired Nicolás Larcamón late last year.

“For us, we want our celebrity investors to kind of do what they want to do, what they feel comfortable with,” Porter says. “It all has to work organically.”