Leeds United was recently acquired by GFH Capital, one of the Middle East’s leading venture capital firms. It will be interesting to see what GFH Capital wants to do with its investment. Although Leeds United finds itself far away from the ‘Promised Land’ of the English Premier League at the moment, the new owners see potential in acquiring the club – a club characterized by a proud legacy. Though, there seems to some work ahead for the new management group before the investment potential of this football club is turned around.
Regular competition away from the Premier League combined with ‘weak’ average attendance figures (approximately 21,000) at the moment positions the club in front of ‘a steep wall to climb’! Without the financial capabilities of Mansour (Manchester City) or Abramovich (Chelsea) or the willingness to spend big corporate funds, which Qatar Sports Investments has done in French club Paris Saint Germain, Leeds United is extremely dependent on its fans. Fans is the engine that will drive the club’s revenue streams – gate receipts and sponsorship being a large portion at a time where the club is at a level below the Premier League and UEFA CHL. Simply, the interdependence between gate receipts and sponsorship is key at this time. This becomes true given the fact that full attendance adds gate receipts and branches out in ‘value creation’ for sponsors. On top of that, fans and sponsors crave experiences and the total experience of football is better with full attendance and thus a better atmosphere in the stadium.
This equation leaves out the answer to whether or not GFH Capital will increase the quality of Leeds United’s core product by investing in new and stronger players. Nevertheless, success on the pitch always holds the potential of adding positively to the revenue circle BUT it also puts some weight on the club’s cost structure. Looking forward to seeing what kind of suggestions and actions the new owners put on the table in an effort to turn the club around and to bring it back to a ‘higher place’ in English football.