Do you want to lose a lot of money quickly? Buy a small football team in England.

Geoff Thompson knows there are plenty of people who want to buy what he has to sell. The phone calls and emails over the past few weeks have left no doubt. And that’s actually no surprise. There are few industries as attractive or as prestigious as English football, and Mr Thompson has a hand in that.

It is admittedly a relatively small piece: South Shields FC, the team he has owned for almost a decade, operates in the sixth tier of English football, several tiers below, and several worlds away from the dazzling lights and international allure of the Premier League. But while his team may be small, Mr Thompson believes it is at least as perfectly formed as any English minor league football club could hope to be.

South Shields have earned four promotions to higher leagues in his nine years as chairman. The team owns the stadium. Mr Thompson has spent significant sums of money modernizing the bathrooms, club shop and private boxes. There is a thriving youth academy and an active charitable foundation. “We’ve done most of the hard work,” Mr. Thompson said.

After a cancer scare last year caused him to reassess his priorities, Mr Thompson has reluctantly decided he must “hand the baton to someone else”.

That’s where things get complicated. There are plenty of very wealthy people who want to talk their way into English football. It is, as Mr Thompson said, ‘fun’. Owning a team offers the opportunity to be “a hero” in a place. It’s a sufficiently compelling pitch that in just a few weeks at least four suitors – two British, two Americans – have inquired about taking over South Shields.

That’s the advantage. The downside is that – now that the Premier League has become a playground for private equity firms and sovereign wealth funds, and as the ‘Welcome to Wrexham‘Its success has focused Hollywood’s searchlight on the romance of the game’s backwaters: England’s minor leagues have become a place where even the very rich can feel poor.

The league that South Shields has risen to, the National League North, is largely filled with part-time teams and semi-professional players, but the team’s salary bill is still around $1.2 million per year. (Even that’s not the highest in the division.) Mr. Thompson estimates he has invested about $10 million of his own money in the club. He knows he won’t recoup most of that.

And that’s fine, according to him. He’s happy to have created something to cherish in South Shields, his humble home town, a place that, he said, “has always been in the wrong quartile for obesity, poverty and unemployment.”

“I have a good feeling about it,” he said. “Even if they sound like the words of a madman.”

The challenge is to find someone who can succeed him and who thinks the same way. He doesn’t want all his work to disappear if his successor realizes the money won’t go as far as one might hope. “I don’t want it to wither on the vine,” he said.

Pursuing the dream

Simon Leslie doesn’t know how and when his ambition to own a football team arose. It was just something he knew and had known for a while. “I’ve always wanted to own a club,” he says. “I thought it seemed like the coolest, sexiest job in the world.”

Before the arrival of the Premier League 30 years ago, Mr Leslie’s background – he founded Ink, a company that produces a portfolio of in-flight magazines, and sold his stake in 2022 – would have made him a likely candidate made to own a team. in the upper reaches of English football.

But now the cost of getting to the top is essentially out of reach for only the extremely wealthy: Jim Ratcliffe, one of the richest men in the world, recently spent more than 1 billion dollars to buy just a 25 percent stake in Manchester United. Rising prices have caused a spike in inflation further down the road, meaning even buying into the second tier, known as the Championship, is unaffordable.

“You need money from the nation state to buy a Premier League team,” as Mr Thompson put it. “A team in the championship needs hundreds of millions.”

Last year, Mr Leslie realized his sixth-tier dream by taking a majority stake in Eastbourne Borough, a mainstay of the National League South, the geographical counterbalance to the division that South Shields calls home. In the town of Eastbourne – posh, seaside, artsy – Mr Leslie saw opportunity.

He had a bold vision for what the football team could become: a haven for players released from elite academies, and supported by a state-of-the-art rehabilitation center – “cryotherapy, cold plasma, everything,” he said – wedged between the sea and the rolling hills of the South Downs.

It would be wrong to say that money was no object, but Mr. Leslie was willing to invest. He spent about $600,000 in his first season hiring not only players but also sports scientists, talent spotters and chefs. He expects to invest the same amount in his second year. The goal is to break even by 2026 because, Mr. Leslie said, there is a “limit to how much I am willing to lose.”

But the inflationary effect that has priced even the super-rich out of top-flight football is now being felt across the various tiers of English football: across the country there are dozens of investors pouring large sums of money into teams in the three divisions of the semi-professional National Football League fuses. League and even to the vast, hyper-local amateur levels below.

“It’s not just that teams from the above divisions come and sign our players,” Mr Leslie said. “We have had clubs from the Isthmian League, the level below, offering players more money than we pay them.”

They can do this because – unlike the Premier League or the three professional levels of the Football League just below it – England’s minor leagues have no cost controls. Owners can spend whatever they want, and they are incentivized to do so because of the potential reward: promotion to the Football League can bring in around $1.2 million a year in broadcast revenue alone.

“It’s in the National League that people think they can make money,” Mr. Leslie said.

Over the course of his first few months at Eastbourne, he has come to realize that this is much easier said than done.

A losing gamble

English football has an unfortunate habit of looking at its beloved pyramid only from top to bottom. As it descends from the cash-soaked Premier League through the ambitious Championship to the dozens of semi-professional and amateur leagues below, the depth and breadth of the competition system seems to illustrate not only the sport’s popularity, but also its health.

However, look at the pyramid from bottom to top and the impression is different. It is steep, intimidating and quickly narrows.

Only two National League clubs can be promoted to the Football League each season, unlocking coveted television revenue.

“Clubs are spending excessive amounts of money to get out of the lower leagues,” says Christina Philippou, a lecturer in sports finance at the University of Portsmouth. “That means if others want to compete, they have to spend the same.” And that, she said, “creates a spiral.”

It’s so drastic that it surprises even those who may have become accustomed to it. “I see some teams spending money and I’m stunned,” said Gary Douglas, the chairman of Guiseley, a National League North team on the outskirts of Leeds. “There are teams with a fairly small audience that suddenly have huge budgets.”

According to him, the change has been gradual. He first invested in football in 2006 and took over management of Guiseley with two friends. Their combined wealth made the club the “richest in non-league”, as Steve Parkin, one of the members of Mr Douglas’s triumvirate, said said at the time of the purchase.

That is most certainly no longer the case. Money has flowed into the minor leagues in recent years, even before Wrexham – both the team And the documentary – brought an unexpected allure to the lower echelons of English football. Now there are dozens of wealthy owners willing to gamble that they will be the ones to succeed.

“The National League is the golden goose,” Mr Douglas said.

However, how risky an investment this is is evident from the clubs’ finances. In 2022, the last year for which a full set of figures are available, clubs in the National League’s three divisions reported a combined loss of $25 million. Two-thirds of the league’s teams were effectively insolvent, with their liabilities overshadowing their assets. That pattern is likely to repeat itself further up the pyramid, where revenues are even smaller.

“There’s a disaster looming,” said Dr. Philippou.

For some, liberation will come with escape and promotion. But many more teams – and their owners – are destined for disappointment. Like Mr Douglas, the chairman of Guiseley, they could become financially and emotionally involved and unable to leave.

“Once you’re in, you’re in,” he said.

Or perhaps, like South Shields chairman Mr Thompson, they should begin the long, demanding search for a suitable replacement: someone who will build on their work rather than dismantle it. After all, that’s kind of how the system works.

“The model is that, for reasons of ego or emotion, there are always new people waiting when a given individual’s journey at a club ends,” said Dr. Philippou.

However, it only works, she added, because of the belief that “there will always be someone else to come along.”