Game-changing deals: the purchase and sale of sports franchises

A report on a session at the 15th Annual London Finance and Capital Markets Conference held on 26 and 27 January 2026

Chair

Francesco Gucciardo, Aird & Berlis, Toronto

Panellists

Roberto Duque Estrada, Brigagão Duque Estrada, São Paulo

Zoe Feller, Bird & Bird, London

Malcolm S Hochenberg, Proskauer Rose, New York

Mario Tenore, Pirola Pennuto Zei, Milan

Mark J Weinstein, Hogan Lovells Cadwalader, New York

Reporter
Mark Galea Salomone, WH Partners, Valletta

Introduction

Sports franchise investment has entered a new era. Valuations that would have seemed extraordinary a decade ago are now commonplace, and transaction activity shows no sign of slowing. This conference panel, chaired by Francesco Gucciardo, brought together practitioners from across the Atlantic to examine what is driving this phenomenon, how cross-border acquisitions are structured from a tax perspective and what unique compliance challenges arise when major sporting events land on United States soil.

The session was opened by Gucciardo, who grounded the discussion on the numbers. The Los Angeles Lakers were acquired in June 2025 at a valuation of $10bn. The Dallas Cowboys sit at $12.8bn, Real Madrid at $6.53bn and even the Texas Longhorns college football programme commands $2.2bn. These are not outliers. They reflect a structural shift in how sports franchises are valued and who is buying them.

The explanation lies partly in how dramatically the revenue model has changed. The old formula of regional broadcasting, ticket sales and merchandising has given way to a sophisticated, multi-channel ecosystem encompassing global media rights, sponsorship and intellectual property monetisation, direct fan engagement through apps, streaming and betting platforms and curated content, including docuseries and podcasts. Alongside this commercial evolution, major US leagues, such as Major League Baseball (MLB), the National Basketball Association (NBA), the National Hockey League (NHL) and Major League Soccer (MLS), have progressively opened up their ownership structures to private equity, deepening the pool of available capital. The result has been market acceleration in terms of transaction activity, with US-based investors playing a dominant role worldwide.

US investment in non-US clubs

Malcolm S Hochenberg set out the foundational investment thesis for US buyers of international clubs: long-term capital appreciation rather than short-term operating returns. It is common for European football clubs to generate modest profits or operate at a loss, and the structuring objective is generally to achieve favourable capital gains treatment on exit, while managing local withholding tax exposure on dividends and gains. This is an analysis that must be conducted on a transaction-by-transaction basis.

One planning option available to US investors is a check-the-box election, which allows an entity holding the club to be treated as tax transparent for US purposes. In principle, this could permit operating losses to flow through to the investor. Hochenberg was careful to caution, however, that this should not be taken for granted. US passive loss rules and material participation requirements can significantly limit the practical availability of such deductions, particularly for non-controlling investors.

Stadium ownership adds further complexity. In the US it is routine for stadium assets to sit in a separate legal entity from the operating club. In many EU jurisdictions, this separation is either impractical or not feasible, and the issue requires careful analysis as part of any acquisition.

From an Italian perspective, Mario Tenore described a market that has seen a pronounced shift from traditional family ownership to international (and increasingly American) investment. Italian tax authorities have shown a willingness to challenge intermediate EU holding companies, particularly where those structures appear to lack economic substance and may have been interposed primarily to access reduced dividend withholding tax rates. In one transaction involving a US investor acquiring a majority stake in an Italian club, the recommended approach was direct investment through a US partnership, attracting a 15 per cent withholding tax rate under the Italy–US double tax treaty.

Timing proves equally critical. Italian football is a heavily regulated sector, and where a transaction required prior approval from the Italian tax authorities, aligning the regulatory timetable with the timing of a check-the-box election was described as fundamental to the deal’s success.

Mark J Weinstein drew together these broader themes with a pointed observation: one size does not fit all. The choice between direct and indirect investment structures depends on a wide range of factors, such as the applicable regulatory requirements, the investor profile, the nature of the investor’s participation in management activities and the tax position in both the local jurisdiction and the US.

The United Kingdom has attracted particularly intense US investor interest. A total of 11 of the 20 Premier League clubs are now US owned, with a further 32 professional clubs across the lower leagues similarly held. The absence of UK withholding tax on dividends makes holding structures relatively straightforward. A US parent company holding shares directly in a UK club is a clean and commonly used arrangement.

Zoe Feller noted, however, that due diligence in these transactions can be considerably more involved than the holding structure might suggest. Many clubs carry complex historic ownership arrangements, including legacy leveraged structures that can be difficult to unpick. Supporters’ trusts frequently hold minority stakes, meaning full acquisition of the club is not always achievable. Stadium ownership, typically structured through a separate entity beneath the operating business, is also generally fixed and unlikely to be restructured as part of a transaction.

Roberto Duque Estrada described a legislative transformation that has reshaped the Brazilian football investment landscape. The introduction of the Sociedade Anônima do Futebol (SAF) has created a specific corporate vehicle through which clubs can now operate and into which outside investors can inject capital.

The typical SAF transaction involves a new corporate entity being established, the club’s assets being transferred into it and investors acquiring stakes in the new vehicle. As of December 2025, 127 SAF entities had been created across Brazilian football. The SAF regime carries its own specific tax treatment in the form of a percentage of gross revenues in lieu of standard corporate taxes, although the scope of that regime is narrowing. From 2027, revenues from player transfers, which were initially excluded from the calculation, will be brought within scope. Recent legislative changes have also introduced a ten per cent withholding tax on dividends remitted abroad, a material change for international investors.

Tax diligence and audit trends

Each jurisdiction presented its own areas of heightened scrutiny. In Italy, Tenore commented that player salary arrangements are a particular focus. As many employment contracts are negotiated on a net income basis, any failure in the application of a special tax regime can result in the club bearing additional costs. Agent payments also present a risk. Where an agent acts for both the club and the player, Italian tax authorities have sought to recharacterise a portion of the commission paid by the club as a benefit in kind received by the player, triggering payroll withholding obligations.

In the UK, image rights companies have long been a target for His Majesty’s Revenue and Customs (HMRC), which has argued that payments routed through such vehicles should be treated as employment income. Feller drew attention to a recent UK Budget announcement which confirmed that certain image rights payments will be brought within the scope of employment income taxation. Furthermore, the use of umbrella companies for event staffing presents a further and growing compliance risk. From April 2026, clubs will face joint and several liability for any unpaid payroll taxes owed by such providers, making due diligence on third-party staffing arrangements a commercial necessity.

In Brazil, Duque Estrada noted that tax liabilities accumulated by clubs prior to the SAF restructuring frequently feature prominently in investment decisions. Many clubs have sought to negotiate settlements under tax debt programmes, particularly given Brazil’s elevated interest rate environment. He also commented that multi-club ownership is generating novel complexity. Where investors own clubs in different countries and transfers occur between them, pricing those transactions on an arm’s length basis is challenging.

Hosting major events in the US

With the FIFA World Cup and the Formula 1 calendar, among other events, bringing major global sporting events to American soil, the panel turned to the tax considerations facing international sporting organisations operating in the US.

The standard framework involves establishing a US tax-exempt entity to serve as the local host. Local revenues broadly offset local costs, while higher-value revenue streams, such as global media rights and sponsorships, are retained by the international federation in its home jurisdiction.

The critical risk, as Weinstein emphasised, is the creation of a de facto partnership between the US host entity and the federation. If the two organisations share profits or losses, exercise joint management or hold themselves out publicly as a combined operation, the federation may be treated as carrying on business in the US, with its allocable share of income becoming taxable. Operational separation, independent governance of the host entity and written policies governing conduct are not optional; they are essential.

For athletes competing at US events, Hochenberg outlined the two principal income categories: services income, such as appearance fees, and royalties, such as endorsement payments. The former is commonly treated as US-source income. The latter raises characterisation questions. Off-court endorsements (where an athlete’s image is exploited independently of sporting performance) are often more readily treated as royalties. On-court arrangements are more difficult to deal with.

Also of interest was the discussion around the article on entertainers and sportspersons contained within most double tax treaties. The panel agreed that the thresholds set are often limited by a very low de minimis. For instance, the US–Italy double tax treaty sets the threshold at $20,000; a figure that bears little relationship to the sums actually at stake.

Conclusion

In a nutshell, the sports franchise sector presents some of the most commercially dynamic and technically demanding transactions in the current market. Valuations are at historic highs, investor appetite is global and the tax and regulatory environment differs substantially across jurisdictions. Whether advising on an inbound acquisition, a major event structure or athlete remuneration, the consistent message from the panel was clear: early, jurisdiction-specific tax advice is fundamental to the success of the transaction.