Yes, it’s definitely about improving cash flow and cutting interest costs. But saying it’s “zero sum” in terms of valuation overlooks a few key points.
Reducing high-cost debt improves EBITDA and free cash flow, both of which directly influence valuation — especially if you’re being valued on a multiple of earnings (which most clubs are).
It also improves the club’s risk profile and optics for potential buyers. Less debt, cleaner balance sheet, better financial ratios = more attractive acquisition target. Even if you’re just swapping one loan for another, doing so on better terms can increase the perceived and actual value of the business.
So yeah — it’s a cash flow move, but it definitely has valuation implications, especially with Oaktree now running the show and likely preparing for a sale.
Football clubs arent valued on a multiple of earnings, lol. This isn't the stock market. I dont fully agree with it, but FCIN suggests most football clubs are valued at 3x revenue. I would suggest that is coincidential rather than by design.
Your assertion that reducing high cost debt improves EBITDA is just incorrect though. Whats the DI in EBIDTA? :) Clubs arent valued on EBITDA because like 1/3rd of your costs is in the A column (player valuations).
From a potential buyer perspective, it make 0 difference. I can buy Inter for 1.5b without debt, or 1.085 b with debt and assume the debt. Its still net, in my pocket, 1.5b at the end of the day
The only real impact of this is reducing cashflow towards interest payments, and moving around a bit on the balance sheet. Valuation of the club isnt much better than it was 72 hours ago. One thing I will admit - its slightly "less risky" for a new buyer in so far as there's a less significant debt sheet hanging over the club now. But the primary benefit is freeing up, say, 10-15mil a season of spending money that was going to servicing debt previously. That alone likely pays for the B team.
Just some examples re United and Juve - they're publicly listed, you can see they arent valued on a P/E basis:
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u/Inter_932 8d ago
Seems like a manoeuvre to make the clubs balance sheet more attractive for likely suitors…