Fresh off the reported $30 million bath he took in the cryptocurrency crash, Tom Brady’s foray into the world of British football looks a little more promising.
By buying a minority stake in Birmingham City, a mediocre 148-year-old club, Brady deviates from the paths of American investors like Todd Boehly, who dropped a record $5.4 billion on Chelsea in 2022.
Rather, Brady gets the football version of a penny stock – a small portion of a small company that could potentially become a desirable asset in the right circumstances.
The exact price tag and Brady’s percentage of the team remain unclear, but Birmingham City are hardly among Europe’s football elite. The club has been entrenched in England’s second division for the past 12 years and the Blues will finish 17th in 2022/23.
In addition, the club was valued at just $44 million when Tom Wagner’s firm, Shelby Companies Limited, began its acquisition in St. Andrew’s earlier this year, according to The Athletic.
Tom Brady hopes to cash in on Birmingham City with the chance of a lucrative EPL promotion
Birmingham has a young, eclectic population, which is perfect for building a fan base
Tom Wagner hopes to increase sponsorship and fan interest by revamping St. Andrew’s
But with a top two finish, or victory in the final of the EFL Championship play-offs in May, Birmingham City would have to share billions in profits with the Premier League heavyweights. National broadcast revenue alone for each EPL team reached $127 million last season.
Unsurprisingly, Brady isn’t the only US investor spending money on second-tier teams. Two such clubs, Swansea City and Ipswich Town, recently gained US investment after wealthy Yanks spent much of the 2000s bringing in more heralded clubs such as Arsenal and Manchester United.
That’s not to say that Brady has made a surefire bet on Birmingham. According to research from financial services firm Deloitte, more than half of EFL Championship teams are running at a loss.
But Brady and Birmingham City don’t have to look far for inspiration.
Crosstown rivals Aston Villa FC returned to the Premier League in 2019, shortly after billionaire investors Nassef Sawiris and Wes Edens bought 55 percent of the club for a reported $38 million. Villa rewarded their investment with a victory in the aforementioned EFL Championship playoff final, securing a promotion worth approximately $500 million in annual TV deals, sponsorships and additional revenue.
Now Villa is in seventh place in 2022-23, and there is growing optimism around coach Unai Emery and new players Youri Tielemans and Pau Torres as they begin their season against Newcastle on August 12.
And the club’s improving reputation is further supported by qualification for the Europa Conference League – Villa’s first European competition in over a decade.
Brady and Birmingham FC can take inspiration from crosstown rivals Aston Villa
Unfortunately for Brady and Birmingham, the climb from the EFL Championship to the EPL can be treacherous, with many clubs overspending in a fruitless push for promotion.
Deloitte’s annual football finance review revealed staggering EFL losses from 2011 through 2021, when 24 teams combined $507 million in the red. Birmingham City reported a pre-tax loss of $30 million for the 2021-2022 season, and the club continues to face major repairs to its century-old stadium, St Andrew’s.
And then there’s the growing concern over player wages in the EFL Championship, where teams are torn between their first-division aspirations and second-division revenues.
“The biggest problem in English football from a cost control point of view is player wages,” said lecturer and author Dan Plumley at Sheffield Hallam University. The athletic. “It’s completely unsustainable and that’s especially evident in the championship.”
The good news for Brady is that his partner, Wagner, he says specializes in investing distressed debt Bloomberg. He also has detailed plans to boost sponsorship and fan interest by focusing on stadium renovations.
Tom Wagner, co-founder and co-CEO of Knighthead, acknowledges the Birmingham fans
Two fans arrive at the stadium ahead of the Sky Bet Championship against Blackpool
Birmingham City players celebrate George Hall’s goal during an April game
According to Wagner – whose teenage son reportedly attends the same New York high school as Brady’s – Birmingham City benefits from being at the center of England’s high-speed rail system. That means that about 80 percent of the English population is within an hour of the city.
In addition, England’s second most populous city has young, eclectic residents, which appeals to teams looking to build their fan base.
There is no magic bullet for Wagner, Brady and Birmingham City, whose success is anything but guaranteed. But for the first time in recent history, there is real optimism in the Bordesley area of the city.
“The club has been taken over by some very passionate and powerful people and they care deeply about it. They want to grow this club and make it a force,” manager John Eustace told reporters on Thursday. “That’s going to happen over time, it’s not in a short period of time. It’s done in two, three, four or five years. Eventually it will be there.’