The power of foreign investment: propelling the UK's sport sector to new heights
Our latest foreign direct investment (FDI) report demonstrates that according to the most recent data available, the UK’s inward FDI position stood at £2,002 billion in 2021, up from £1,919 billion in the previous year.
The UK is clearly an attractive destination for overseas’ capital and this money has become a catalyst for growth and innovation in the UK's sport sector. In this article, we delve into how foreign investment is currently transforming the sport industry, with a specific focus on real estate investment and strategic partnerships between consumer brands and sports clubs. The article aims to highlight the role that sport can have for attracting FDI but also how it has a positive impact on our own sport sector.
Real Estate Investment
Foreign investors are increasingly recognising the potential of the UK's sport sector, particularly in the realm of real estate. They are injecting substantial funds into the development of cutting-edge stadiums and state-of-the-art training facilities, not only boosting the infrastructure but also driving economic growth in local communities. These investments create job opportunities and attract tourism, further enhancing the overall appeal of the sport sector.
The construction of the Tottenham Hotspur Stadium involved a significant investment from Joe Lewis, a British businessman, and ENIC International, a company owned by Joe Lewis. However, it also attracted substantial foreign investment from the NFL in the United States.
The NFL saw an opportunity to expand its global presence and recognized the potential of the UK as a market for American football. As a result, they invested in the development of state-of-the-art facilities within the Tottenham Hotspur Stadium to accommodate NFL games.
This collaboration between British and American investors has not only led to the creation of a cutting-edge stadium for Spurs but has also driven economic growth in the local community. The stadium project has created numerous job opportunities during construction and in ongoing stadium operations, benefiting the local workforce.
Moreover, the partnership with the NFL has attracted international attention and tourism to the stadium. With regular NFL games taking place at the Tottenham Hotspur Stadium, it has become a destination for both football and American football enthusiasts from around the world. This influx of visitors has further enhanced the overall appeal of the sport sector and generated economic benefits for the local community through increased tourism spending.
Foreign investors can also be attracted to the UK’s existing facilities and sporting heritage which can have huge knock-on benefits which are in addition to sporting ones.
A shining example of this is the remarkable transformation of London's Olympic Park following the 2012 Olympics. It has attracted foreign investors who have seized the opportunity to contribute to its evolution into a thriving hub of activity, combining sports facilities, parklands, residential areas, and cultural attractions.
iCity, which is a consortium led by UK property developer Delancey and data centre operator Infinity SDC, partnered with the Abu Dhabi-based investment firm, ExCeL London, to form iCity. iCity secured a long-term lease to develop the former International Broadcast Centre into a hub for digital and creative businesses.
Another example is Manhattan Loft Corporation. This property development company secured an investment from the Malaysian government's strategic investment fund, Khazanah Nasional Berhad, to develop new residential properties within London's Olympic Park. This investment aimed to provide housing options and contribute to the ongoing regeneration of the area.
Consumer Brands Partnering with Sports Clubs
Foreign investment has also paved the way for strategic partnerships between consumer brands and sports clubs, resulting in mutually beneficial collaborations. By aligning themselves with revered sports clubs, consumer brands gain access to an enthusiastic global fanbase, while sports clubs secure financial support and exposure to a wider audience.
A prime example of this is the partnership between Manchester United Football Club and Chevrolet. In 2012, the American automotive brand Chevrolet, which is a subsidiary of General Motors, became the official shirt sponsor of Manchester United.
This partnership not only involved a significant financial investment from Chevrolet, but it also provided them with extensive brand exposure to Manchester United's global fanbase. In return, Manchester United secured a substantial sponsorship deal that helped support their operations and player acquisitions.
Another example of a foreign investor partnering with a UK sports club can be found in the West Midlands. In 2018, Chinese investment group Fosun International acquired Wolverhampton Wanderers Football Club in a deal worth around £45 million. Fosun International's investment brought financial stability to the club and helped fund player acquisitions, infrastructure development, and other operational expenses.
This foreign investment not only provided Wolves with the necessary resources to compete in higher divisions of English football but also allowed Fosun International to gain exposure to the global football market and leverage the club's growing popularity.
The UK has consistently proven to be an appealing destination for foreign investors, and the sport sector is no exception. With a rich sporting heritage and a reputation for hosting world-class events, the UK offers an enticing environment for foreign investment. The country's legal and regulatory stability, coupled with its robust intellectual property protection system, provides a secure and reliable platform for investment to deliver returns.
Moreover, the UK's multicultural society and diverse fan base present a unique opportunity for consumer brands to engage with a wide range of audiences. This appeal extends beyond traditional sports, as foreign investors recognise the potential for growth in emerging areas such as e-sports, women's sports, and niche sporting markets. Although not all sports attract equal investment (with many clubs and governing bodies struggling financially) foreign investment in certain areas has allowed other sports and clubs to flourish on the world stage.