The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Liam Proud

LONDON, July 22 (Reuters Breakingviews) - Clubs like Liverpool, Paris Saint-Germain and Manchester City are at the pinnacle of the world's most popular sport. Yet their price tags, usually only revealed when investors buy a stake, are decidedly mid-tier. Closing the gap to more richly valued American sports franchises will be tough.

Liverpool is the latest case in point. The Financial Times reported on Tuesday, citing people familiar with the matter, that a consortium led by investor Amit Bhatia, son-in-law of billionaire tycoon Lakshmi Mittal, is in talks to buy a ​minority stake at a $6 billion-plus valuation. Amazon.com AMZN.O founder Jeff Bezos may join the bidding consortium, per Sky News, while the Wall Street Journal reported that the price tag could be up to $7 billion, also citing people familiar with the matter.

Liverpool generated about $900 million of revenue in the financial year to May 2025 - a period in which they won the Premier League, aided by Mohamed Salah's 29 goals. Using a $6.5 billion total enterprise value for the club, then, implies a so-called trailing valuation multiple of 7.2.

That level is fairly normal for a European soccer investment these days. Chemicals tycoon Jim Ratcliffe paid 7.7 times revenue for a stake in Manchester United MANU.N in late 2023. The average valuation multiple across seven major European soccer investments since 2019 is just over 6, according to Breakingviews calculations. That sample includes deals involving Atlético Madrid, PSG, AC Milan, Chelsea and Manchester City's parent group.

Compare those numbers to American sports deals, though, and the European valuations start to look rather modest. Recent deals involving the Boston Celtics and Los Angeles Lakers, the two most storied basketball franchises, were struck at 14 and 19 times trailing sales respectively. The implication is that U.S. trophy assets change hands for at least twice the price of European ones, as a multiple of revenue.

The gap shows up in the trading multiples for listed teams, too. Madison Square Garden Sports MSGS.N, which owns the New York Knicks basketball team and hockey's New York Rangers, is worth 9.1 times forward revenue, LSEG data based on daily prices shows. Man United and Juventus JUVE.MI, whose shares are also publicly listed, garner much more modest valuation multiples of 4.6 and 2.4, respectively.

There are good reasons for the disparity. European soccer leagues allow relegation, which is where teams get demoted to lower divisions for poor on-field performance and thus see their revenues fall off a cliff. Even big sides like Man United and Tottenham Hotspur have come close of late to this financially disastrous reality. For most big American sports leagues, by contrast, there is no such concept, which makes investors' lives easier.

Another difference is the use of salary caps. In U.S. sports like basketball, these rules aim to help keep player spending in check, preventing an all-out talent bidding war that would ruin profitability for the teams. European soccer authorities are dabbling with something similar, but it doesn't seem to have made a huge difference yet.

The upshot is that European soccer, despite its global popularity, is a financially riskier endeavor from an investors' point of view. Unlike some of the spot kicks awarded in the recent World Cup, the sport's valuation penalty is mostly deserved.

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CONTEXT NEWS

A consortium led by Amit Bhatia and backed by the Mittal family is in talks to buy a minority stake in Liverpool Football Club, the Financial Times reported on July 21 citing people familiar with the matter.

Bhatia is the son-in-law of steel tycoon Lakshmi Mittal. Liverpool's owners, Fenway Sports Group, told the FT that an "investment consortium led, managed and represented by Amit Bhatia has expressed interest in making a strategic minority investment" in the club.

The deal could value Liverpool at more than $6 billion, according to the report. The Wall Street Journal subsequently reported that a deal could value the club at between $6 billion and $7 billion.