Apollo has acquired a majority stake in Atletico Madrid. What could possibly go wrong?

I have been a fan of football for almost my entire life. I’ve been playing football since age probably four or five, because I was amazed by the simplicity of the game and the potential one can achieve thanks to regular practices. I’ve been playing as a youth member of the Shakhtar Donetsk team. I enjoyed the game so much. For me, it was a mix of being an athletic medieval gladiator and a small strategist (especially when you have a ball in your possession). 

When I remember my youth play today, I think of my dream of being a professional player and the football clubs I admired. Among them were Juventus, Barcelona, and Liverpool. This set of clubs stood out from the rest, not because I knew the history or they were winning those days, but because of some small details. For example, I remember when I saw Ronaldo for the first time in Barcelona, who could dribble 5 opponents. It was spring, and my sister invited me to watch early morning sports news (prior me heading to difficult school classes). It was probably 19967-98. I remember the first time I heard about Hristo Stoichkov in Barcelona; that name has stood with me for many years. I remember a beautiful standard kick by Pinturricchio, Alessandro Del Piero, who made the strike seem more like an art performance. 

Time passed by, and I stopped playing (moved into business), yet started looking into a broader selection of football clubs, growing my interest. I especially enjoyed watching the Spanish La Liga. In Spain, football is a different dimension. Families go to watch football at stadiums every single/second week, and a football club becomes an eminent part of their lives. I lived in Spain for some years, thanks to IE Business School and its MBA program. One of the clubs that I really endorsed in later years was Atlético de Madrid. Not that I am a fan of the club, but from the locals, I accepted the club’s positioning: while Real Madrid was an invite-only elite football club, Atleti built itself inclusive among the local routes of outer Madrid areas. A club for the “rest of us”. That was an “A-ha” moment for me, which was the detail I admired to turn into pro-Atleti. That’s why I was very confused and concerned about the recent acquisition of a majority of the club by Apollo. 

Don’t get me wrong, additional funding for the football club, especially when you compete with such giants as Real and Barca, is a must. What I’m questioning is the profile of the buyer. There is nothing wrong, per se, with a private equity firm acquiring a stake in the sports team. In the end, we have all seen the lucrative returns that NBA clubs’ owners received from their deals in early-mid 2000s. However, here we are talking about a different sport, a different heritage, different pedigree players, and a different culture, traditions, and, most importantly, fan base. One can argue, well, football games with Colchoneros have been watched by hundreds of millions of people - why not use it to earn money? Is that a good business? Probably. 

However, I am very concerned about the tools that Apollo will use after the deal is closed. First, the motivation of a private equity firm is always a fast return. Will they invest in the youth team? Will they keep the team in the same area? Or do they move to another bigger stadium elsewhere? Second, they have already appointed new members to the board - who are they? Will they share the passion of millions or just stay analytics-driven, cold-minded professionals as regular PE guys? 10 years ago, I tried to sneak into Metropolitano stadium on some low-profile match with my family - it was a total failure: all the tickets were sold out weeks before. No hucksters, no resellers. All the seats in the adjacent cafes were also unavailable. It was not a coincidence. The local Jorjes, Pedros, and Rafas were there any time they were out of their work with their whole families. And now comes Apollo. 

My point is that any PE firm aims to receive a great return. And in the case of sports, to do that, it could easily increase prices for entry tickets, leasing costs for merchandisers, etc., to get an extra +2-3% on the club’s EBITDA. And yes, probably all the seats will still be sold out, and merchandising will be consumed; however, a portrait of a regular fan, who attends the stadium with his family and enjoys being all dressed up in the latest season’s merch, will change. Instead of locals blue collar workers, we will see more and more tourists who will happily spend their liquidity for a once-in-a-lifetime experience. They will come and go, bringing the acquirer an extra return, but eventually erasing and dissolving the always sparkling volcano blood and vibrating heart of the real Atleti local community. Those who know the anthem, sing songs, live their lives with Rojo blancos in their souls.  

I hope I am wrong. I hope Apollo appoints the right people to the board, who will give their word to communities, explain their plans, and keep their word. And I wish in 5 to 7 years, when Apollo is going to exit, there will be a real El Jefe de Atleti, who could turn the club back to its roots.