Let’s conduct preliminary diligence on the economics of running a Tier 2 club in Belgium

Access to financial information core to the economics of acquiring and running a football club, and to the contextual nuance that surrounds it, increases as you move up the European pyramid. For potential owners or investors considering a spend outside the Big 5 countries — and outside even the first tier of domestic football — it is daunting to assemble the level of diligence and confidence necessary to move forward seriously on any interest or target in mind. It will likely demand the expense of real dollars against that pursuit before anything picks up steam.

Let’s say this potential owner or investor, in specifics, was bullish on the competition level and talent pipeline available in Belgium, and wanted to learn more about the potential year-to-year economic realities of operating a competitive Tier 2 club — with the possibility of promotion always being an appealing reward and goal.

The model brings you the best of both worlds: primary club financial information, and a dynamic ability to create scenarios for the type of club you have in your mind. It jumps beyond a static statement for specific clubs with their own unique characteristics — so you can feel like you have all bases for preliminary opinion-forming covered, for only the price of an annual subscription.

If we plan to operate a Tier 2 club and maintain a squad wage level on par with top-half finishers — here is what the one-year economics would look like across three stadium sizes spanning the real-world stadiums present in the Belgian leagues.

The stadium moves the number but does not change the answer: the same squad at the same wage level loses €3.2M at 5,000 seats and €2.4M at 15,000 — capacity is worth €0.8M a year, and the club is in the red at every size.

But we always need to know what happens when the outcomes stray from this. And more importantly: if a club is spending at this level, what are the odds of either achieving promotion to the Tier 1 league, or suffering relegation and being lost even further down the pyramid to struggle back up?

At top-half wages the club is promoted in Year 1 in about one season out of ten — and carries a one-in-twenty chance of the outcome every buyer needs priced: the drop into Tier 3.

You can even go deep, and start to work through real three-year branches. Start Year 1 in Tier 2, and then experiment with the major branches of what could happen over the next two years — from staying in Tier 2 the whole time, to a season in Tier 1 or a season in Tier 3, and the yo-yos in either direction.

The branches price the shape of the risk rather than a single outcome. Staying in Tier 2 both years is the runaway likeliest path at 61%, and its expected loss carries the most weight in projecting a composite blended expectation across the scenarios. The paths that touch Tier 1 or Tier 3 are individually unlikely — 7% and 5% touching one promotion, 4% each for touching a relegation. Overall, what this limited lens fails to capture is the reason an investor takes the position at all: promotion changes the club’s earning potential, transfer potential and enterprise value, and those do not show up in two years of operating results.

To tie it back to real clubs: from our original exercise sizing up Tier 2 season finances across the various stadium capacities, the model gives us the following real clubs, and their estimated matchday and commercial revenues from recent seasons’ published financial data.

Looking at where those five clubs, who spend at various levels, have gone across the last three seasons, we see the range an investor is buying into: three have won promotion to Tier 1, one never left Tier 2, and one went bankrupt. Although anecdotal, this gives a real representative sample of the range of outcomes possible after making an investment into the second tier of Belgian football.

Imagine the time and effort saved through the tools in the model to get a real sense — beyond a possible purchase price — of what a potential owner or investor might be getting themselves into. And imagine doing this for any of the 12 countries and 30 leagues in the model, before deciding to take any more serious and expensive next steps.