Why is Tom Brady investing in Birmingham City?

Off the field, it’s been much worse.

After past owner Carson Yeung was convicted and jailed for money laundering in his native Hong Kong almost a decade ago, the club’s directors were, according to Horrocks, “faceless.”

“There were names on pieces of paper, but they were based in Hong Kong and the Cayman Islands,” he said. “Never commented, never visited, so you didn’t know who they were.”

Horrocks helped coordinate protests against the club’s majority shareholders after years of financial mismanagement. Last season, another supporters group hired a plane to fly a banner over the stadium calling for the resignation of the club’s CEO.

“Everybody was quite miserable,” Horrocks said.

But the mood shifted this summer when Thomas Wagner, co-founder of US-based Knighthead Capital Management, told Birmingham supporters the firm had acquired the club. When Horrocks sent a letter introducing himself, Wagner replied. Having grown up in Boston, another sports-oriented town, Wagner saw plenty of commonalities in their backgrounds.

“He gets what we’re about,” Horrocks said.

The ownership group received another boost when Tom Brady appeared.

Earlier this month, Brady and the club announced that the former Patriots quarterback had become a minority owner, also serving as chairman of the club’s new advisory board. Traditionally in the shadow of the city’s most popular and successful team, Aston Villa of the Premier League, Birmingham now had a global icon — a seven-time Super Bowl winner — affiliated with the club.

Here we go! Proud to be part of the Blues family 💙💙💙 @BCFC pic.twitter.com/lSEbzzpcBk

— Tom Brady (@TomBrady)

Blues fan Tommy Diffey doesn’t watch the NFL, but he said the buzz started when Brady followed the club on Instagram about two weeks before the announcement.

“We were just like, ‘What’s going on?’ ” the 27-year-old Diffey recalled. “The greatest NFL player of all-time is following a club based in England that’s done nothing in the last 12 years.”

Brady attended the club’s home opener Saturday against Leeds United, which counts NBA guard Russell Westbrook and PGA Tour golfers Jordan Spieth and Justin Thomas among its investors. Before the match, Brady met with fans at a pub near Birmingham’s home ground, St. Andrew’s, and gave a team talk in the locker room, Birmingham manager John Eustace told reporters after his team’s 1-0 win.

“It lifts our hearts,” Horrocks said.

Martin Calladine said Blues fans deserve to be excited, but the free-lance author, who explores how clubs are run and regulated, is skeptical of claims that Brady is anything more than a “paid pitchman.”

In any case, Calladine — who is working on a book about how many clubs have taken unstable or fraudulent cryptocurrency companies as sponsors — hopes Brady’s foray into English soccer proves more successful than his deal with bankrupt crypto firm FTX did. (Brady is among several celebrity endorsers who were sued by investors.)

Calladine explained that many celebrity investors in sports teams acquire a small share for below-market value, essentially a paid endorsement. He suspects that’s likely the case with Brady and Birmingham.

Ryan Reynolds bought into an F1 team. That was the headline. In fact, he was given 10% of the ownership group’s stake – or 2.4% of the team. For free. Headline: He invested to become a co-owner. Reality: He was gifted a tiny fraction in return for PR.https://t.co/QS7KShy0Dg

— Martin Calladine (@uglygame)

“I think it’s problematic,” he said, “because what’s being done there is it’s obscuring the true nature of the ownership of these businesses.”

Brady is somewhat late to the English soccer bandwagon. Former NFL star J.J. Watt and his wife, Kealia, who played in the NWSL and made a handful of appearances for the US women’s national soccer team, were announced as investors in Premier League club Burnley in early May.

Burnley’s chairman, Alan Pace, faced heavy criticism after his firm, ALK Capital, acquired the club — whose previous owners were acclaimed for their prudent stewardship — in a highly leveraged buyout in December 2020 that left the club more than $114 million in debt. Burnley was relegated to the Championship the following season.

“That, to me, seemed like a very definite attempt to soften the hard edges of that purchase,” Calladine said of the Watts’s involvement.

The Watts are active promoting Burnley on social media, sending jerseys to media personalities, announcing hat sales to benefit the Burnley food bank, and even incorporating their son, Koa, in videos ahead of the new season. The couple was on hand last Friday for Burnley’s first game since being promoted back to the Premier League, a 3-0 defeat against reigning champion Manchester City.

The Watts’s monetary backing, however, is likely relatively small. While the size of their investment is not publicly available, regulations governing England’s top four tiers require clubs to report all shareholders with more than 10 percent stakes, and the Watts are not listed.

The same information for Birmingham has not been updated since the takeover, which cost approximately $44.5 million, but Calladine said he would be shocked if Brady’s stake is anywhere near 10 percent.

Wagner insists that Brady’s presence is not just for promotional purposes, but to provide expertise in several areas, including nutrition, health, and wellness.

“He is not here for promotional purposes”

As NFL legend Tom Brady takes his first step into the world of British football, @FerroTV asks club owner Tom Wagner about the five-time Super Bowl MVP quarterback’s new role with Birmingham City FC ⚽ https://t.co/dXu5MI03nW pic.twitter.com/lhjEWUENZb

— Bloomberg TV (@BloombergTV)

Calladine doesn’t buy it, though he does note the potential cross-promotional opportunities for Brady’s TB12 brand. He thinks it’s “perfectly laudable” that Brady and other celebrities are able to promote their products while increasing the commercial brand value of clubs like Birmingham City. He just doesn’t want minority investors distracting from questions about who controls these clubs — and what these owners want.

The wave of clubs bankrolled by oil-rich nations in the Middle East, as with Newcastle United via Saudi Arabia’s Public Investment Fund, has led to allegations of “sportswashing.”

More quietly, however, American investment firms have become huge players in English soccer. Almost half of the Premier League’s 20 clubs are heavily backed by American capital, including Liverpool, which is owned by John Henry’s Fenway Sports Group. (Henry also owns the Globe.)

The mission of these companies is to create profit. But there’s a problem, especially below the lucrative Premier League.

“Soccer in the UK isn’t a business in a real sense,” Calladine said. “Almost all clubs lose money almost every year, and have done so for almost the entire history of the game.”

Combined operating losses among Championship clubs totaled 361 million pounds (almost $460 million) in 2021-22, according to the most recent data in Deloitte’s annual review of football finance. Birmingham City was one of eight clubs with a net debt exceeding 100 million pounds (about $125 million), per the report.

Wagner specializes in the distressed-asset business — Knighthead led a group that provided almost $6 billion of new equity capital to Hertz when the rental car giant went bankrupt — and Birmingham City is one with massive upside. Promotion to the Premier League is estimated to be worth $210 million over a three-season period, per NBC.

Along with representing supporters’ interests for issues such as ticket prices, Horrocks’s group monitors the financial health of the club. He knows Knighthead isn’t a charity, but he is convinced Wagner is interested in a sustainable build rather than a quick payday.

“I think people are being realistic,” Horrocks said. “But we’re looking upwards, and that’s where we’re going, rather than worrying about where we’re falling.”

Greg McKenna can be reached at [email protected]. Follow him @McKennaGregjed.