Slovenia Soccer Club is Letting Fans Become Owners

SLOVENIA > SILICON VALLEY ??

Many of the deals I find are based in Silicon Valley, New York, or some up-and-coming American city.

However, the most interesting deal to come across my desk last week is more than 6,000 miles away from the prestige of Silicon Valley.

Tucked into the western part of Slovenia is the home of NK Tabor, a soccer club with over 100 years of history. The club flanks the Italian border and is just 15 minutes from popular beaches.

NK Tabor has had a tumultuous stretch - the team’s previous owner had a real estate portfolio that was hit hard during COVID. Plagued by this monetary predicament, the team’s financial situation slipped into an unruly mess.

NK Tabor’s performance on the pitch faltered as a result, and the team was relegated (demoted) to Slovenia’s 2nd tier league.

Bleak would be an appropriate word to describe the outlook for NK Tabor. But hardship and opportunity are often bedmates - and some prying eyes from within one of the most valuable soccer clubs in the world were watching.

A few talent scouts from Manchester United had set out to find a club where they could deploy their skills without the slowing bureaucratic hurdles of a gigantic club.

These former scouts acquired a controlling stake in NK Tabor, and are now offering equity in the club at a valuation of $4M.

SOCCER VALUATIONS HAVE SKYROCKETED

$4M is about as low of a valuation that you’ll find for a soccer club. The average club value in America is ~$678M. In soccer-crazed Europe, the sky is the limit. 

Here’s a look at valuations of some major European Clubs:

• Real Madrid - $6.6B

• Manchester United - $6.5B

• FC Barcelona - $5.6B

• Bayern Munich - $5.0B

It would be a miracle if NK Tabor could 1,500x into one of these valuations, but that would be the most extreme of outcomes. Still, there is opportunity to grow and be massively prosperous for investors.

NK TABOR’S BLUEPRINT FOR SUCCESS

The new owners of NK Tabor plan to lean into their strengths: evaluating and trading players.

In soccer, it is common to profit from trading players to other teams by collecting transfer fees. NK Tabor itself has collected $1.1M of these fees in the past 5 years.

The Slovenian club plans to make transfer fees a cornerstone of their financial strategy - especially coming from Manchester United where they were partly responsible for $120M+ in transfer deals.

NK Tabor owns two soccer academies, one in Columbia and the other in the United States. These academies develop raw talent - and the best are signed to NK Tabor’s team.

With a focus on global talent, NK Tabor fields the highest number of international players of any team in Slovenia. We can debate how good/bad that is for team performance, but I’d say it’s a net positive to have a unique approach.

IS THE TEAM ANY GOOD?

As I mentioned, the team was recently relegated from Slovenia’s top league. This hurts pretty bad, the team loses out on television contracts and will have a more difficult time attracting talent.

The benefit is that NK Tabor goes from being the worst of the best, to best of the worst. The team got off to a hot start in the 2nd tier league, and now reside in 5th place (out of 16 teams).

The club’s management aims to return to the 1st tier league within 1-2 years. Doing so would unlock a minimum of $163,000 per season in television contracts.

Additionally, if the team performed exceptionally well, they could earn a berth in the Europa Conference League playoff competition. Participating teams receive cash payments for each win-and-advance, and top teams can rake in $3M.

This is a fantasy at the moment, but could become more realistic with great execution & talent signings over the next 5-10 years.

The main challenge facing NK Tabor is that they want two somewhat contradictory things. They want to win games and get promoted to the 1st tier league, but they also want to trade away their good players to make money on transfer fees.

This will be an extremely difficult balance to straddle. 

With great execution it can work - especially since the club will receive cash with which they can use to acquire high-quality replacements.

WILL THIS MAKE ME MONEY??

Back to the investment part of this, let’s get a read on how much money the club can make. This may be one of the most difficult things to predict, as it primarily depends on the talent of young academy players I’ve never even heard of, and performance of the team itself.

First taking a look at the club and fanbase itself, I wanted to understand how large the base support of this team goes.

Slovenia is a small country, home to 2.1M citizens. The tiny town of Sežana is where NK Tabor is based, and they maintain a small population of 6,000 residents.

Assuming the club likely draws in support from the nearby area as well, I’ll assume a capture rate of 5-10x Sežana’s population to bring the tally to 60,000.

We don’t have data to showcase Slovenian’s affinity for soccer, but I assume it closely mirrors neighboring Italy which has ~60% population interest in the sport.

60% of the 60,000 surrounding population would yield 36,000 fans.

However, given that NK Tabor is in the 2nd tier league they likely will lose a bulk of that support to 1st tier neighboring clubs. I’ll apply a 60% discount as a result, bringing the final tally to ~14,400.

Between ticket/food & beverage/jersey sales, I’m going to (very heavily) estimate the average revenue per fan at $50. 

14,400 x $50 = $720,000

This is the base revenue that the team should operate from - everything else; competition prize money, television rights, and transfer fees are purely speculative.

I won’t even try to estimate it, but it’s crystal clear that some combination of these are needed to lift the club to profitability - between salaries, travel costs, equipment, and facility upkeep it’s very likely that NK Tabor is currently operating at a loss.

Typically we have financial data to see behind the curtain, but given that NK Tabor was recently acquired we don’t have much to operate off of. The lack of financial data makes it a tough one to plot out.

This investment opportunity breaks the mold of most startups - I don’t have enough data to feel comfortable recommending this investment from the pure perspective of a financial return.

WILL THIS MAKE ME HAPPY?

However, I should note that this looks like a fun adventure to be a part of - the new owners promise to let investors vote on team decisions - team name, jersey designs, things of that sorts.

There’s even a discord group where fans can cheer on the team together and discuss club decisions. There’s something adventurous and fun about owning a stake in a sports club - it amplifies the experience and community that fans share with one another.

Investors can also glean some interesting perks at varying investment levels (the rewards stack on top of each other).

To find out more about this investment opportunity, visit NK Tabor fundraising page.