How Tom Brady's investment in English soccer team cratered

Brady became a part-owner of Birmingham City thanks to his investor status with Knighthead Capital, a hedge fund from New York. Knighthead and Brady saw immense potential in Birmingham City. It's a storied but underperforming club from England's second-largest population center and it has a fierce rivalry with Premier League darlings Aston Villa.

The team needs lots of work — it has been mired in the second division for more than a decade and its stadium is a health hazard due to asbestos exposure — but the potential for a significant increase in value is there.

Brady and Knighthead, however, have indexed too heavily on celebrity appeal and not heavily enough on short-term sustainable gains. They fired respected coach John Eustace last October, replacing him with Wayne Rooney, an ex-Premier League and MLS coach with broad appeal among casual fans but few bonafides as a coach. Under Rooney's failed leadership, Birmingham sank like a stone in a lake.

American celebrities are increasingly investing in European soccer teams, with many citing the journey of actor/businessman Ryan Reynolds and writer/producer Rob McElhenney with Wrexham AFC as an inspiration.

But while Wrexham has advanced under its celebrity ownership, other teams have fallen behind. Brady's Birmingham City likely won't be the only athlete-led soccer team to suffer relegation this season. Former NFL star J. J. Watt's Burnley looks set to be dropped out of the Premier League, too.

Celebrity-led investments tend to be more about branding than on-the-ground spending. The attachment of names like Brady or Watt encourages American bystanders to learn more about European soccer. But with Watt's Burnley heading to the second division and Brady's Birmingham heading to the third, it will be difficult for casual American consumers to find and follow either team. Their "branding" effect will be largely nullified by their respective relegations.

For Birmingham City, branding is the least of its worries. The team needs a new stadium (or significant upgrades to its existing one) to continue playing at home. Brady and Knighthead committed to building a $3B stadium for Birmingham City as part of their investment pitch. With the team now languishing in the third division — a league where club revenue tends to be between $5M and $10M — that stadium may no longer be a justifiable expense.

There's one good thing for Brady and Knighthead about this relegation: It places Birmingham City in the same division as wildly popular Wrexham AFC. If the team has any sense, it will partner with Wrexham on promotional opportunities in the United States to keep Birmingham City top of mind for casual fans.

But to make that happen, Brady and Knighthead must perform like winners — something they haven't done in their nine months in England. 

At a celebrity roast of Brady, even Bill Belichick — the ex-quarterback's longtime NFL coach — got a dig in on Birmingham City's woes.