IN THE second of a four part series entitled ‘Football and Finance’, James Robinson analyses the impact of foreign ownership on English football.
All 20 Premier League clubs have been linked with, or have been taken over by a wealthy foreign owner or consortium. Clubs have been plucked from the brink of mediocrity by the likes Sheikh Mansour bin Zayed Al Nahyan at Manchester City or Milan Mandaric and now Alexandre Gaydamak at Portsmouth and for Chelsea fans, Roman Abramovich. These men all play, the knight in shining armour in our production.
They rule the land that they are in charge of, and do not take any nonsense. However these new owners have not all achieved success. Manchester City became the richest club in the world when the Abu-Dhabi based consortium took over the Manchester club, but money it proves cannot always buy you success on a football field. They opened their cheque books immediately and bought, in some football fans opinions, the best young talent in the world at the moment in Robinho. The Brazilian though has not shone like many presumed he would. This shows Manchester City fans and others that money does not automatically buy you instant success. Matthew Thompson, a Chelsea fan told me “Manchester City can learn from our mistakes. They should make the club a stable top flight team then go for trophies and honours in the next 2 or 3 years – not rush into anything”
Football fans have and will continue to show their dislike towards foreign ownership of their club, the Glazers at Manchester United are a perfect example. They bought the club borrowing money from the banks, believed to be in the region of $850 million, immediately putting the club into financial trouble – which a club like Manchester United has not faced in its recent history. This slow, yet controversial takeover between 2003 and 2005 could have affected the playing staff and the management. After a few years they have shown that it has had the opposite effect and Manchester United have proved themselves, yet again, to be the best football team, not only in Europe but also in the world by winning the Champions League in 2008 and Fifa World Club Cup in early 2009.
Liverpool fans’ relationship with their American owners has been controversial, the relationship links well to that of Cinderella and the evil stepsisters
Professor Simon Chadwick of Coventry University’s Centre of Business in Sport believes that football is facing a new crisis with foreign owners, “New and potential foreign owners can not come into a club and expect to make big bucks out of them. Gillette and Hicks at Liverpool for example, are in it for money – they underestimated what it takes to run a commercially viable club, it also raises questions about their own personal ability to run a club or business” Prof Chadwick later said “Malcolm Glazer’s approach to buying Manchester United was different, he already had previous experience with a sports team, American football side, the Tampa Bay Buccaneers, although when he first came people were not happy, he has turned them into a successful and commercially viable club” Gillette and Hicks’ involvement in Liverpool has created controversy since day one. Their inability to work together for the good of the club has filtered through to the media and fans. This has caused constant unrest amongst them. The Daily Mail in September 2008 had the headline, “Gillette heads into eye of storm at Anfield as Liverpool fans plan protest against American owners” Liverpool fans relationship with their American owners has been controversial, the relationship links well to that of Cinderella and the evil stepsisters.
Thaksin Shinawatra arrival at Manchester City in the summer of 2007 shows how easy it is for foreign moguls to come to this country and buy a football club, but in the former Thai Prime Minister Shinawatra’s case, he subsequently was forced to leave the club due to legal issues effecting his personal finances. Prof Chadwick thinks there should be rules in place to see who can and can not buy a football club, “Football has no rules, regulation or legislation on who can buy a club – this needs to change for the wellbeing of English football”. Mark Pougatch, football correspondent for BBC Radio 5 Live thinks the opposite, he told me “There should not be rules or regulations, that’s just protectionism at best and prejudice at worst. The fit and proper persons rule should be more vigorously enforced though” So who’s right? Can anyone buy a club or should some form of assessment be enforced by the FA for potential buyers to take? Unfortunately, the FA was unwilling to comment on such a topic.
Former Darlington Chairman, George Houghton: Football in the lower leagues does not enjoy the financial support of those in the Premiership and the funding gap is widening
Rumours and figures in the Premier League of potential investors is sometimes beyond belief. It has been reported that Abu Dhabi United Group’s takeover of Manchester City cost £200 million, money just being thrown at a club for players and wages is also sometimes beyond belief, more and more players are now earning 6 figure wages … a week. Ashley Cole questioned Arsenals ambition in 2006 by not making him the highest earner at the club. Instead he moved across London to join Chelsea’s new Russian revolution and got the money he wanted, even if it wasn’t what he deserved. What is it like for lower league clubs? Money has always been tight, especially recently after the collapse of ITV Sport in 2002, which offered so much potential for lower league clubs, but lasted just one season and threw many clubs into severe financial trouble. Managing these financial consequences is not just something that lower league clubs struggle to tackle, they are also ill-equipped to try and mount the problem. We are reading more and more of football league clubs entering administration with Luton and Rotherham being the first victims this season to face a point deduction and the likelihood of ceasing to exist unless a new buyer for the club was found – whereas the top flight clubs are always linked with new investors even when it is not financially needed. The latest club to enter into administration in League 2 is Darlington.
The former Chairman, George Houghton, blamed lack of crowd’s for the downfall of the North East team and its second spell in administration. He told the club’s official website in February, “I would ask the club’s loyal fans to get behind the team and show their support” Lower league clubs do struggle financially as television rights, and sponsorship deals do not amount to anything near to that of the Premier League. George Houghton, explaining the clubs entrance into administration and a 10 point deduction said, “This was a result of a combination of circumstances compounded by the recent recession” he said, “Football in the lower leagues does not enjoy the financial support of those in the Premiership and the funding gap is widening.”
The so called greed of the top flight clubs according to Houghton is ruining lower league football. Chairman of Premier League side, Wigan, Dave Whelan, is apprehensive that escalating levels of debt will send a top-flight club out of business in the near future, much like that of several lower league clubs to date. “I have no doubt that a Premier League club will go into receivership,” he told BBC Radio 5 Live during the show ‘Football and Finance’ in January 2009. “The debt in the Premier League is horrendous. We (Wigan) have got our debt down to somewhere near £15m, it’s serviceable and we can look after that” He said, “Foreign owners will borrow money in the name of the club and will leave the club in debt. Man United owe £750m, Liverpool £500m and Chelsea owe a lot of money too. I think that money should be put into equity, buying shares in the club. If the owner decides to leave, he has to sell his shares. It’s nothing to do with the club and doesn’t put them into serious debt.”