ONE by one, Barclays Premiership sides are falling into foreign hands as billionaires take advantage of Britain’s open markets and booming television rights to buy up historic clubs.
Top-flight clubs are looking forward to a two-thirds increase in television income from next season, making the FA Premier League business more attractive than at any time since football clubs were first floated on the Stock Exchange in the mid-1990s.
While Roman Abramovich’s spending spree at Chelsea shows no sign of abating, the Glazer family takeover of Manchester United is rapidly looking like an astute financial decision, giving others hope that they can follow suit.
On the other side are a group of club chairmen — such as Doug Ellis, who relinquished control of Aston Villa last month, or Terence Brown at West Ham United — who know that now is the best time to sell for years, because club finances should remain healthy until the end of the decade. Keith Harris, the chairman of Seymour Pierce, the City bank that advised on Randy Lerner’s takeover of Villa, estimates that clubs’ television income “will increase by £17 to £20 million from next season, which is hugely more advantageous than anybody expected”.
Clubs are in the last year of the existing three-year TV deal, worth about £1.2 billion to the whole league over that period. The new deal is worth £2.1 billion, nearly £700 million a year until 2010, reflecting greater competition for football rights.
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At the same time, Chelsea aside, there is a greater financial realism among clubs, who are trying to control wage bills while at the same time boosting revenues through ground investment, as at Arsenal, or simply more careful merchandising, as pioneered by United.
When the Glazers seized control of United, supporters were worried about the high levels of debt the Americans took on, but the improving financial outlook allowed them to slash their interest bill over the summer. Assuming United do not suddenly suffer a total loss of form, the Glazer buy is likely to look very astute indeed.
At the time of the original buyout, the Glazers estimated that United’s turnover at the time of the 2007-08 season would be £232 million. The club are likely to be £20 million better off than that, the kind of sum that makes all the difference between a tight and a healthy profit.
That could reward the long-term fan/investor, particularly as the attendance of English fans can be predicted with something approaching certainty. “Times are simply much better,” Harris said. “In bad times, football clubs have all the liquidity of dumplings in gravy. But now people believe they will soar.”
Overseas investors are also helped by Britain’s easygoing attitude to foreign ownership. Unlike the rest of Europe, there is no tacit attempt to rebuff overseas buyers of high-profile assets.
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In Italy and Spain the markets are simply not as open — it is hard to contemplate Juventus without the Agnellis, or Silvio Berlusconi willing to sell out of AC Milan. It helps that Premier League TV rights are sold collectively in a way that assists medium-sized clubs; the disparity in Italy, where rights have been sold individually, is much greater, meaning that medium-sized clubs are not as promising for investors.
It also helps that owning a club has always been seen as a way to buy legitimacy. Abramovich’s exact motivation for buying Chelsea remains unclear, but while other Russian oligarchs have run into trouble with President Putin, Abramovich is now a highly visible figure in the West. It is harder to imagine the Kremlin taking him on.
Meanwhile, wealthy English fans seem unwilling to step up. The home-grown attitude is that football is a good way to lose money. Yet investors such as the Glazer family, or Lerner, have experience — through their investment in American football — of what can be achieved.
It will only take one Leeds United-style disaster to change the mood, but for the moment it is boom time in football, and West Ham are unlikely to be the last Premiership side to attract foreign attention while the financial outlook looks so good.
Our Beautiful Game in Foreign Hands
Sept 2006
Kia Joorabchian (iran) Rumoured to be planning an approach for control of the club £80 million
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Why Foreigners Buy Into British Football Clubs
Buoyant TV revenues boost club prospects
British regulations are open to foreign ownership
Owning Premier League clubs buys respectability
Cash-strapped chairmen are willing to sell
FULHAM
Purchased may 1997 Mohammed Al Fayed (Egypt) £30 Million
CHELSEA
Purchased July 2003 Roman Abramovich £140 Million
MANCHESTER UNITED
Purchased may 2005 The Glazer Family (US) £800 Million
PORTSMOUTH
Purchased Jan-July 2006 Alexandre Gadamak (russia) £15 Million for a 50 percent stake in jan, remainder bought in July
ASTON VILLA
Purchased Aug 2006 Randy Learner (US) Proposed deal £63 Million (deal yet to be completed)