Foreign Ownership Of English ClubsSun, 1 July 2007
Former Thai Prime-Minister Thaksin Shinawatra appears unstoppable in his desire to purchase Manchester City for £81.6million. Having previously been thwarted in his efforts to buy Liverpool, neither the charges he currently faces in Thailand nor the concerns of British Sports Minister Richard Caborn look likely to derail his takeover of the English Premier League club.
Caborn met with English FA, Premier League and League officials last Wednesday and made it clear he wanted to investigate the ‘fit and proper person test’ required of club owners and directors. After the meeting, Caborn was reported as saying that “Rules on ownership must remain under constant review and strengthened if necessary.”
In the conclusion to an article entitled “Why are so many wealthy foreigners buying into English football?” which appeared on the online edition of the Belfast Telegraph on 22 June 2007, the question was posed “Are foreign owners of English football clubs a good thing?”.
There is nothing new in wealthy individuals buying into English football clubs. They have traditionally done so for a variety of reasons, such as
- The prestige or publicity in owning a football club.
- Being fans of the clubs themselves, and wanting to use their wealth or influence to achieve success, or greater success for the club.
- Given the strong links between many English football clubs and the community in which the club is based, wanting to put something back into the community in which they made their wealth
- As investment.
A similar variety of motivations probably lie behind the interest of the current breed of wealthy foreigners in wanting to own an English football club, subject to the following additional considerations or qualifications:
- Given the global profile of English football, in particular, the English Premier League, any prestige or publicity in owning a major English club is no longer local or even national, but international.
- Wealthy foreigners are unlikely to be longstanding fans of the clubs they acquire.
- While a wealthy foreigner is unlikely to have made his wealth within the community in which the club is based, or even within Britain, he may have a pre-existing objective of creating a presence for himself in Britain, and investing in an English football club may well ease his acceptance in the community or the country.
Foreign ownership of EPL clubs is not new – Mohamed Al Fayed, the Egyptian owner of the prestigious Harrods department store in the West End of London, purchased nearby Fulham in the summer of 1997, then just promoted to the third tier of English football, and financed both the redevelopment of its ground, and its rise into the EPL. Before that, Sam Hammam, a Lebanese businessman, owned a majority stake in Wimbledon (as they were then known) from 1975 to 1999, during which time they rose from non-league football to be established in the top flight in England. Milan Mandaric, a Serbian-American business tycoon, who had previously owned San Jose Earthquake, a Major League Soccer club in the United States, and French club Nice, took over Portsmouth in 1998.
Since Roman Abramovich took control of Chelsea (another West London club) in June 2003, the following acquisitions of major English clubs by foreigners have taken place:
|Club||By whom||Nationality||Prior Sporting interests||When||How much (actual or reported)|
|Manchester United||Malcolm Glazer||American||Tampa Bay Buccaneers (American football)||May 2005||£790 million|
|Portsmouth||Alexandre Gaydamak||Israeli- French businessman of Russian descent||His father, Arkadi Gaydamak, has since July 2005 been the
sponsor of the Hapoel Jerusalem basketball team
|Btwn Jan and Jul 2006||Cash injection of £15 million and £32 million.|
|Aston Villa||Randy Lerner||American||Owner of Cleveland Browns (American football)||Jul 2006||£62.6 million|
|West Ham United||Consortium headed by Eggert Magnússon||Icelandic||Various positions in European football||Nov 2006||£85 million|
|Liverpool||George Gillett and Tom Hicks||American||Owners of Montreal Canadiens and Dallas Stars respectively
|Feb 2007||£470 million|
Apart from Thaksin’s interest in Manchester City, there are several other potential takeovers or rumoured interest in English clubs by wealthy foreigners:
- 30 year-old American-based businessman Daniel Williams is fronting a consortium interested in buying Blackburn Rovers.
- Hong Kong tycoon Carson Yeung have recently purchased a significant stake in Birmingham City, with a view to a £70m takeover of the club.
- American tycoon Stan Kroenke, owner of the Colorado Rapids Major League Soccer club, was earlier this year linked with a takeover of Arsenal, while more recently, a Dubai-based group which includes an individual associated with a failed takeover bid for Liverpool in December 2006, have been rumoured to be interesting in acquiring Arsenal.
Foreign interest in acquiring English clubs extends to the second tier of English football. US-based businessman Gary Hopkins heads an American consortium Manhattan Sports Capital Partners, who are interested in acquiring Coventry City of the Championship. After disposing of his interests in Portsmouth, Milan Mandaric took over Leicester City of the Championship in November 2006.
Three features appear to recur in the profiles of wealthy foreigners buying major English clubs:
- The individuals concerned, especially the American and European buyers, are extending pre-existing business interests in sports into the English Premier League, and the acquisition of an English club appears to be a primarily commercial decision, against the backdrop of the increasing global profile of the EPL and the expansion of its markets in South-east Asia, East Asia, the Indian sub-continent and North America, and with every prospect of expansion in the Middle East.
- A wealthy foreigner acquires an English football club in connection with his residing or settling in Britain.
- None of them were fans of the club before they bought or were linked with the club, even though after the purchase of the club, they may well become the club’s biggest fan, as Roman Abramovich appears to have become at Chelsea.
It is inevitable with the globalisation of both the EPL and money, wealthy foreigners are looking to purchase major English clubs.
It is no surprise that the clubs that attract the interest of foreign wealth are based in the largest population areas, or have good catchment areas in terms of both population and level of interest in football, as reflected in the success of the clubs in that area, whether currently or historically.
Ultimately, investors in English football clubs, whether British or foreign, are looking at revenues and potential revenues. Revenues comprise primarily of gate receipts, television deals and merchandising. Gate receipts and merchandising relate to the club’s fan base, while each club’s share of TV revenue in the Premier League depends on how it performs in the league.
While Manchester United, Liverpool and, to a lesser extent, Arsenal, already had well-established global fan bases before any foreign acquisition, the other clubs that have been subject of foreign takeovers or interest do not. Therefore, the new owners of these clubs must look to build upon the local fan base, even if their ultimate goal is to develop a global fan base, with all the marketing and merchandising opportunities that a global fan base can afford.
In order to get the local fans in through the gates, the clubs must be successful. Therefore, regardless of the motivations of the new owners, they must ensure the clubs succeed where it matters most – on the pitch.