More foreign investors expected
The financial crash is sending mixed messages for football.
Last week when the Premier League had their first meeting of the new season the talk amongst the bosses was that the foreign ownership of the league now at nine could rise to 13 or 14 by the end of the season.
That view does not appear to have been modified by the New York horrors.
People at the heart of English football, both directors and others, are keen to talk down any long term impact of the crisis on football.
One leading football director told me, "All right the credit crunch means some people have a lot less money but in the end football will attract money and I still expect four more clubs to be foreign-owned. And remember the League is now looking to its next television deal and already there is talk that next time round BT may be interested, pushing the price up even further."
This man has been very involved in the game for many years, made money from it and is not a novice like Mike Ashley, so it not easy to rubbish his views.
Yet to pretend that football can just ignore the crash is plainly wrong.
It is obvious that the impact of the Lehman collapse means that the high-roller spending that has brought what Roy Keane called the prawn sandwich brigade to the game, the ones who fuelled sale of corporate boxes and used football as entertainment, will suffer.
And that has an impact on clubs which are planning to build new stadiums and hoping to finance them by selling high-priced corporate boxes as Wembley and Arsenal did.
Clubs that might be sold must also now be distinguished between those that come with a stadium baggage and those that do not.
Both Liverpool and Everton come into that category.
Any Everton buyer will need to be sure Kirkby will work.
It was the desire to match Manchester United, and its stadium expansion begun under Martin Edwards, that prompted David Moores to look for a buyer for Liverpool and eventually end up with one that may lead nowhere.
Contrast that with Arsenal's financing of the Emirates stadium.
It was a complicated deal which made Arsenal, as their chairman Peter Hill-Wood said, a property company. But central to the deal was that most of the money was borrowed - some £260m - with the club made to find the remaining £140m.
Any new Liverpool owner will find it impossible to strike such a bargain, even Arsenal would admit they could now not do such a deal with the banks and any Arsenal-style deal is also beyond Tottenham.
Although Tottenham deny they are for sale, their stadium problem in some ways is worse then their problems on the pitch and should the buyers sniffing round make an offer they will be very mindful of how they can finance a revamped or new White Hart Lane.
Tottenham have the added headache that the 2012 Olympics mean that the money necessary to make the journey to Seven Sisters Road less of the hell it is now may no longer be available.
The lack of stadium baggage puts Newcastle and Manchester City in a different league.
City was given its stadium on very generous terms of rent and so is in a good position.
The previous owners of Newcastle had plans for expansion but St James' Park is a perfectly good stadium and this combined with the club's great support should make it an attractive purchase for any buyer.
However now the foreign owners who have looked at it know they can no longer borrow to buy.
Some are also very worried by the never-never land of football transfers.
This can mean that a club takes years to pay for a player transfer particularly when the deal is with a foreign club. Indeed it can get to the stage that the buying club is still paying after the player has left.
And while there is little good to say about the way in which Ashley managed Newcastle, these potential buyers have also realised that while there may be money in football an owner only makes money when he sells, and that road is paved with anguish and requires owners who have skins thick enough to take abuse from frustrated fans.
Thaksin Shinawatra will walk away from Man City with a near £50m profit. The headline figure for the Abu Dhabi deal is likely to be around £200m but much of this is providing for loans. They key figure is £21m - that is what Shinawatra paid for the equity of City. He will get some £71m for it.
In the past such figures have attracted foreign buyers.
For some months now there has been much talk of rich Indians buying a Premier League club.
Recently this has featured the rich Indian businessman Anil Ambani. His feud with brother Mukesh is well-documented. Mukesh has an IPL cricket franchise so what better for brother Anil than to go for an EPL club to trump his brother? In reality this seems unlikely.
The financial crash combined with the football madness revealed by Mike Ashley's stewardship, or lack of it, appears to have changed attitudes.
Before the collapse Ashley's handling of Newcastle could be treated as one of the quirks of the game. Now, in a much more sombre financial market, it is evidence of the lunacy of football finance. Anil Ambani is certainly backing away from any such idea.
And there are many other rich men like him having second thoughts about entering this mad world.
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A slightly, or very, opportunistic article here that is short on content.
What is it that Ashley did wrong financially with regards his ownership of Newcastle?
His current problems stem from the rather delusional fans, including Kevin Keegan, who seem to think that Newcastle is a massive club.
This isn't a dig at Newcastle, but they lack the new riches of Chelsea and Man City, or the stability of United or Arsenal. Therefore when offered 12 million for a mediocre player, Ashley was always going to sell... As you said, selling is one of the major ways to make money.
As a fan, he's shovelled money at a mess of a club to try and help it, as Steve Gibson did at Boro years ago, and as the league's best, most genuine chairman, that has worked. Ashley isn't in the Gibson bracket, noone is, but sound business sense with regards the running of the club, twinned with the generousity and passion to fund it is vital for anyone not soley in it for the money.
Owners need a long term plan and careful management, and the willingness to dip into their pockets when it's justified, however delusional backing of a club is where it all begins to get abit silly.
Football invokes passion in people, when it invokes passion in people with a huge amount of money - then we lose the sound business sense and get spiralling transfer fees and ridiculous turnstile prices... Football, for the moment, exists in a vaccuum for the super rich - it's when the fans can't afford to support anymore and smaller clubs can no longer buy competitively that football will suffer.
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Its not far off now until we see some kind of limits placed on how much a club can spend/borrow.
It will take a correction like the one we are seeing in the world financial markets though first, and I'm afraid we may see a few more clubs (maybe big clubs) go into administration first.
I'm a city fan, and really worried about the kind of money being thrown about at the moment. I know its unlikely with citys new owners - but with the credit crunch what happens if your new owners run out of cash/go broke? Will anyone come forward to take over a club losing tens of millions a year?
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The 'Horrors' are not limited to New York Mirhir.
5000 people just lost there jobs here in London and more will follow. The Impact upon football will be delayed, but have no doubt, it will kick in eventually.
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Premiership football has become a world wide major coprorate business and the trend will continue of clubs being bought and sold to those witht he funds to compete in European and world competition adn this will continue until a European and worls suoper leagues are created. Some clubs will be more successful than others financially and and on the field of play, and some will fail.
The prsent problems at Newcastle have been prciipated by Mr Ashley and his friends but are more long standing. Anything said by Mr Ashley or on his behalf should be treated with caution. Northunmbria Police gave him no advice about his safety and have praised protestors for their conduct. Where is the evidence of his personal investment in club and what has he already taken out of the business funds?
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"Tottenham have the added headache that the 2012 Olympics mean that the money necessary to make the journey to Seven Sisters Road less of the hell it is now may no longer be available".
I'm sorry to point out the obvious, but Tottenham Hotspur FC are not situated on Seven Sisters Road. A Simple look at a map tells you that Seven Sisters Road ends some two miles South of White Hart Lane. They are based on Tottenham High Road.
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Can someone please invest in my club, Cardiff City. We have got Keith Harris on board who was part of the Abramovich/Chelsea takeover. Just not sure what his role is with us.
We have a new state-of-the-art stadium in place for next season, a new training ground. Please someone help!!
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yes but in a recession, money doesn't just disappear, lots of people lose it, but others gain it.
So maybe one of the winners of the current credit crunch will buy a club.
I mean speculators, not American mortgage defaulters.
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There is no chance a club like Cardiff will get a competent and rich buyer, just look at the debt the club has amassed and proved it is unable to clear. Also look at the fans, why would a foreign investor want to be linked in any form to Cardiff fans who have a very bad reputation.
The chances are that if a Welsh team was to recieve very rich financial backing then they would go and buy Swansea City as the administration is sound, finances are sound and the fans are extremely loyal. And they have a better team as well.
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Opinionman242 - you are a fool.
Seven sisters tube station would need a massive amount of redevelopment if Spurs were to increase their capacity - it is already dangerously over-worked on match days.
I'm a Liverpool fan who has only ever driven past WHL - but I know how to read between the lines, as well as having the ability to read maps.
Do keep up.
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The best bet for foreign owners is Rangers.
They will pick it up for a song. All they have to do, is then purchase something like Stoke City and reverse Rangers into it. The EU competition people would have no choice but to wave it through.
Then you have the club with the biggest physical support in the UK, playing in the Premiership, and then it's a different ball game for everyone.
I reckon £200m would do it.
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No Mighty Morfa Power Ranger,
Cardiff did have a bad reputation, it no longer does. From your name I will assume that you are a Swansea fan and therefore looking for a reaction from me or other Cardiff fans, but I won't give you one.
You are entitled to think what you like about the loyalty levels of the fans, but I will point out that this season we have averaged higher attendances than Swansea.
Better team than Cardiff? That is open to debate. I disagree, but I am clearly biased. Maybe others on here could give their objective opinion?
Cardiff XI:
Heaton,
McNaughton,
Purse,
Roger Johnson,
Capaldi,
Whittingham,
McPhail,
Rae,
Ledley,
McCormack,
Bothroyd.
Swansea XI:
De Vries,
Rangel,
Ashley Williams,
Monk,
Marcos Painter,
Britton,
Bodde,
Gower,
Butler,
Pratley,
Scotland.
P.S. We may have some idea after Tuesdays Cup match about who has the better team too.
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There is no credit crunch in the US. Lessons learned are zero so far. They're as in denial now as they were when they first started giving mortgages to the homeless.
The government takeovers of our main mortgage lenders will probably make more money available than less. Although they might do a credit check now, I seriously doubt they'll do any real checks on income.
The key is regulation and in the US there is none. Our equivalent of the Bank of England (the Fed) believed in the oxymoron of self-regulation, and this hasn't changed.
You have to remember that here there is no incentive to change whatsoever. Those in charge of frittering away their Bank's profits by gambling on the stock market are still in charge. They will do everything exactly as they have been, right up until the government buys them out and probably for a bit after.
Expect this mess to get much, much worse before it gets better. And if there's another Republican administration come November, god help us all. Their policies of allowing the rich and greedy to do exactly as they please is what got us into this mess. The rich walk away from the mess they made with 7 figure golden handshakes and get to keep their multi-million dollar homes. The employees and the stupid (those that think Republicans are in some way conservative and therefore good for the economy) get nothing, lose their jobs, homes and pay the taxes that will be used to bail out another large bank.
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Once there are too many rich foreign owners in the EPL, what happens if they then try to protect their investments by making it a closed shop with no relegation or promotion? Can the FA retaliate by isolating the clubs from European competition (by effectively making the Championship the highest sanctioned league)?
There could be drama for years to come if such events came to pass.
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Big investment is great for individual clubs.
But, as good as it is to see the likes of Robinho in the Premiership, I don't think large investment is good for football. It's killing the game as a genuinely competitive sport.
The gap between the poorer clubs, the wealthy and the mega wealthy is getting bigger.
Arsene Wenger said in an interview on the BBC that he believes football clubs should only be allowed to use the clubs natural resources - sponsorship, gate money and TV money.
And I agree with Wenger. It will mean that successful clubs are successful because of the manager's and club's good work and clubs are rewarded for their success and can then invest the money into the team, rather than clubs simply buying success as we're seeing now.
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Another poor blog. You've said nothing in 500 odd words. And as previously stated, Tottenham's ground is on the High Road, not Seven Sisters. If you do not know where a stadium is based how can you possibly expect people to take your blog seriously?
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I have to agree with Bentos, poor blog with some poor reporting.
You claim Newcastle don't have any stadium baggage, yet they do not own their stadium. They rent the land the ground is on, the landlord is the City Council and Freeman of the City for the elements on Town Moor.
Cameron Hall financed the redevelopment and building of the stands they are a listed asset in the Company Pensions Scheme portfolio and bring in a rent of £1m per year until 2025
Then we have the training ground which is not owned by Newcastle but by SportUK ie the government.
How is that NOT baggage!
So aside from the fact that you think not owning your ground and paying well over £1 million a year in rent is a good situation for a football stadium, you then go on to slag the way Newcastle has been run off. How can you say they are a better take-over proposition than Liverpool or Everton and then slag off their business finances (which are a mess true).
Maybe next time you should check some facts before making statements like that in your blog!
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Any news about Luton FC and Scarborough Athletic FC?
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Richyburger: Paying £1 million a year rent isn't baggage at all. If the club were to buy St Jimmy's Home for the Insane Park the cost would be significantly more per year over an extended period. St James' is a guaranteed home for the future, and £1m a year is cheap.
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The Football bubble - unfortunately - must burst sometime.
Depending how the game is managed now and how the crash is handled in the future, will determine the ease or difficulty of re-floating the game.
Football's officials in FIFA and around the world - possibly with the exception of England and a handful of other European Football Associations - are living in dreamland.
Reality - as in the ever increasing numbers of empty seats and empty stadiums - still has not kicked in. We hear this constant talk about the beautiful game. But look around and the hype and bull went through the roof ages ago and attendances are going through the floor.
Keeping Football financially viable starts with changing the Qualifying Criteria and Qualifying Systems for the World Cup, the UEFA Champions League and Football's other high-profile Competitions (if any!).
AIG - America's Insidious Greed! - will now need the 'AIG' on Manchester United's shirts to sell their company and get them out of debt. Football at the same time cannot afford Its Advertisers and Sponsors to desert the game and discover their association did not benefit them (the best way to calculate your sponsorship’s performance and value is to withdraw it and check the figures!).
The crash is coming; the signs are there. Football - if it wants - can learn a lesson from An Indebted Giant (AIG) how to prevent big, bad business becoming AIG (Another Insolvent Glutton)!
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This comment was removed because the moderators found it broke the House Rules.
The way this is going is clear:
1. 75% quorum of owners are billionaires from around the world with no real link to UK.
2. They make wild threats requiring free stadia or they will take the whole league on a worldwide travelling circus. Or even relocate it to the US.
3. The biggest 16 clubs cecede and turn the whole thing into a franchise.
Then this will happen.
1. One will move to Dublin.
2. Celtic and Rangers will be invited to join.
3. Cardiff will be invited to join.
FC United and AFC Wimbledon may be the forerunners for several more......
IMHO
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The bubble will burst as investors begin to realise how hard it is to get a return.
Ambramovich has owned Chelsea for 5 years, invested hundreds of millions and has reached one Champions League final but still not won it. If in 5 years Man City have not won the Champions League will their owners think the investment worthwhile ?
Anyone buying a Premiership club has to build a team capable of taking on Man U, Chelsea, Arsenal, Liverpool and now I suppose Man City just to qualify for the Champions League let alone come close to winning it. I think the world's super rich might start to consider that before pumping hundreds of millions into Newcastle, Everton or even Cardiff City ! to become the number 6 club in the Premiership.
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There are several worrying precedents from other sports around the world...
In 1995, the owner of the Cleveland Browns effectively held the city to ransom, demanding $175 million of local taxpayers money to be spent on the stadium, or he'd move the franchise to Indianapolis... the city eventually spent close to $300 million on a new stadium, and the team was moved anyway after Indianapolis offered an even better financial package.
Anyone think a 15 point deduction by the FA if your club goes into administration is harsh? Ever wondered why German teams don't seem to perform as well as English, Spanish or Italian teams in European competions?
In the German Bundesliga, if you can't demonstrate that your clubs' finances are sound, and that your income will meet your expenditure, prior to the start of the new season, you're not awarded a license to play in either of the top 2 divisions... Real Madrid or Man Utd, with their collossal levels of debt, wouldn't pass a Bundesliga test although there's evidence to believe both clubs have the ability to reduce their borrowings, it would seriously affect what they could do on the pitch.
Chelsea are in a similar position in that Abramovich's money is apparently only "loaned" to the club, and in theory he could call in those loans. This is a potentially devastating situation, in that Chelsea have nowhere near as much in the way of off-field income as either Real or Man Utd... potentially, Man City could soon also face a similar situation as Chelsea.
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