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The secrets of football's Inner Circle

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Paul Fletcher | 22:30 UK time, Wednesday, 16 September 2009

Sheffield Wednesday chairman Lee Strafford wants an investor to put £20m into the Championship club - and he is relying on an American firm to make it happen.

You probably haven't heard of New York-based investment bank Inner Circle Sports but it represented Tom Hicks and George Gillett in their takeover at Liverpool and brokered the deal that saw Ellis Short assume control at Sunderland.

And it is currently using what key personnel at the bank describe as their extensive contacts to find Strafford the investment he needs to try to realise his ambitious plans for the Owls to take flight.

If you include Birmingham, where Hong Kong businessman Carson Yeung is poised to take control, half of the Premier League is now in the hands of foreign ownership.

And as the extraordinary example of League Two club Notts County illustrates, even the right type of Football League club can generate interest from abroad.

But how can we be sure that wealthy foreign owners, many of whom are largely unknown in the United Kingdom prior to their investment, have the right intentions for the clubs that they buy?

George Gillett (left) and Tom HicksInner Circle represented Gillett and Hicks in their purchase of Liverpool

Football clubs in England have a long history and tradition; they are inextricably interwoven into the fabric of the community to which they belong. Is that heritage in danger of being damaged by foreign takeovers?

Inner Circle makes its money-brokering deals, either on behalf of the club or the potential investors. The people I have spoken to at the bank insist they are selective both in terms of who it represents and how it matches an investor to a club.

"We are very open to having a conversation but before we take on an assignment we need to understand the probability of success," senior partner Philip Hall told me.

Inner Circle insists it conducts a thorough top-to-bottom analysis of a club before agreeing to represent it, from its history and tradition to the current financial situation and potential for growth. The deal makers want to get to the stage where they can answer any question a potential investor might ask. It might take months to work through this process - and concluding a deal once an investor shows a genuine interest can take even longer.

Similarly with investors, the people I spoke to insisted Inner Circle wants to make sure it is representing serious individuals, preferably with experience of other sports markets - and definitely not the sort of people that founder Rob Tilliss described as "promoter types who are trying to get their names in the paper".

Crucial to its success is correctly matching club and investor.

"What we try to do with our clients is educate them to be as realistic as possible about what the potential for a club in a certain market actually is," added Hall. "We always try to have the right fit."

Some investors are strictly focused on owning clubs that regularly compete in the Champions League. Others, such as Randy Lerner at Aston Villa, want to develop mid-level Premier League clubs and transform them into top-four outfits, while another type is happy to buy into a team outside of the top flight with the aim of realising long-term potential.

"If you invest in a top Premier League team you know you will be spending within a 10% band of the other leading sides but with a club like Wednesday it is a blank slate," Tilliss told me. "I think people are looking at it as an interesting opportunity."

Most of the investors that Inner Circle represents already have experience in the North American sports market. Liverpool's Gillett, for example, is the former owner of the Montreal Canadiens ice hockey team.

The theory is that American investors come to England with experience of a sports market that is further developed than the Premier League or the Football League. Therefore they can use their knowledge to develop revenue streams and thus increase the prospects of financial success at the club in which they invest.

"What US investors in particular are looking at is how to create a win-win experience," added Tilliss. "Of how to create a better matchday experience and grow revenue streams out of the supporter base.

"They see people standing in long queues to pick up tickets or carrying one coupon book for the whole season"

When Tilliss founded Inner Circle in 2002 he held a firm view that there was a lot of growth left in the Premier League. Since then there has been what he describes as a "big rush" to invest in English football - with only a very specific type of investor now interested in buying a club.

"The market has changed dramatically over the past 10 years," said Tilliss.

"Back then there were ego buyers but today investors are, almost without exception, return driven and looking at it as a business - but they are emotional about their investment.

"After they acquired Liverpool I was sat with George and Tom at the Champions League final in Athens and they recognised buying a football club is not a straight-up type manufacturing business. You have got to make it a community asset and treat it with kid gloves."

Most of the investors Inner Circle has worked with so far are American but the global financial crisis has had an impact on the market. Tilliss expects a lot of future investment in the Premier League to come from Asia and his company is trying to develop ties in that part of the world.

Supporters can be suspicious of wealthy foreign owners sat in the stands proudly wearing their club's scarf. Who are they and why have they invested so much money?

"It is an interesting social phenomenon," added Tilliss. "Foreigners showing up to own British clubs is pretty destabilising."

Tilliss highlights the Glazer family's takeover of Manchester United in 2005 , which prompted huge protests from fans.

"It was thought they would slash and burn but that has not proved to be true," said Tilliss. "If you asked anyone to predict back then whether David Gill would still be chief executive in 2009 it would have seemed like a 0% chance."

United have also won the last three Premier League titles, which Tilliss suggests has helped the Glazers become accepted.

"Ultimately fans care about winning if [a club with a foreign owner] is doing the right things on the field then they will be embraced," added Tilliss.

Sheffield Wednesday chairman Lee StraffordOwls chairman Strafford is hoping Inner Circle will find investors for his club

That said, I would be surprised if some supporters were not concerned at the increasing level of debt at United since the Glazer family became involved with the club.

When I asked Tilliss what had surprised him the most about English football since he decided to become heavily involved, he suggested the unwillingness of the regulatory bodies to embrace change and innovation, citing the Football Association's unwelcome response to the idea of the 39th game of foreign soil.

But this is clearly not enough to deter investors. Tilliss stressed during our conversation that football is an increasingly global business - rendering the notion of a chairman putting his hand in his pocket to prop up his local club increasingly archaic.

"As football becomes a global business it needs a global perspective to grow and be successful, and this will become more magnified in the next five to 10 years," he said.

The suggestion is that clubs who fail to embrace the global market place will be left behind because they will eventually lack the finances to compete.

Or as Hall puts it: "As more and more money pours into the sport, clubs will have to look outside their borders for more investment."

Foreign ownership of English clubs is more than a trend, it is as pattern that will undoubtedly continue and become more prevalent.

One question occupying Inner Circle at the moment is where future investment will come from in the wake of the global financial meltdown. Tilliss is predicting a lot of activity from Asia and his company are working to develop contacts and partnerships in that region.

Our beautiful game is changing beyond recognition as it goes global and there is no turning back the clock.

And if Wednesday supporters want to see their club return to the top flight it might require foreign investment to make that happen.

You can follow me throughout the season at


  • Comment number 1.

    Fascinating insight into those people.

    I work in M&A transactions on a daily basis and cannot imagine the kind of due diligence procedure that these guys must be undergoing before they even take on a club (or indeed have to undergo if approached by a potential investor on the club when identified).

    I wonder how many staff Inner Circle has in China at this point. *Mischeivous grin*

  • Comment number 2.

    remember the band inner cycle?

    ~ i've been watching you, a la la la long. ah good times.

    anyway, if not a huge fan of these american investors. instead of lowering the debts, its getting more and more.

    plus, i'm just scared that they might english football like most of the sports in america. was a huge fan of american football back when i was younger, but nowadays i can't stand to watch it and limit myself to just the superbowl. there's just too much commercial and a whole lot of circus-ation to it now.

  • Comment number 3.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 4.

    You put the paragraph about the effects of the global financial crisis meaning a shift to Asia in twice, does that mean its significant? ;)

    I cannot fathom how come all the rich people who want to own football clubs are not British? Surely there must be an even share of wealthy individuals on these shores, so why don't they want to invest in the clubs?

  • Comment number 5.

    Comment no.2 - The band was actually called Inner Circle, so your pun is closer than you thought!
    I suppose my club, Stoke, can be counted in the archaic band. Our chairman Peter Coates is a local businessman who has been at the club for decades. He did sell up to an Icelandic consortium approx. 10 years ago but then returned after they were found out as a bunch of chancers who knew nothing about football.
    So far so good, but as Mr. Coates is not a young man anymore and his offspring have no apparent interest in taking over the club in their fathers absence it's slightly worrying to think about who possibly might be the person/s to take the wheel and for what end.

  • Comment number 6.

    "the Football Association's unwelcome response to the idea of the 39th game of foreign soil".


    Not just the FA.

    FIFA, politicians, foreign FA's, potential host cities and every right thinking fan is opposed to this obscene idea as well!

  • Comment number 7.

    Its sad really that clubs in the premiership being seen as community assets has long gone, as the very communities that have created and feed the club to their statures today have been slowly priced out to create these new 'revenue streams' which consist of yuppies and tourists to continue to buy the 'complusory cup tickets' and row of tat that excretes from the club shop.
    How can these people when suggesting football can expand with more investment see it as sustainable? When the pockets run dry (which they will) the big clubs that have shun the communities they once depended on may will get a big shock when they try crawling back. They must think we are all idiots.

  • Comment number 8.

    In response to 'anger_onthe_terraces', Lee Strafford at Wednesday has the community at the very heart of the club again. We have 'The Sheffield Children's Hospital Charity' emblazoned on our shirts, who have recieved donations from shirt sales, collections at the club and prize money when Wednesday won an award from Yorkshire Forward for the club's partnership with the hospital.
    Lee Strafford himself is an accessible chairman as well and listen's to the fans . Hillsborough stadium will be redeveloped into a community stadium with classrooms for use of local schools and the University of Sheffield. The club also has cheaper tickets and family tickets for those on low income and the unemployed.

    I'm afraid with bad management at Wednesday previously, we still do need investment to get back to the Premiership, but with Lee Strafford on board he wants the right investor who has the same community strategy and values. The community is a big part of Wednesday's future and rightly so.

  • Comment number 9.

    I am saddened by the overall commercialisation of football but it's no different to most other areas in society that should be public/community owned. Given the thirst of fans for success and the money it requires collectivley we can hardly start getting morally indignent at the thought the people who actually put their hands in their pocket and risk their necks and financial well being want a return! If we as supporters want to protect out clubs there's nothing stopping a supporter base raising the funds to take ownership of their own paticular clubs... the recent failure of the Liverpool FC supporters to raise the capital to buy their own club (as well as the attempt by Utd supporters to raise the capital to buy a blocking stake during the Glazer takeover) just highlights the hypocasy of fans and the antipathy when direct action is actually required. We complain vociferously and at length but at the end of the day do nothing to excersise our power as supporters (consumers) and actually take back our clubs. Why...because we want the money and are greedy for the success. Common sense would suggest the right thing to do would be what several leagues do in and mandate that the club 51% cannot be sold and as such the club will always ultimately be controlled by the fans.

  • Comment number 10.

    Wasn't it another American firm, Dornoch Capital, that decided that the best way to assist a takeover of Tranmere Rovers would be to stick it on ebay for £10m and see if anyone takes a punt? I don't mean to tar all such companies with the same brush, but it doesn't take much imagination to see why people are wary.

  • Comment number 11.

    In response to 'AltyOwl1867' of course I wasn’t painting every 'big' club with the same brush and there are clubs doing good things either within the community for charity or for the good of the game, one top flight club for example would be Burnley assisting Accy Stanley. Some of the things you mention there about what Wednesday are doing are exactly what all clubs should be doing in tough economic times for both punters and the clubs to get bums on seats. My comments were aimed at Man Utds compulsory purchase of cup games for season ticket holders and Leeds Utd charging £28 for visiting Stockport fans in league one.

    Bronco3114, there has been examples of fans purchasing majority stakes at clubs and running them into the ground. I take for example my club Stockport and how the fans lack of any real business noose and investment drove the club into administration, another example are Notts County where incessant in-fighting and bickering had an affect on the pitch performance until they were recently bought out. The trust run/fans run club is a dream for a lot of fans but there are very few clubs that make it work, in English football Exeter are the highest profile, and talking from experience being an ex-member of such a trust that ran my club, even then people don’t listen to you.
    I think in an ideal world every club should be run by a few local business men who are passionate about their clubs and have the necessary business skills and who liaise with the fans and have the councils backing and support. Fat chance of that happening.

  • Comment number 12.

    Finances in Football are a very complex issue. The trend of "foreign" owners only really tells half the story. There seems to be two kinds of owners at the moment. On the one hand you have people like the Glaziers who bought Manchester United by borrowing money and purchasing shares. After the share purchase they promptly put the debts on to the clubs books and the club pays the interest out of its operating cash flows. In the case of United this works at the moment because United generates enough cash flow to pay that interest and to pay its operating expenses.

    The other kind of transaction is that of Chelsea and Manchester City. Bought by super rich owners who then pump hundreds of millions of pounds into transfers and wages in an attempt to get the club a higher profile and increased revenues.

    The danger in these kinds of transactions is that the clubs are suddenly set up to live vastly beyond their means. Fans like to think that having super rich owners makes their club super rich. It doesn't. Companies can't simply "Give" other companies vast sums of money. The 150 million pounds spend at City, weather city fans lie to acknowledge it or not, is sat on Manchester City's books as debt. This debt increases every month as the owners subsidize the club so it can meet its wage and other financial obligations that are not covered by the turnover.

    That is fine as long as the super rich owners are prepared to sink millions of pounds into the club each month. But sooner or later there has to be an accounting. Manchester City went from a solvent club to one entirely dependent on hand outs from a rich owner. That, in the long run, is unsustainable.

    Foreign ownership if fine but ultimately any club needs to be self sustaining.

  • Comment number 13.

    'anger_onthe_terraces' totally agree with your comments about Man Utd and Leeds. Leeds is somewhat more daft, as they're a league one team and those ticket prices will put more fans off and reduce revenue surely? Man Utd has priced out hardcore fans now, a lot of my friends from Manchester are big Man Utd fans, but they can't justify paying for a season ticket, let alone the cup matches as well. Full of corporate types at Old trafford, who like to be 'seen'.

  • Comment number 14.

    As an American, cant see why youre not pleased for the investment? Moaning constantly and watching football in cow sheds is not the american way : you should be grateful for a country that constantly has to bail you guys out, brought you decent burgers and thousands of tv channels

  • Comment number 15.

    corporate customers bring a lot of much needed revenue into football, such as myself. It is not a cse of being seen, but of supporting your club and inviting others who may not have the chance to go. Corporate boxes are a way of attracting customers to your company who would otherwise think you were someone to be avoided

  • Comment number 16.

    'As an American, cant see why youre not pleased for the investment? Moaning constantly and watching football in cow sheds is not the american way : you should be grateful for a country that constantly has to bail you guys out, brought you decent burgers and thousands of tv channels'

    Please tell me your a wind up looking for a rise. Football is not and never has been a 'franchise' as you eloquently describe your sports teams. Standing on the terraces I imagine beats sitting courtside anyday of the week, you wouldnt understand the passion.

  • Comment number 17.

    What a sad state English football has become where it is seen that Americanising the game is the way forward, what do they hope to achieve? Hot dogs, nacho hats and idiots with letters scrawled on their chest to spell out a player’s name? Or as the beer advert had it with clubs moving all the time and changing names like in Rugby? It will kill lower league football, with kids wanting to see the Manchester steelbacks instead of their local club. This has been happening for years already, and is in a bad enough state already. I said it at the time if a game 39 ever came into the game it would be the death of the game as we know it....

    But what is the answer? Wage caps? Limits on what clubs are allowed to spend on players? I fear neither of these would be accepted, and to think people thought it was bad back when Tottenham floated on the stockmarket.... That may have been the catalyst for it but its got a whole lot worse since then!

  • Comment number 18.

    This interview was a good opportunity to pose some tricky questions about foreign ownership, but the blog has ended up as a press release.

    Surely phrases like the following:
    "It is an interesting social phenomenon," added Tilliss. "Foreigners showing up to own British clubs is pretty destabilising."


    "What US investors in particular are looking at is how to create a win-win experience," added Tilliss. "Of how to create a better matchday experience and grow revenue streams out of the supporter base. "They see people standing in long queues to pick up tickets or carrying one coupon book for the whole season"

    should have been challenged by you on the supporters' behalf?

  • Comment number 19.

    At least you have a competitive league. Even as a Rangers fan, I can see how the Old Firm is destroying Scottish football. Whenever one of the other SPL clubs have a promising player, they snap him up and then 9 times out of ten will spend the rest of his old firm career on the bench.

    Also, the youngsters up here only care about supporting Rangers & Celtic and have no interest in their local team. This can be seen by the fact that due to lack of funds many clubs are going part time due to lack of local interest.

    I am a die hard rangers fan but am a fan of Scottish football first and us such wish for the day that the Old Firm start playing down south. On that day, I will bin my season ticket and go my support my local team in Partick Thistle


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