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Americans banking on Derby

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Mihir Bose | 17:47 UK time, Monday, 28 January 2008

The Derby takeover is fascinating. The first question is why should five unnamed investors, three Americans, a Chinese and a Korean invest in a club doomed to relegation?

The answers to that question are complex and we first need to understand the deal. The details announced are sketchy but well-placed sources have told me fascinating facts which go a long way to explaining why Derby have been taken over.

The deal has been described as the £50m deal. Probe behind that headline figure and the reality is around £20m of that money is going to the existing directors. The new investors are also taking over the existing debt. This amounts to about £8m of working capital. There is also the 30-year mortgage on the stadium at Pride Park, around £15m (the stadium is valued at around £60m).

derby438_getty.jpg

I am told around £10m may be available for players. The investors have not been named and I am told others may join them. They have been put together by General Sports and Entertainment Group. They already manage sports franchises in the United States but they are attracted by Derby because it provides them for the first time with a global sports brand.

There is nothing in the world of sport that quite matches the Premier League in terms of pulling power and Derby, at least until May, are part of that brand.

Derby may well be doomed to relegation. They have seven points so far and may struggle to get to 30 points come May. But the club will definitely earn £30m from the Premier League TV deal. And while relegation would hurt, the next two seasons in the Championship would see Derby much richer than their rivals.

Derby will earn £11.5m a year in parachute payments, nearly five times as much as other clubs in that league. That money will give them more chance of bouncing back up.

Then there are the property aspects of the deal to consider. There is planning permission to develop Pride Plaza, the area around the
stadium
, an area of 120,000 square feet. And the training ground of 25 acres is situated in a prime residential area.

So given that the investors are paying £20m for the shares of Derby, this for them is a very good bargain in a franchise which they can see making them money. Yes the fans may hope that the team will benefit and the talk is that the investors will invest in players. But they will also want to develop Derby as a brand.

Yet more evidence that football these days, even at the very foot of the Premier League, is big and attractive business.

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