Saturday, November 25, 2006

Financial Controlling of Soccer

Soccer Premier League : Ultimate Toy for Rich Boys

English Premier League clubs are being bought by overseas investors because they offer potentially huge returns thanks to their large regular incomes, lucrative television revenues and international brand values.

Despite FIFA president Sepp Blatter saying this week that the biggest threat facing the game was foreign investors wanting football to serve them instead of them serving the game, English clubs continue to prove attractive to men with large sums to spend.

West Ham United became the sixth Premier League club to be acquired by overseas interests this week with Icelandic Eggert Magnusson, 59, a member of UEFA's Executive Committee, leading a consortium backed by billionaire compatriot Bjorgolfur Gudmundsson.They have paid 161.5 million dollar to acquire the club whose major, but sporadic, successes since they were formed in 1900 have come in cup competitions.

West Ham have never been champions of England but famously did provide three players -- Bobby Moore, Geoff Hurst and Martin Peters -- to the England side that won the World Cup in 1966.Whether West Ham will ever be able to challenge the likes of Manchester United, Liverpool, Arsenal or Chelsea and establish themselves as serious contenders for major honours is open to doubt but there is no questioning the potential of the club whose home at Upton Park in east London holds 35,000.That capacity could double if they were to move into the Olympic Stadium after the 2012 London Games.

BOYS' TOYS Analyst Bill Gerrard of Leeds University Business School says that a club's past history does not really have a bearing on its future potential for a big-money investor.''The English Premiership is the top domestic football league in the world,'' he said.''It's got the best international coaches and players. It attracts an international audience and is the ultimate toy for the very rich boy.''

Analyst Alan Switzer of Deloitte & Touche said the financial and promotional lure of the Premier League could not be ignored.''The top 20 Premiership clubs generated combined revenue of 2.59 billion dollar in 2004-05, with its nearest rival the Italian Serie A at 1.73 billion dollar,'' he told Reuters.''English clubs benefit from modern stadiums with extensive corporate facilities hence higher ticket prices than elsewhere in Europe. The clubs are very successful at extracting value from their stadia.''

The trend of non-British businessmen buying English football clubs started when Egyptian businessman, and owner of top London department store Harrods, Mohamed Al Fayed bought Fulham FC in 1997 for 49 million dollar. In 2003 Russian billionaire Roman Abramovich bought Chelsea for 99.50 million dollar.Texan oil billionaire Martin Glazer paid 1.41 billion dollar to acquire Manchester United in 2004, while Aston Villa's new owner is another American tycoon, Randy Lerner, who bought the club for 119 million dollar.Russian-French businessman Alexandre Gaydamak bought Portsmouth in 2006 for 58.46 million dollar from its former owner and another overseas investor, Milan Mandaric.

BUSINESS SIDE The number may rise as Liverpool, previously approached by ex-Thai Prime Minister and telecommunications tycoon Thaksin Shinawatra, continues takeover talks with American entrepreneur George Gillett.Of Europe's top five soccer-playing nations, German clubs had the largest average league match attendance last season at 40,800 per game.England were second with an average of 33,800 followed by Spain, 28,500, France, 21,700 and Italy, 21,500.

However, English clubs generate the highest television revenues at an estimated 1.08 billion dollar per season from 2007-08.''Premiership club brands benefit from their great exposure,'' Switzer said.''The global appeal of the Premiership is illustrated by the expected 50 per cent increase in overseas TV rights for the new deals from 2007-08.'' English clubs are also more accessible to foreign businessmen than their European counterparts because a number of them are publicly-owned companies listed on the Stock Exchange.

''The largest Spanish clubs are owned by their members which makes them more difficult to take over than the listed clubs.Some Italian clubs are listed but others are held by powerful Italian figures or companies who to date have not wished to sell,'' Switzer added.The trend has been welcomed by Premier League spokesman Dan Johnson who said that although clubs were not run on a break-even basis and businessmen risked losing millions, owners ultimately wanted returns on their team's performances.

(Thanks to REUTERS)

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