Why do successful businessmen own football clubs?
For super rich businessmen, the desire to own an English club remains as strong as ever. by AtTheMatch
In the past, just as players were often local lads who once cheered on their teams from the terraces, so too owners were wealthy businessmen from the surrounding area. Owning a club was an ideal way for businessmen to cement their ties to a community, bask in the adulation of fans and promote products directly to supporters. Liverpool Football Club, for example, was for many years, owned by the Moores family. Their wealth emanated from the Littlewoods football pools company. Manchester United has been owned by a brewer, a clothing manufacturer and a butcher. How times have changed. Today, the Premier League is the playground for foreign owners to stake a claim in the richest league in the world. Businessmen may purchase an elite club for commercial reasons, but others are instead motivated by a desire to secure political advantage.
Profits or wins?
While many owners try to run football clubs in the same way as any other business, most struggle to generate profit. Queens Park Rangers chairman Tony Fernandes admitted as much in an interview with Simon Kuper and Stefan Szymanski, “I thought I could make it profitable definitely.” In a later interview he added, “I can control almost anything in AirAsia. You can do whatever you want in football, but it’s up to 11 guys on the pitch at the end of the day right?” Others have been guided by a ruthless determination to ensure profitability. Newcastle United owner Mike Ashley, who invested more than £200 million in the club and recently stood down from the board, oversaw the club’s £30 million profit for the last financial year. Yet Ashley remains a hated figure by Newcastle supporters who want the club to compete in the upper echelons of the league, end a stringent wage cap and invest in new players. The Glazer family bought Manchester United in 2006 in a leveraged buyout that loaded debt on to the club. The hope was that the club would become self-sufficient, allowing the owners to be in control of a multi-billion pound asset. Others, despite a commitment to long term investment, have rewarded themselves. Majority shareholder Stan Kroenke enjoyed a £3million dividend in 2014, a move which did not go down well with Arsenal supporters following a 3% season ticket price rise.
Some have have been guided by the heart rather than the head. When Simon Jordan took over the reins at Crystal Palace, his mobile phone business, the Pocket Phone Shop, which began with a £15,000 investment, was sold for £78 million. Jordan couldn’t resist the temptation to delve into the world of football despite warnings from friend and former Millwall owner Theo Paphitis. Jordan invested £10million into Crystal Palace. Yet 10 years later the south Londoners were placed into administration. In his autobiography, Jordan attributed the loss of half of his £75 million fortune to football. He told the Independent in 2012: "If you have ambition in football that's the dangerous thing because the ambition will drive you on to make decisions that commercially you might not make in any other business.”
Highly visible assets
Owning a sports team has been a trophy asset for many years – akin to possessing a rare painting. But owning a sports team also helps other business interests. When Fred Wilpon, a real-estate developer took over the New York Mets baseball team, he told New Yorker magazine: “No one had heard of us before we bought the Mets, and afterwards the change was dramatic... I don’t think someone has not returned one of my phone calls in 30 years. It’s a small club… people want to be near it.” It is a similar story in the world of football. Mike Ashley’s attachment to Newcastle United played an important part in increasing profits for Sports Direct. Ashley benefited from free advertising at St James’ Park - the stadium he even renamed the Sports Direct Arena for a period.
But there are more opaque motivations for owning a football club as the Premier League has become the battle ground between forces thousands of miles away from the physical location of stadiums. Top European clubs are no longer bought for straight forward commercial reasons and many owners have no desire to make football clubs profitable. Instead, football has been used as a vehicle for shrewd political manoeuvring. Deloitte found that seven of the 20 biggest clubs by revenue were sponsored by Middle Eastern airlines – including the likes of Barcelona, Manchester City and Arsenal. Many argue that investment by owners from Gulf states ultimately derives from government backed wealth funds. Seen in this context, football is a tool for wealthy nations to increase their global appeal, attract new investment and promote their global ambitions. The likes of Dubai, Bahrain and Qatar are all small oil rich nations who have utilised the power of the Premier League to stabilise their position in a volatile region. The life of a Russian oligarch can be vulnerable one. By tying himself to an English football club, a culturally significant and highly visible asset, Roman Abramovich, who has underwritten over £1billion of Chelsea’s debt, has secured further personal protection.
There have been distinct phases in club ownership - one which started as a way of cementing ties in a local community to furthering commercial interests. But as the costs of running a club have spiralled, the desire of wealthy individuals to attach themselves to icononic clubs has more to do with geopolitical intrigue and self-preservation than anything to do with the beautiful game.Click here to stay up to date with AtTheMatch