You
have sold some shares and you’ve got some money to spend. Now you want the
ultimate: Your own football club. Hold on there, are you sure? Football clubs
are a nightmare to run. In fact, almost two-thirds of premiership clubs have
been in receivership at some point. Remember Portsmouth FC ploughed through
four owners some seasons back and landed itself a debt of £60m and relegation
in the Championship. Think of Leeds United’s tragicomic collapse; the balls-up
at Cambridge United; Rotherham going into receivership in 2006 and 2008;
Southampton’s sorry saga. And, of course, Crawley Town getting a winding up
order years back. So, what do we know? Don’t buy a football club for the glory.
So, before Dangote aspires to join Abrahamovic, Glazers and Al Mansours, he
should make sure he knows his stuff.
But
does Dangote know how much these football clubs really cost?
does Dangote know how much these football clubs really cost?
It is
often mistaken that these clubs go for a quid. For instance, Swansea City was
bought by investors for £100, and sold four years later for a £1. But beware:
underneath those figures lies a pile of debt.
often mistaken that these clubs go for a quid. For instance, Swansea City was
bought by investors for £100, and sold four years later for a £1. But beware:
underneath those figures lies a pile of debt.
Does
Dangote have the cash, can he do an Abramovich?
Dangote have the cash, can he do an Abramovich?
No,
he can’t. New UEFA Club Licensing and Financial Fair Play Regulations already
in place, require clubs to balance their income and expenses. Dangote cannot
operate under such rules. The premiership is too organised and transparent for
any businessman to easily manipulate. The wage structure of footballers is too
large for a businessman like Dangote to take on. Let us forget that those goons
at Forbes have told us that Dangote is Africa’s richest man. As it stands, he
cannot afford the outright purchase of a big football club like Arsenal. It is
as simple as that. He will go broke. It is a possibility if we are talking
about a club in the coast of West Africa. Dangote has most of his wealth in
shares and physical assets and the football business requires liquid cash to
sustain. Have we all forgotten that the same Dangote got a 3G licence and sold
it to Etisalat? He is a very smart businessman who knows how to pick his areas
of investments.
he can’t. New UEFA Club Licensing and Financial Fair Play Regulations already
in place, require clubs to balance their income and expenses. Dangote cannot
operate under such rules. The premiership is too organised and transparent for
any businessman to easily manipulate. The wage structure of footballers is too
large for a businessman like Dangote to take on. Let us forget that those goons
at Forbes have told us that Dangote is Africa’s richest man. As it stands, he
cannot afford the outright purchase of a big football club like Arsenal. It is
as simple as that. He will go broke. It is a possibility if we are talking
about a club in the coast of West Africa. Dangote has most of his wealth in
shares and physical assets and the football business requires liquid cash to
sustain. Have we all forgotten that the same Dangote got a 3G licence and sold
it to Etisalat? He is a very smart businessman who knows how to pick his areas
of investments.
Can
he get Bank backing?
he get Bank backing?
Unlikely!
No serious private equity firm would get involved with a football club. They
are not proper businesses. Too much politics, too many egos. And there’s no
proper exit route – the history of football clubs on the stock market is
chequered, to say the least. They are rich men’s toys, great for entertaining
your mates, and that’s about it. I don’t think Dangote can afford such an
expensive toy.
No serious private equity firm would get involved with a football club. They
are not proper businesses. Too much politics, too many egos. And there’s no
proper exit route – the history of football clubs on the stock market is
chequered, to say the least. They are rich men’s toys, great for entertaining
your mates, and that’s about it. I don’t think Dangote can afford such an
expensive toy.
A lot
of people think it is relatively easy to make a million pounds by being the
owner of a football club. That all you have to do is put in that first two
million pounds. But these people should also know that since the English
Premier League was formed in 1992, football finances have dried up to the
extent that making a million pound profit is no longer a walk in the park. It
is also the case that buying a football club is unlikely to yield that much of
a return. Despite the significant TV and other commercial revenues, football
clubs in England’s top flight still struggle to break even. This is ironic,
given the goal of setting up the Premier League was to stabilise club finances.
of people think it is relatively easy to make a million pounds by being the
owner of a football club. That all you have to do is put in that first two
million pounds. But these people should also know that since the English
Premier League was formed in 1992, football finances have dried up to the
extent that making a million pound profit is no longer a walk in the park. It
is also the case that buying a football club is unlikely to yield that much of
a return. Despite the significant TV and other commercial revenues, football
clubs in England’s top flight still struggle to break even. This is ironic,
given the goal of setting up the Premier League was to stabilise club finances.
Is
Dangote putting his heart over his head?
Dangote putting his heart over his head?
Yes I
think so. Simon Jordan, in his autobiography, tells the story of how owning a
football club can go terribly wrong. Jordan amassed a fortune of £75m in the
early days of the mobile phone revolution. In 2000, he paid £10m to take
control of South London football team Crystal Palace, becoming the youngest
football club chairman at the age of 32. He was warned by many not to do it,
but having watched the club since his childhood, he could not resist.
Fast-forward 10 years and the club was in administration and Jordan’s personal
wealth largely wiped out. It is reported that Roman Abramovich, the Russian
owner of Chelsea, has written off more than one billion pounds he ploughed into
the club since acquiring it in 2003. Catching him up fast is Sheikh Mansour
from Abu Dhabi, who has invested close to one billion pounds in Manchester City
since 2008. Can Dangote write off such a huge amount of money? It is in fact
the amount of money he borrows to invest in businesses. But again, I think
Dangote is just trying to hype himself. Most of the serious money flowing into
football recently has come from the Middle East. The Qatar Investment Authority
(the country’s sovereign wealth fund) bought the French Ligue 1 side Paris St
Germain in 2011 and has gone about transforming them in the same way Sheikh
Mansour has Manchester City. Forget those guys at Forbes, Dangote is not in the
same league as these guys.
think so. Simon Jordan, in his autobiography, tells the story of how owning a
football club can go terribly wrong. Jordan amassed a fortune of £75m in the
early days of the mobile phone revolution. In 2000, he paid £10m to take
control of South London football team Crystal Palace, becoming the youngest
football club chairman at the age of 32. He was warned by many not to do it,
but having watched the club since his childhood, he could not resist.
Fast-forward 10 years and the club was in administration and Jordan’s personal
wealth largely wiped out. It is reported that Roman Abramovich, the Russian
owner of Chelsea, has written off more than one billion pounds he ploughed into
the club since acquiring it in 2003. Catching him up fast is Sheikh Mansour
from Abu Dhabi, who has invested close to one billion pounds in Manchester City
since 2008. Can Dangote write off such a huge amount of money? It is in fact
the amount of money he borrows to invest in businesses. But again, I think
Dangote is just trying to hype himself. Most of the serious money flowing into
football recently has come from the Middle East. The Qatar Investment Authority
(the country’s sovereign wealth fund) bought the French Ligue 1 side Paris St
Germain in 2011 and has gone about transforming them in the same way Sheikh
Mansour has Manchester City. Forget those guys at Forbes, Dangote is not in the
same league as these guys.
The
Glazer Family bought Manchester United in 2006, recognising the immense value
of its global brand as a cash generator and the opportunities to enhance it
even further. The cost of buying the club was loaded on to the club itself,
with the revenues it generates used to pay the debt and interest that the
Glazers undertook to buy the club. Eventually, the hope is that the club will
essentially pay for itself leaving its American owners in possession of a
multi-billion pound asset but till date, the Glazers are still gnashing their
teeth and are still neck deep in debt. When it was speculated that a Middle
East consortium was willing to pay £1.5bn for Arsenal Football Club, it was
stated that Stan Kroenke, the American who owns about 63 per cent of the shares
in the club, would have made just £400m on his shares. So, given the appalling
financial returns, why do people buy football clubs?
Glazer Family bought Manchester United in 2006, recognising the immense value
of its global brand as a cash generator and the opportunities to enhance it
even further. The cost of buying the club was loaded on to the club itself,
with the revenues it generates used to pay the debt and interest that the
Glazers undertook to buy the club. Eventually, the hope is that the club will
essentially pay for itself leaving its American owners in possession of a
multi-billion pound asset but till date, the Glazers are still gnashing their
teeth and are still neck deep in debt. When it was speculated that a Middle
East consortium was willing to pay £1.5bn for Arsenal Football Club, it was
stated that Stan Kroenke, the American who owns about 63 per cent of the shares
in the club, would have made just £400m on his shares. So, given the appalling
financial returns, why do people buy football clubs?
Who
can buy Arsenal football club?
can buy Arsenal football club?
Anyone
can buy Arsenal football club, but that anyone doesn’t include anyone who
obtains bank loans to fund a business. Sir John Madejski, chairman of Reading
Football Club, describes the ideal football club owner as having deep pockets,
mercurial, and not faint-hearted.
can buy Arsenal football club, but that anyone doesn’t include anyone who
obtains bank loans to fund a business. Sir John Madejski, chairman of Reading
Football Club, describes the ideal football club owner as having deep pockets,
mercurial, and not faint-hearted.
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