Most Football Club Owners see ownership not as the only motivation, there are many ancillary benefits too. Looking at the U.K. football clubs there is a long history of ownership by local buyers. Lately also foreign buyers show up and have gain a strong position in the Premier League.
In the past, English clubs had often owners that were local merchants, whose businesses would often have a connection with football or who made products that football supporters might buy. Liverpool Football Club, for example, was for many years owned by members of the Moores family, which had made its fortune from the Littlewoods football pools company. Manchester United, during its 132-year history, has been owned by a brewer, a clothing manufacturer and a butcher.
The purchase of Manchester United by the Glazer family, which already owned an American football team, the Tampa Bay Buccaneers was another kind of ownership. “The Glazers come from an NFL [National Football League, the highest level of American professional football, a quite different game to English football or “soccer”] background, but the one thing that they see that football has that the NFL doesn’t have is the potential for global growth,” says Prof. Szymanski.
And despite the recent takeover bid for Manchester United by a consortium of wealthy supporters known as the Red Knights led by Keith Harris, chairman of London-based investment bank Seymour Pierce, Prof. Szymanski reckons the Glazers are here to stay. “Their behavior at Tampa Bay shows that they are committed for the long term,” he says. “They bought a franchise on its knees, turned it around, won the Super Bowl and they appear to have no interest in offloading the team.”
Whether a club can, during the long run, turn a sustainable profit is a moot point. However, despite the fact that many clubs currently barely make a profit, while others lose money year-on-year, a few businessmen have been able to make a healthy return from their ownership of a club over time.
“The idea that these clubs are going to be yielding assets, as in paying a dividend every year, is not the way they work. But from a capital growth point of view they can make sense,” says Deloitte’s Mr. Jones. “To an extent, they are a rare asset, just like a fine art painting, classic car or a collection of fine wines. Their scarcity and desirability gives them intrinsic value for interested purchasers.”
Liverpool University’s Dr. Miller concurs. “For the most part, [football clubs] are seen as a trophy asset,” he says. “As long as a football club keeps performing on the pitch at the same level as when you bought it, then it will hold value and likely increase its value. It’s a long-term asset that you hope will appreciate.”
However, Dr. Miller also says that assuming a football club will always be an ever-appreciating asset can be dangerous. “Football clubs can also be a rapidly depreciating asset. Since Newcastle United moved down from the Premiership to the Championship, Mike Ashley, its owner, hasn’t been able to unload the club even at a vastly reduced price. That just shows the danger of being relegated.”
Buying a Championship club — the level below the Barclays Premier League — and going for promotion to the Premier League can also be a strategy for making money out of owning a football club, says Warwick University’s Prof. Grant. “But that club will need a good catchment area that has a fan base that can be expanded, a modern stadium and a team with potential,” he adds. He suggests Cardiff City Football Club may be a suitable candidate. “From the city of Cardiff you can go in all directions for quite some distance without encountering a rival club and you’ve got a big population [of potential supporters].”
An illustration of how high the risks of owning a football club, even one in the Barclays Premier League, can be has been demonstrated by Portsmouth FC, which entered the bankruptcy process in February.
“The central issue is that only a handful of Premier League clubs have ever consistently made a profit. The recession has exposed that,” says Sean Hamil, an expert on sports financing who lectures at the Department of Management, Birkbeck College, University of London.
“There might be a point where the revenues mature, the music stops and you haven’t got a chair to sit on, which seems to be the case at Portsmouth. This is one of the reasons why you have high-quality investors in football clubs like John Madejski [Reading FC] and Delia Smith [Norwich City FC] seeking to sell out. The current economic model of English football simply does not allow the vast majority of owners to even break even, never mind make a profit.”
Zolfo Cooper’s Mr. Wilson suggests English football could do with a period of stability. “It may not be a bad thing for everyone to take a step back and say let’s try and operate within our means for a while,” he says. “Unfortunately, football doesn’t like stability.”
Sources WSJ.com / Wikipedia / Forbes