2 good articles from the Observer this weekend on EPL clubs selling out to overseas investors:
The big sell out
With nine top-flight clubs under foreign ownership - and more set to follow - what is our national game in danger of losing, asks Tom Bower.
The Observer
July 29, 2007 6:09 PM
No other country allows the crown jewels of their major sport to become the uncontrolled playthings of investors whose backgrounds remain untested. The Football Associationâs failure to investigate properly the background of the foreign nationals buying top clubs or their growing influence on the sport heralds the end of the Premier League as an English institution. Persuaded that footballâs only hope of survival is spending unlimited millions of pounds, the gameâs administrators have swallowed the myth that the Premier League can flourish only by unquestioningly allowing a wholesale takeover by foreign investors. The silence and self-inflicted paralysis in Soho Square is endangering the whole of English football.
The rot started when Roman Abramovich, the Russian oligarch, was allowed to buy Chelsea in 2003, despite the controversial origins of his fortune. Many Chelsea fans believed that Abramovichâs billions would not have any negative effects on football in England. Standing on the sidelines, the FA and even the government, with powers to scrutinise any directors seeking to control a public company, allowed Chelsea to become an oligarchâs toy without heeding the warnings that, while Abramovichâs love of football seemed genuine, his money would destabilise the Premier League. The predictions were accurate.
Four years later, the billionaireâs investment looks shrewd. Having paid 150m for Chelsea, Abramovich could now resell the club for at least 500m. Over the next two years, the majority of Premier League clubs are destined to be owned by foreigners. Premier League football will not be played for English fans, but for one billion paying spectators on global television. Financially that might be rewarding for rich investors and for the players themselves, but the benefit for fans and for the national team is questionable. The English game, some believe, is facing a fatal blowback.
Richard Scudamore, the gung-ho chief executive of the Premier League, has welcomed foreign takeovers as âirresistibleâ. Their millions, he predicted some years ago, would enhance the game. Thanks to foreign players and foreign money, the Premier League has certainly become the worldâs wealthiest, most watched and admired national competition. But Scudamore now risks being devoured by his new paymasters and the consequences for English football could be catastrophic.
Over recent weeks, some of the nine foreign owners of Premier League clubs have been quietly discussing Scudamoreâs dismissal and his replacement by a non-British executive. Their motives are financial. Having spent millions to buy the clubs and many more millions on foreign players, they are impatient about inadequate profits. Scudamore, they complain, is an amateur compared to his American peers. âOnly the Americans know how to really market the Premier League brand,â says a football agent close to the foreign owners. âTheyâve got Scudamore with his unsophisticated âThird Worldâ mentality. A proper marketing expert could earn millions more from the most exciting sporting fixture in the world.â To maximise the profits, the foreign investors argue, the Premier League should be rebranded and marketed like Coca-Cola.
In his defence, Scudamore can parade the high fees being paid by Asian television companies for the rights to show Premier League matches. In Hong Kong, the host broadcasters have just paid $200m (100m) to screen the next three seasonsâ matches, which amounts to about $10 spent per match for each viewer. In Singapore, the TV rights were sold for $160m over the same period. The biggest area of potential growth is China, which has paid $50m but is identified as a future bonanza. Those deals will contribute 625m to the Premier League over the next three years. And thatâs the rub. While Scudamore practically doubled the leagueâs income over the previous contract, the new foreign owners want more. The recent tours by Chelsea, Liverpool and Manchester United to America and the Far East and South Africa are as much about long-term marketing as generating immediate income.
Scudamoreâs successor is likely to be an American without any interest in the 37,500 English clubs affiliated to the Football Association, or the Premier League clubsâ commitment to the England team. The Premier Leagueâs relationship with the FA, already frail as a result of Scudamoreâs disdain, would be further jeopardised. With at least four more Premier League clubs, including Everton, Arsenal and Fulham (owned by the would-be Brit Mohamed al-Fayed) expected to be sold over the next year or so, the balance of power is inexorably tilting in the foreignersâ favour.
No alternative scenario seems feasible. To remain in the Premier League with a chance of qualifying for the lucrative Champions League requires tens of millions of pounds to buy new players. Liverpool, for instance, have just signed the young Spain striker Fernando Torres for an improbable 26m, a club record. One of Liverpoolâs main rivals, Arsenal, have in recent seasons begun to struggle because much of the clubâs money was spent on a new stadium, the 60,000-capacity Emirates, rather than players. Depressingly, none of the clubâs potential buyers is English. That is consistent with the absence of any Englishmen offering to buy West Ham, Aston Villa or Portsmouth. Even Liverpool were never destined to be bought by a wealthy local fan. The English are cashing in their national sport to earn fast money. Greed is not the only reason. No Englishman, it seems, has the vision and ability to secure an adequate profit from Premier League football as an owner.
Daniel Levy, chief executive of Tottenham, would accept, it appears, an offer at 200m for the club (his company ENIC bought an initial 29.9 per cent share in Spurs in 2000 for 22m and now owns 66 per cent), while Danny Fiszman, one of Arsenalâs major shareholders, would agree to sell his shares if the club were bought for 400m, plus 300m of debt. There is no shortage of bidders for Arsenal. Boris Berezovsky, the fugitive Russian oligarch, unsuccessfully negotiated to buy the club and, like other oligarchs, oil sheikhs and Asian magnates, is still hunting for his prize. Their reasons are obvious: the international status of owning a Premier League club far outshines possession of aluminium plants and oil wells. Their motives are little different from generations of British owners. Sitting in the directorsâ box, surrounded by thousands of screaming fans, and looking down at âyourâ team does wonders for the ego. Does it matter if Doug Ellis at Aston Villa sells out to an American or Terry Brown at West Ham is replaced by an Icelandic biscuit tycoon? Certainly, few would see little reason to cry that Ken Bates, previous owner of Chelsea, has been swapped for Abramovich.
Pini Zahavi, the Israeli agent responsible for brokering Abramovichâs purchase of Chelsea, Alexandre Gaydamakâs takeover of Portsmouth, and Kia Joorabchianâs failed bid for West Ham, epitomises the unsentimental predator. âWhatâs the problem?â he asks rhetorically. âBritain has sold its banks, its gas, electricity and water supply companies and even its airports to foreign companies.â Laughing, he adds: âNinety per cent of Mayfair is foreign owned and sometimes all of Arsenalâs team is foreign, so why not the football clubs? Honestly, I canât understand what difference it makes.â
The difference is that football is not a utility or a bank, but part of the fabric of England, uniting so much of the nation in frenzy and depression during international competitions such as the World Cup. That communal glorification is already threatened by the rising costs of watching Premier League matches. With the exception of the top-six clubs, spectators are increasingly deterred from watching less glamorous matches from the stands because of excessive ticket prices and the amount of football shown on television. More insidious is the growing habit by the managers of the star clubs to ârestâ their best players in matches against their inferior rivals and in cup matches. That disappoints the fans, is a step towards potential match-fixing and hastens the introduction of a European super league, a poisonous scheme for English football.
The only possible block to a complete foreign takeover of the game at the highest level would be the Football Association. Notorious for freebies and fiefdoms, the FAâs executives and members are stubbornly loath to reform themselves. Ineffective to prevent corruption by agents, remove conflicts of interest among club owners (such as Chelseaâs flagrant disregard for protocol when they tapped up Arsenalâs Ashley Cole in January 2005) and control the spiralling prices and wages for players, they have meekly accepted their impotence at the power of the Premier League. Outwitted first by Scudamore and now by the foreign owners, the FA are powerless to persuade footballâs new tycoons to develop and sustain the sport at a local level.
In those circumstances, English football could be said to be fortunate that foreigners have come to the rescue. Sky - owned by a naturalised American - and the major clubs owned by foreigners have invested enough money to save English football from its mounting debts. The downside is that the foreigners understandably appear only interested in personal wealth and glory. None is genuinely interested in investing in British youth or re-establishing closer relations between the clubs and the fans, or encouraging footballâs grassroots in order to strengthen the national game. According to former West Ham chairman Terry Brown, who was replaced at the East End club when an Icelandic consortium bought them for 85m, his successor, Eggert Magnusson, has made little effort to retain the clubâs relationship with local charities and council officials. (When contacted, West Ham said they would shortly be announcing âtwo initiativesâ with local charities.)
So far, foreign players and managers have been tolerated because the game remained under English control. The first foreign takeovers were seen as eccentric but not threatening. That will change if Americans, Russians, Arabs and the odd shady Thai politician execute a wholesale takeover.
Not only would the game lose its English identity but, more important, the FAâs benign influence would be further eroded. Impotent against the foreign investors, the FA would find it increasingly hard to organise and train the England team and adequately police the rules about the registration of players and financial probity. As the divorce between the FA and Premier League solidified, loyal fans could well become disenchanted by the internationalisation of their clubs. The blowback for the investors would be empty seats in the stadiums reflecting the fansâ anger that their passion had become a plaything for remote speculators.
Tom Bower is the author of Broken Dreams: Vanity, Greed and the Souring of British Football (Simon & Schuster)