Monday, March 01, 2010
Industrial Sabotage at Manchester United?
When I first saw remarks like those I'm about to quote, I let it pass with an oblique comment (in the Portsmouth post from last week). But industrial sabotage -- driving down the price of a company in order to take it over more cheaply -- is a crime, is it not? If so, why would anyone connected with a takeover bid make the claims that a Mr. Keith Harris has allegedly made to Sky Sports News?
Update: Here's a story from the BBC where you can view and listen to Mr. Harris speak on the subject.
Representatives from law firm Freshfields and investment bank Goldman Sachs, among others, are understood to have been involved in the secret meeting.People, do the world a service and educate me! This stuff can't be credible, can it?
Informally known as 'the Red Knights', the group held talks regarding a potential offer to buy out the Glazer family, who are unpopular with United fans.
...Keith Harris, who has been involved with the group considering a potential takeover, recently called on supporters to start boycotting matches in an attempt to force the Glazers' hand.
Harris said last week: "Turning up to games 10 minutes late and things like that just doesn't do the job.
"The green and gold protest is fabulous, a symbolic and significant message to the owners. It is like the white handkerchiefs in Spain. But that won't force the Glazers to sell to us.
"However, if enough people - and I am talking about thousands - stop turning up to matches and do not renew their tickets, then that does it. The supporters have to hurt the Glazers in their pockets.
..." would not talk about this if I didn't have full confidence in our ability to raise the money to do this. I never talk publicly unless I have confidence. Getting the money together is the easy bit.
"But we can't make an offer until the Glazers are placed in a position where they are forced to consider it."
Update: Here's a story from the BBC where you can view and listen to Mr. Harris speak on the subject.
Labels: english football, franchise values, Holy Toledo
Wednesday, February 24, 2010
Decline of Portsmouth... and the English PL
News reports in England imply that Portsmouth Football Club of the English Premier League, perhaps the richest league in world soccer, is within days of bankruptcy. Like an LA condo in 2008, Portsmouth is now operating under its fourth owner this season! This suggests to me that some soccer-owner-wannabes were a bit slow to catch on to the fact that the incredible decades-long growth in the value of sports franchises was destined to stall in the “Great Recession.”
Of course, this is not the first instance of financial trouble for a team in England’s top flight. Leeds United, a club that’s been champion of England three times, imploded both financially and on the pitch in the past decade. Leeds entered the equivalent of American bankruptcy in 2007 and has fallen into the third tier of English soccer. West Ham United, along with other London clubs that have had a periodic taste of the top, such as Crystal Palace and Queens Park Rangers, have faced financial jeopardy in the past year.
As is the case with homeowners, banks, and auto manufacturers, voices have recently been raised in England to “save the clubs from themselves,” if you will. Or alternatively, and inconsistently, to save the clubs from the foreigners, especially the Americans. There has been no American involvement in Leeds or Portsmouth as far as I know, although prominent American investments in top clubs like Arsenal, Liverpool, and Manchester United have brought forth various levels of vitriol from different varieties of English activists. The irony in this activism is that American ownership in English football increases the likelihood that player wages – the key expense which brings ambitious “climbing” clubs to their knees – will be restrained through league agreement. David Conn’s piece in today’s Guardian makes this latter point, and discusses a UEFA initiative to restrain player wage expenses.
A move to bring in some sort of a salary cap would likely find key allies, again ironically, in unusual quarters of the British polity. For example, a restraint on wages tied to club revenue has been advocated by Arsenal’s manager, Arsene Wenger, who fields a team in North London typically bereft of English players. His apotheosis in that regard, the English Football Association, would welcome the effects of a salary cap because it would limit the imports of foreign players and increase the number of Englishmen on the pitch.
In the case of Portsmouth, I suspect that their supporters would welcome just about any owner with the cash to return them to the EPL as soon as possible (they are surely doomed to relegation this year, regardless of who owns the club). As for Manchester United, there is more than one option which appeals to different segments of their supporters. First, a debt-free, free-spending billionaire to come upon the scene, who is willing to buy out the Glazers and spend oodles of money to combat the like of the Russian-financed Chelsea and the recent upstart, the Arab-financed Manchester City. In short, the sugar daddy that English fans pine for, from Wolverhampton to Notts County. Now, it must be said that while such a sugar daddy (a la G. Steinbrenner) might appeal to Man Utd fans, his appearance would surely appall almost everybody else. But regardless, when one takes the view of the league as a whole, this is fancy. How many people are there in the world who are willing to spend a billion plus pounds on a soccer club, in the interest of pure sport? Ultimately, Manchester United is a commercial enterprise, a fate that its sporting success and worldwide appeal has brought upon it.
Less controversial would be an English takeover which reduced the club’s debt/equity ratio. But again, this issue is poppycock. Basic economics implies that ownership will improve the club when it makes sense, regardless of how much debt the club has on its books. Man Utd’s debt had little or nothing to do with the transfer of Ronaldo, who was destined for Real Madrid regardless of who owned the club. Moreover, Wayne Rooney is still on board, and the purchase of Berbatov for 30 million pounds looks if anything, to be extravagant. Now, some people in finance may be exploiting the current imbroglio to lower the asking price for Manchester United, but I doubt that the Glazers are intimidated by this tactic (in the U.S. the Glazers might consider a lawsuit).
Back to the issue of Portsmouth and bankruptcy. Bankruptcy will dock 910 points from Portsmouth and ensure their relegation beyond all doubt. Portsmouth could easily end up where Leeds United is, toiling about the bottom tiers of the Football League. But were they wrong to reach for the stars by buying the best players they thought they could afford? I’m willing to let the league table -- and their FA Cup trophy from 2008 -- pass judgment. As much as I want Arsenal to triumph over the new money of Chelsea and Manchester City, and as much as I’d like to see the likes of Portsmouth and Wolverhampton spared from the trap door of relegation, there is something ultimately appealing about the no-holds-barred competition of the English Premier League. Long may it reign.
Of course, this is not the first instance of financial trouble for a team in England’s top flight. Leeds United, a club that’s been champion of England three times, imploded both financially and on the pitch in the past decade. Leeds entered the equivalent of American bankruptcy in 2007 and has fallen into the third tier of English soccer. West Ham United, along with other London clubs that have had a periodic taste of the top, such as Crystal Palace and Queens Park Rangers, have faced financial jeopardy in the past year.
As is the case with homeowners, banks, and auto manufacturers, voices have recently been raised in England to “save the clubs from themselves,” if you will. Or alternatively, and inconsistently, to save the clubs from the foreigners, especially the Americans. There has been no American involvement in Leeds or Portsmouth as far as I know, although prominent American investments in top clubs like Arsenal, Liverpool, and Manchester United have brought forth various levels of vitriol from different varieties of English activists. The irony in this activism is that American ownership in English football increases the likelihood that player wages – the key expense which brings ambitious “climbing” clubs to their knees – will be restrained through league agreement. David Conn’s piece in today’s Guardian makes this latter point, and discusses a UEFA initiative to restrain player wage expenses.
A move to bring in some sort of a salary cap would likely find key allies, again ironically, in unusual quarters of the British polity. For example, a restraint on wages tied to club revenue has been advocated by Arsenal’s manager, Arsene Wenger, who fields a team in North London typically bereft of English players. His apotheosis in that regard, the English Football Association, would welcome the effects of a salary cap because it would limit the imports of foreign players and increase the number of Englishmen on the pitch.
In the case of Portsmouth, I suspect that their supporters would welcome just about any owner with the cash to return them to the EPL as soon as possible (they are surely doomed to relegation this year, regardless of who owns the club). As for Manchester United, there is more than one option which appeals to different segments of their supporters. First, a debt-free, free-spending billionaire to come upon the scene, who is willing to buy out the Glazers and spend oodles of money to combat the like of the Russian-financed Chelsea and the recent upstart, the Arab-financed Manchester City. In short, the sugar daddy that English fans pine for, from Wolverhampton to Notts County. Now, it must be said that while such a sugar daddy (a la G. Steinbrenner) might appeal to Man Utd fans, his appearance would surely appall almost everybody else. But regardless, when one takes the view of the league as a whole, this is fancy. How many people are there in the world who are willing to spend a billion plus pounds on a soccer club, in the interest of pure sport? Ultimately, Manchester United is a commercial enterprise, a fate that its sporting success and worldwide appeal has brought upon it.
Less controversial would be an English takeover which reduced the club’s debt/equity ratio. But again, this issue is poppycock. Basic economics implies that ownership will improve the club when it makes sense, regardless of how much debt the club has on its books. Man Utd’s debt had little or nothing to do with the transfer of Ronaldo, who was destined for Real Madrid regardless of who owned the club. Moreover, Wayne Rooney is still on board, and the purchase of Berbatov for 30 million pounds looks if anything, to be extravagant. Now, some people in finance may be exploiting the current imbroglio to lower the asking price for Manchester United, but I doubt that the Glazers are intimidated by this tactic (in the U.S. the Glazers might consider a lawsuit).
Back to the issue of Portsmouth and bankruptcy. Bankruptcy will dock 9
Labels: english football, league structure, soccer
Saturday, July 18, 2009
Premier League "Domination" at Risk
During the last two years, the EPL has produced three of the four semi-finalists in the Champions League, a fact that has lead UEFA chief Michel Platini to consider changing qualification rules in order to re-balance the competition. Well, it looks like economic policy may do the job for him. Britain is about to hike its top income tax rate to 50%, and the pound has lost ground to the Euro. In contrast, Spain taxes foreign players at 24%. Obviously, this gives teams in La Liga a big edge in the transfer market. Could it be that Real Madrid have been "bidding against themselves" as they collect their transfer trophies?
See this story in The Guardian -- Tax burden will end Premier League's domination -- for a discussion of the tax hike's implications.
Thanks to Andrew Siegler for the link, who sees the positives in this for the English game: "I actually think this will be a good thing for English football, incentivizing English players to move abroad and learn how to play less like headless chickens." Yeow!
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Question for students: The Guardian's story states the follwing: "According to agents, most marquee signings will simply demand that clubs make up the difference so that the players receive the same net wage. In other cases, where clubs refuse to make up the difference, players are increasingly likely to opt for Spain or elsewhere in order to relieve their tax burden." What sorts of players will be successful in "preserving" their net wage, and what sorts will move abroad?
See this story in The Guardian -- Tax burden will end Premier League's domination -- for a discussion of the tax hike's implications.
Thanks to Andrew Siegler for the link, who sees the positives in this for the English game: "I actually think this will be a good thing for English football, incentivizing English players to move abroad and learn how to play less like headless chickens." Yeow!
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Question for students: The Guardian's story states the follwing: "According to agents, most marquee signings will simply demand that clubs make up the difference so that the players receive the same net wage. In other cases, where clubs refuse to make up the difference, players are increasingly likely to opt for Spain or elsewhere in order to relieve their tax burden." What sorts of players will be successful in "preserving" their net wage, and what sorts will move abroad?
Labels: english football, labor markets, soccer
Tuesday, May 22, 2007
Not a great investment
I'm speaking of Wolverhampton Wanderers, a football club that was in the old first division when I first set foot in England in 1973. I've kept track of them off and on ever since. A good friend - a former Clemson soccer player and Econ alumnus - comes from Wolverhampton, which makes their recent lack of success somehow more rueful for me. But back to the point - the investment. Here's the condensed story of Sir Jack Hayward, former owner of Wolverhampton Wanderers.
Hayward, 83, who used to crawl under the turnstiles at Molineux to watch the team as a boy, bought the club 17 years ago for £2.1 m from Gallagher Estates, and spent around £50m in the first 10 years in unsuccessful attempts to take Wolves back to the old First Division, and latterly the Premiership.I haven't seen the books of Wolves, but an English soccer club, particularly when operated by a benefactor such as Sir Jack, is a break even business at best. And so, after (at least) £52m of investment since 1984, Sir Jack is turning the club over to a fellow named Morgan, from Liverpool. For £10. Football can be a cruel game.
Four years ago he retired as chairman, handing over to elder son Rick, and taking the title of life president, which he will retain. He promised he would stand aside if the right person came along, and a number of potential suitors showed interest, including Milan Mandaric, before he took over at Leicester, and a consortium led by Graeme Souness. All were rejected until yesterday's news from Wolves that Hayward had taken the "unprecedented step of 'gifting' the shares" to Carden Leisure Ltd, who are controlled by Morgan.
Labels: english football, finance
