Fields of dreams: Where billionaires pay to play

For many years, English football clubs have attracted millions of fans to the hallowed shrines of soccer. In the last few years, however, the packed stadiums and legions of worldwide fans, have drawn the attention of wealthy investors and foreign billionaires who want a piece of the action - on and off the field.

Since the beginning of the millennium, oil tycoons, media and business magnates have been buying renowned English football clubs, members of the elite leagues in the world.

Today, out of the 20 clubs in the top-flight English Premier League, nine are either wholly- or partly-controlled by non-British entrepreneurs with deep pockets and a penchant for the game - along with a shrewd business sense. And that number is expected to rise soon amid reports of ongoing negotiations to sell more football clubs to foreign investors.

In the past several weeks, for example, Dubai International Capital group has been associated and subsequently denied reports of talking to owners from Liverpool FC, while the owner of Newcastle United visited the UAE to hawk his club to potential buyers.

Manchester City was taken over by Abu Dhabi United Group in early September for a price believed to be in excess of Dh650 million.

Motives

While the buyers' motives might vary, they all share the same goals: more social exposure; huge profits and high financial returns. In essence, it's big business offering big returns for big egos.

"There is also an element of the billionaires' club - like collecting fine art or giant yachts," Raoul Simons, sports editor at the Evening Standard newspaper said from London. "It's increasingly a sign of prestige to own a Premier League Football club."

And the draw?

"Of course, there is the added benefit that if you own a sought-after premier league brand, you may be able to sell it in future at a profit to another billionaire who wants to join the exclusive club," Simons told Gulf News.

Kuwaiti economist Ali Al Nemash agrees.

"It is more of international social presence than an economic issue," he said. "And prestige comes from popular places."

Once they purchase a club, they're buying the loyalty, cheers and recognition of tens of thousands of adoring football fans from around the world. And that's from day one - regardless of the club's performance on the pitch, Al Nemash said.

But a poor record on the field can quickly sour fickle fans' love affair with their wealthy owner, as is the case in Newcastle, with owner Mike Ashley afraid to take his family to St. James Park for fear of their safety.

Why then, the allure of a game that had been tarnished by drunken yobs, rioting fans, and football violence over the past decade?

Simply because, many super-rich investors look at football clubs as a business venture, an opportunity to make money as the game grows in popularity around the world.

The Premier League had combined revenues in the 2007-'08 season of Dh12.5 billion. The bulk of that money comes from the sale of television-viewing rights, stadium receipts and ticket sales, and from the worldwide sale of branded merchandise.

The Premier League is ahead of any other soccer league in the world, sports-finance analysts say. Even then its revenues are still behind those of the National Football League, the National Basketball Association and Major League Baseball in the United States and Canada.

NFL's annual returns are estimated at Dh23 billion in the 2007-'08 season, and baseball's Dh21.3 billion.

According to Forbes magazine's annual ranking of NFL franchises, the Dallas Cowboy's are worth almost Dh6 billion, the Washington Red Skins worth Dh5.8 billion, and the New England Patriots worth Dh4.9 billion. The magazine also found that for the first time in any sport, team values averaged Dh3.678 billion. Ten years ago, when it first started keeping track, the average value of an NFL team was Dh3.86 billion. Any potential owner of any business would be satisfied by at least tripling his investment, and enjoying the process.

It's these types of potential returns that attracted the Abu Dhabi United Group to buy into the Maine Road club through a private transaction - not as a sovereign wealth investment.

"The purchase of Manchester City," well-informed sources in Abu-Dhabi told Gulf News, "is not a purchase by a sovereign fund in the same way investments made by other sovereign funds. This is not a sovereign fund investment in the definition of the International Monetary Fund (IMF)," added the source, who asked not to be named.

Some press reports said that giant investors in the UAE are considering investing in other football clubs.

Changing landscape

It was in 2003, when the financial and ownership landscape of English football started to take a new shape, analysts said. Then, Russian oil tycoon Roman Abramovich brought west London club, Chelsea, bankrolling it to back-to-back Premier League titles under the leadership of Jose Mourinho.

Abramovich paid Dh945 million and pumped a further Dh3.3 billion to bring in the best players in the world. On the field, he changed the game, not how it was played, but by whom.

Off the field, he changed it more: a game for the ultra-rich by the noveau riche. Suddenly soccer wasn't a game, it was a commodity.

Experts believe that the presence of these commodity billionaires was positive for the game because of the potential cash infusion.

So why only English clubs? After all, if football is the world's most popular game, then wouldn't the same investment strategy pay dividends in the big soccer markets of South America, Germany, France, Spain and Italy?

British clubs benefit from more lax foreign ownership laws as a result of a number of political and legislative factors.

It is not only a matter of profitability, sports experts note, but also a matter of practicality when potential investors look at clubs like Manchester United and Liverpool over those of Barcelona, Real Madrid, AC and Inter Milan, or SV Hamburg. Simply put, a lack of regulations preventing foreign citizens from owning an English football club is encouraging investors to buy a piece of the Premier League pie.

Most of English football clubs are not Public Limited Corporations, and, potential buyers need only to buy out the interests of "a few significant shareholders."

Furthermore, the Football Association introduced in February 2005, a fit and proper person test for prospective directors and owners. Passing the test requires a clean bill of health from not being disqualified as a director of a UK company; nor of being convicted of any offences; nor of banned by a sports governing body; and not being bankrupt.

"Other big football countries, such as Germany and Spain build protections in their football structures to prevent takeovers by foreign investors," the Evening Standard's Simons said.

"The other reason is the success of the Premier League's branding," he said, adding that many of the best players in the world play with English clubs and enjoy the global following of fans.

Players in the top flight easily earn a million pounds annually for kicking a leather ball around the pitch. And playing for the Red Devils (Manchester United), the Toffees (Everton) or the Gunners (Arsenal) is the height of a footballer's profession. Owning the clubs is the pinnacle of success for many entrepreneurs also.

Top bosses: Foreign owners of EnglishFootball Clubs