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?
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.
Does 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.
Can 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.
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.
Is 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.
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?
Who 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. CLICK HERE TO READ FULL AND TOUCHING NIGERIAN CELEBRITIES BIOGRAPHY AND SCANDALS
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