Foreign Investment into our national Sport - Football. Is it good for the Game?

Dated: 2 Oct 2008

Posted by admin

Categoiry: Sport

I am a huge sports fan, I tend to follow most sports but have a greater passion for Football, the biggest sport on the planet as well as now being big big business.

The Premier League

The English premier league is probably the most richest league in the world, most definitely in Europe. Since the formation of the Premier League in 1992/1993 season there has only ever been four winners, Manchester United 10 times, Arsenal 3 times, Chelsea twice and Blackburn once.

The premier league became rich mainly due to television revenue, money put into it by SKY TV, a satellite television company, this took the game away from terrestrial TV. There was a huge demand for live football on TV and SKY captured the market and made it their own. This has now changed, there is no longer the domination by SKY due to new regulations. The rights for the premiership has been sold all over the world and no matter where you go you will see young children wearing replica shirts of their favourite premiership teams.

There has been talk of there being a break away group which they are calling the big four, since 2003/2004 season the top four has been the same, Arsenal, Chelsea, Liverpool and Manchester United, just the positions have changed at the end of the season. Why have these four clubs been so dominant? The top four can attract any palyer they want, they have the financial backing and therby keep strengthening their team season after season. However, it’s not simply about buying new players all the time, it is the team, the coach and new players to improve on the previous season.

The Wealthy Clubs

The top four as described above are the wealthiest clubs in England and represent a majority in Europe and the world, the top four premiership clubs occupy 4 of the top 10 spots, English clubs have a high representation in the overall top 25, see below:

This is a list of the richest football clubs in the world in April 2008 as ranked by Forbes magazine on their worth in US dollars.^[1]

Rank	Team	Country	Value ($m)^[2]	Debt as %of value^[3]	% change on year	Revenue ($m)	Operating income($m)^[4]
1	Manchester United	England	1,800	60	24	394	111
2	Real Madrid	Spain	1,285	27	24	474	112
3	Arsenal	England	1,200	43	31	329	77
4	Liverpool	England	1,050	65	131	269	60
5	Bayern Munich	Germany	917	0	9	302	72
6	AC Milan	Italy	798	0	-3	307	54
7	FC Barcelona	Spain	784	7	47	392	92
8	Chelsea	England	764	0	42	382	-5
9	Juventus	Italy	510	5	-10	196	35
10	Schalke 04	Germany	470	48	0	154	36
11	AS Roma	Italy	434	12	94	213	48
12	Tottenham Hotspur	England	414	15	70	207	64
13	Olympique Lyonnais	France	408	7	19	190	15
14	Internazionale	Italy	403	0	-27	207	21
15	Borussia Dortmund	Germany	323	57	63	122	31
16	Newcastle United	England	300	43	16	175	12
17	Hamburger SV	Germany	293	0	32	163	41
18	Werder Bremen	Germany	262	0	n/a	131	11
19	Valencia	Spain	254	159	31	145	-45
20	Celtic	Scotland	227	11	23	151	48
21	Everton	England	197	30	24	103	-1
22	West Ham United	England	195	23	25	115	-22
23	Manchester City	England	191	63	-8	114	27
24	Aston Villa	England	190	12	36	106	-40
25	Olympique Marseille	France	187	0	19	134	13

Notes

Soccer Team Valuations
Estimated by Forbes based on past transactions, market value, debt and stadium.
Includes stadium debt
Revenue before interest, taxes, depreciation and amortization.

There is now a new player in the game, most recently Manchester City changed ownership and is now reportedly the richest club in the world, taking over the mantle from Chelsea, they are now owned by a Sheik from the emirate state of Abu Dhabi.

Manchester City have already flexed their financial muscle by spending heavily on players during the Transfer window.

Foreign Investment

The premier league as far as I am aware is the only league which has a foreign investment in terms of club ownership. There many foreign players here and high percentage of players make up the first eleven whereas in the other European leagues majority of the first team is made up of indigenous players. I think this is good for the clubs but probably has an overall detriment to the fortunes of the national team.

There are a number of clubs who now have rich foreign owners, Chelsea, Liverpool and Manchester United are all benefiting from foreign ownership, and now we are seeing the other Manchester club gatecrashing the party.

There is talk that due to the investment in these clubs it is an unfair advantage to the smaller lesser known clubs as they cannot compete with the big boys, they cannot attract the best players from around the world, they cannot afford either the transfer fee or players wage demands. This is true and there is a gulf developing, however, the smaller clubs can do better by better management on and of the field. It has been shown that a smaller team with less money can succeed, Portuguese club Porto, French club Monaco both proved with good management on the field all is possible.

As football has become big industry, the clubs can and should be run as a business, a well run club can survive and compete at a high level, the model used by the Dutch club Ajax worked very well for a very very long time, they were producing many local young players who were sold onto bigger leagues around Europe, the club was still able to compete with the so called the power leagues like “La Liga in spain” and “Serie A in Italy” to win the Champions League (European Cup). Why has Ajax the club other clubs were looking to emulate, gone backwards?

I think that foreign investment is good, as long as everyone is playing on a level playing field. The investment has to be for a long term strategy, and should include the development of the academy. Not just set it up and leave it to rot. Take proactive action to build and sustain it for the future.

I also feel that there should some form of salary structure or cap and a sensible price tags on players, this will help the clubs to operate like a business by re-investing back into the club after paying the players salaries and overheads etc., the profits will go into maintaining the academy. The structure will allow clubs to make better use players from the academy, at the moment I feel Arsenal are the only club trying to run a club the way I think it should be run. This would stop the smaller clubs getting into financial difficulties.

2 Responses to “Foreign Investment into our national Sport - Football. Is it good for the Game?”

Allen Taylor Says:
October 2nd, 2008 at 1:34 am
Nice writing. You are on my RSS reader now so I can read more from you down the road.

Allen Taylor
Bayern M Says:
May 3rd, 2009 at 11:40 pm

Modern Health and Spirituality