{"id":32956,"date":"2021-10-15T08:13:37","date_gmt":"2021-10-15T04:13:37","guid":{"rendered":"http:\/\/www.mauritiustimes.com\/mt\/?p=32956"},"modified":"2021-10-15T08:13:37","modified_gmt":"2021-10-15T04:13:37","slug":"newcastle-united-buying-a-football-club-can-still-be-lucrative-with-the-right-business-tactics","status":"publish","type":"post","link":"https:\/\/www.mauritiustimes.com\/mt\/newcastle-united-buying-a-football-club-can-still-be-lucrative-with-the-right-business-tactics\/","title":{"rendered":"Newcastle United: buying a football club can still be lucrative \u2013 with the right business tactics"},"content":{"rendered":"

\"\"<\/em><\/span><\/h4>\n

<\/h4>\n

Running a successful club requires more than money. But the money certainly helps<\/em><\/span><\/h4>\n

\"\"Shutterstock\/Michael715<\/a><\/span><\/span><\/p>\n

Many Newcastle United fans cheered the announcement on October 7 that their club had finally been sold for\u00a0\u00a3305 million. The sale, to a consortium headed up by Saudi Arabia\u2019s sovereign wealth fund, adds to a long list of clubs bought by the mega-rich, including Manchester City (owned by Sheikh Mansour), Arsenal (Stan Kroenke) and Chelsea (Roman Abramovich).<\/span><\/p>\n

But why do wealthy people or states buy football clubs in the first place? What is it about owning a team in a volatile and generally\u00a0loss-making industry\u00a0where success on the pitch can never be guaranteed?<\/span><\/p>\n

Certainly the more successful clubs are a safer financial bet than those further down the football pyramid, with the lower leagues regularly\u00a0haemorrhaging money\u00a0(the Championship notoriously spent an average of\u00a0107% of income on wages\u00a0recently).<\/span><\/p>\n

The Premier League meanwhile continues to flourish financially, with its clubs bringing in plenty of revenue. Collectively, they\u00a0earned \u00a34.5 billion\u00a0in the 2019-20 season (the latest set of available accounts), and its members made up 12 of the\u00a0top 30 clubs in the world by revenue.<\/span><\/p>\n

Of those, the so-called \u201cBig Six\u201d Premier League clubs \u2013 Manchester City, Manchester United, Chelsea, Liverpool, and Tottenham Hotspur \u2013 are indeed the biggest six earners. Even the lowest earning among them, Arsenal, made 45% more than the next Premier League club on the list, Everton.<\/span><\/p>\n

So maybe owning a big club is a way to make big money? Well, it\u2019s not quite as simple as that, and the old adage, that the quickest way to become a millionaire is by starting out as a billionaire and buying a football club, still holds some weight.<\/span><\/p>\n

This is because revenue (money coming in) is not the same as profit (money that owners can add to their existing pile of money at the end of the season). So making a fortune is by no means a given,\u00a0even in the Premier League.<\/span><\/p>\n

Of course, there are other reasons for buying a football club, even a loss-making one. It may be fandom, ego, prestige or politics \u2013 indeed, the Saudi backed takeover of Newcastle has been\u00a0labelled by opponents\u00a0as \u201csportswashing\u201d, the use of sport as a means of seeking legitimacy or improving reputations. The new owners have\u00a0strongly denied\u00a0that this is the case.<\/span><\/p>\n

The long game<\/strong><\/span><\/h4>\n

The easiest motive to understand is the fan who buys the club they\u2019ve always supported. Few of us get to choose which club we align ourselves to \u2013 the choice is instead often made for us by family, friends or locality.<\/span><\/p>\n

Being a fan is similar to being locked into a monopoly \u2013 there is no other option. So the best way to ensure that your club is run the way you think it should be is to buy it yourself, like businessman\u00a0Tony Bloom with Brighton & Hove Albion\u00a0or the TV chef Delia Smith\u00a0with Norwich City.<\/span><\/p>\n

Then there are owners that see a potential investment to take a loss-making club and turn it into a profitable one (or at least profitable enough to sell on at a higher price). You need to invest money to do this of course, but it is possible.<\/span><\/p>\n

It is also possible to take a valuable club and make it less so. Mike Ashley may have bought Newcastle for \u00a3134 million in 2007 and just sold it for \u00a3305 million, but its\u00a0relative value as a club\u00a0compared to its competitors in the Premier League, fell over the period of his ownership.<\/span><\/p>\n

And while there are many ways to improve a football club\u2019s fortunes, pretty much all of them involve heavy investment. Money for better players, money for better training facilities, money for better coaches and medical staff.<\/span><\/p>\n

But aside from the significant costs, the benefits of owning a football club can be seen in the expertise, brand expansion and saved costs of sharing resources across a business empire, which again is particularly apparent in the Premier League.<\/span><\/p>\n

In total, seven (that\u2019s roughly a third) of the current Premier League majority owners also own at least one other sports team, and three own other football clubs outside England. Arsenal owner Stan Kroenke has Colorado Rapids in the US. Brentford owner Matthew Benham has Football Club Midtjylland in Denmark. Manchester City owner Shekh Mansour has many clubs worldwide within the City Group.<\/span><\/p>\n

Some teams (Arsenal again, Leeds and Manchester United), have owners who also have American football teams (NFL) as part of their sporting business portfolio.<\/span><\/p>\n

That is not a coincidence. From sharing backroom staff to developing specialist equipment to sharing ideas, there is much to be gained from\u00a0crossover industries. So perhaps, for these people at least, owning a football club is a clever business tactic after all.<\/span><\/p>\n

Christina Philippou<\/strong><\/span>
\nPrincipal Lecturer, <\/span>
\nAccounting and Financial Management, <\/span>
\nUniversity of Portsmouth<\/span><\/p>\n

\n

* Published in print edition on 15 October 2021<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

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