Friday, February 09, 2007

EPL and more....

As a child growing up in Racine, Wisconsin, George Gillett Jr had, by his own admission, never heard of Liverpool FC. Likewise, Texan tycoon Tom Hicks, would, until recently, have known equally little about Bill Shankly or the goalscoring exploits of Ian Rush. However, following the announcement that their £174.1 million takeover bid for the Reds had been unanimously accepted by the club’s board, the American duo will now formally oversee the future direction of the club provided the deal is sanctioned by shareholders.

The move will see Liverpool become the third Premiership club to come under American ownership, following the Glazer family’s takeover of Manchester United in 2005 and the arrival of Randy Lerner at Villa Park last summer. And with four other clubs - Chelsea, Fulham, Portsmouth and West Ham - also bankrolled by overseas backers, it means that more than a third of the Premiership will soon be under foreign ownership.

Announcing the deal yesterday afternoon, Liverpool’s outgoing chairman David Moores was in no doubt that the takeover will leave the Reds in a significantly stronger position both on and off the pitch. “I believe this is a great step forward for Liverpool, its shareholders and its fans,” he said.

It’s easy to see why Moores agreed so readily to the offer on the table. Gillett and Hicks have agreed to pay off a sizeable part of the club’s outstanding debts. More importantly, they have also committed to bankroll the construction of a new 60,000 stadium in nearby Stanley Park. In addition, the pair have promised manager Rafa Benitez a sizeable transfer kitty with which to challenge once and for all the current domination of English football by Manchester United and Chelsea.

Only last month, Benitez complained that he simply did not have the financial backing to compete with United, who benefit from a slick global marketing campaign and the extra revenue generated from the fact that Old Trafford is currently almost twice the capacity of Anfield, or Chelsea, backed by owner Roman Abramovich’s multi-billion pound fortune. The ability to compete financially with the Premiership’s two richest clubs would therefore be welcomed by the Spaniard.

When the Glazer family arrived at Old Trafford in the summer of 2005, many United fans, encouraged by sensationalist media reports, staged mass protests outside Old Trafford, fearing that the brothers would proceed to strip the club’s assets and sell their best players. Some went as far as to form a new football club, FC United, fearing that the takeover would spell the beginning of the end of the club.

These fears have, until now at least, proved unfounded, with the Red Devils currently sitting six points clear at the top of the Premiership and the Glazers showing themselves willing to grant manager Sir Alex Ferguson a generous transfer kitty.

Gillett and Hicks are unlikely to face similar protests when they are unveiled to the Liverpool fans in the coming days. And both have been keen to stress that they are committed to upholding the club’s traditions.

“We fully acknowledge and appreciate the unique heritage and rich history of Liverpool and intend to respect this heritage in the future,” they said in a joint statement issued yesterday. “The Hicks family and the Gillett family are extremely excited about continuing the club's legacy and tradition."

Gillett has overcome the scepticism of fans before, albeit closer to home, when he took control of National Hockey League outfit Montreal Canadiens in 2000. Many Canadiens fans feared that Gillett, who had no previous background in ice hockey ownership, would pay no regard to the team’s traditions, but most have been impressed so far by his low-key approach to sports ownership.

“[The Canadiens are] an iconic team and has built on that,” Jean Gosselin, a sports marketing specialist at National Public Relations, told the press agency the Canadian Press. "But he never tried to transform what the Montreal Canadiens [are]. They’re one of the most significant teams in the world."

Tom Hicks also has a significant sports background, owning another NHL franchise, the Dallas Stars, as well as Major League Baseball team the Texas Rangers. His track record at both suggests that he is also unlikely to rock the boat or upset too many on Merseyside.

Nevertheless, while the takeover is unlikely to arouse the hysteria, much of it motivated by blatant anti-Americanism, that engulfed the Glazers’ arrival at Old Trafford, it is bound to rekindle the debate about the impact of foreign multi-millionaire owners on the Premiership. Somewhat ironically, it is a Frenchman, Arsenal manager Arsene Wenger, who has been most vocal in questioning the impact of foreign investors on the English game.

Speaking after the recent takeover of West Ham by Icelandic biscuit magnet Eggert Magnusson, he warned that rival clubs, including Arsenal, would eventually be unable to compete with those with wealthy foreign benefactors, unless they too courted foreign investment, a situation which could ultimately see a number of clubs struggling to stay afloat.

"What is dangerous for us is once the financial potential of the club goes above their natural resources by far, we will be in trouble because we don't have that. “At the moment [our] income basically [comes from] gate [receipts], television and sponsorship. If it is that plus private gifts then we cannot compete. At the moment we can do it because only one club [Chelsea] has those resources. But once three or four have that, you are dead. The pressure on the salaries will be too big.”

Gillett and Hicks are not comparable to Abramovich in that whereas the Chelsea owner sees the club essentially as a plaything and has until now paid little regard to balancing the books – the Blues recently reported a record £140 million loss for the year ending June 2005 – the soon-to-be Liverpool owners will be treating it as an investment and therefore looking to make a return on their outlay.

And despite the fact that Gillett has a mixed business track record, having filed for bankruptcy in 1992, both have subsequently amassed sizeable fortunes through shrewd investments. Consequently, they are unlikely to sanction spending on a similar scale to Chelsea, where Abramovich has, until this season at least, given manager Jose Mourinho carte blanche to spend as much as he wants in his quest to make the Blues the dominant club not only in England but worldwide.

Nevertheless, Liverpool’s increased spending power is likely to further distort the gap between English football’s have and have-nots. And this, in the long run, could prove disastrous.
Bumper TV deals have already created a two-tier Premiership, with the ‘big four’ – Manchester United, Chelsea, Liverpool and Arsenal – essentially contesting a mini-league of their own for the championship, leaving the rest of the league to fight it out for the consolation prize of a place in the Uefa Cup.

Next season’s champions likely to pocket almost £50 million in Premiership TV revenue alone, not to mention a bumper additional windfall if they progress past the group stages of the Champions League. Therefore, even with the arrival of foreign millionaire owners at clubs such as Portsmouth and Aston Villa, the big four are likely to continue to dominate English football for years to come. The arrival of Gillett and Hicks – and the ensuing transfer funds for Rafa Benitez can only serve to cement the established order.

And if the Premiership were to become even more stultified than it already is, it would almost certainly lose its appeal among both fans and, ultimately, broadcasters and sponsors. So far this season, dozens of games have been played out against the backdrop of empty seats. Average attendances at Manchester City, Bolton, Middlesbrough, Blackburn, Wigan and even Newcastle, home of football’s self-proclaimed “loyallest football supporters”, have all been well down on last season.

Perhaps more worryingly still from the clubs' point of view, the latest figures from the Broadcasters' Audience Research Board (Barb) show that TV audiences for Premiership games are also down this season. The average audience for the first 50 televised top-flight games this season was 1.19 million; when the last snapshot was taken in April 2005, the average audience was 1.25 million.

While inflated ticket prices and TV subscription costs are no doubt to blame for fans turning their back on the Premiership, its uncompetitive nature has also almost certainly played a part as well. It is no coincidence that the top four have continued to attract sell-out crowds this season, while those mired in mid-table have seen gates fall.

And if fans stay away and TV audiences continue to decline, the money men at both BSkyB and Setanta, the new player in the Premiership TV market from next season, will have to question the wisdom of continuing to ply vast amounts of money into securing the TV rights. This in turn could lead some of the foreign investors who have rushed to buy into the Premiership questioning their investments. It could also stretch many clubs who had budgeted on ever-increasing TV deals to financial breaking point.

This possible doomsday scenario, however is a long way off. And should Liverpool sign two or three world-class players next summer and reclaim the Premiership crown after an 18-year wait, I doubt if Reds fans will care one jot.

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