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Billionaires League: American Ownerships in Soccer English Premier League

The English Premier League is one of the biggest in the soccer world. Premier League club’s combined revenue is about $3.6 billion and includes some of the richest soccer clubs in the world.

Four of Premier League’s 20 clubs are owned by Americans, and American businessman Stan Kroenke is the majority shareholder of Arsenal FC.

How the American ownerships in English soccer are unfolding:

The Glazer Family, Manchester United

In 2005 the Glazer family, who also owns NFL team Tampa Bay Buccaneers, did what in the financial world is called a “leveraged buyout” (LBO). Critics will state that this basically means that the Glazer’s borrowed a huge amount of money ($1.2 billion) in order to purchase the club. This “loan” was secured against the club’s assets meaning that Manchester United, once a no-debt club came in massive debt and was forced to make huge interest payments.

In 2011 Manchester United presented a turnover of $530 million and the club has been one of few big soccer clubs to present profits. The problem is that these profits are being used for interest repayments due to the loan issue concerning the LBO. Things have become even worse in relation to the public offering of Manchester United stocks as reports are suggesting that a structure in the content of the stock allows half of the yield to go directly into the Glazer family’s pockets.

  1. Commercial Growth: The club has managed to present impressing figures in turnover and profits since the takeover.
  2. Trophies: Since the takeover, the club has won 4 Premier League titles and 1 Champions League (most prestigious title in European soccer)
  3. Relationship with the fans: The fans have developed a hatred for the ownership. There is even a global campaign running against the ownership: “Love United, Hate Glazers”.
  4. Leveraged Buyout: The fans will always think of the acquisition as a way to take advantage of the club’s assets.

The plusses are almost superficial because the Glazers will probably never be acknowledged as a successful ownership. This is not a way to run a soccer-ownership and I am sure Manchester United fans will hate to see even a plus (+) in relation to the Glazer’s ownership.

John W. Henry/Fenway Sports Group (FSG), Liverpool FC

The boston-based sports investment company agreed to buy Liverpool FC for $480 million in October 2010. FSG is also the parent company of MLB’s Boston Red Sox. Unlike the former American owners George Gillet and Tom Hicks, principal owner John W. Henry and FSG intented to spent and invest in the future of the club. The owners appointed one of the clubs most legendary players Kenny Dalglish as manager and provided him with $95 million to buy star players Luis Suarez and Andy Carroll. Dalglish managed to win the Carling Cup, Liverpool’s first title since 2006. However, the club ended last season at 8th, the worst in 18 years. The Americans acted quickly and Dalglish was fired after one and a half year in the club.

  1. Dedication: The mayor of Liverpool city, Joe Anderson, has said about the ownership: “There is trust, respect and collaboration.”
  2. Sponsorship deals: The sponsorship deal with American Warrior Sports ($40 million per season till 2018) is one of the biggest kit-supplier sponsorship deals ever by a football club.
  3. Redevelop Anfield Road: The legendary stadium will be redeveloped instead of building a new stadium. The majority of Liverpool fans can’t imagine the club playing any other place than Anfield Road. Just as a comparison, could you imagine Boston Red Sox playing at any other venue than Fenway Park?
  4. Results: The results on-pitch is still lacking and Liverpool FC is far from retaining another Premier League title (18 in all but latest was acquired in 1990)

It all sounds very good for Liverpool FC and FSG, however there is one big problem: Liverpool FC has made its worst start in 18 years in the league and it’s difficult to imagine Liverpool winning a big title in the near future.

Stan Kroenke, Arsenal FC

The majority shareholder of Arsenal FC, Stan Kroenke, is the owner of Kroenke Sports Enterprises which also includes Denver Nuggets (NBA), Colorado Avalanche (NHL), St. Louis Rams (NFL) and Arsenal FC (English Premier League). Kroenke has often been criticized by his lack of spending (both at Avalanche and Arsenal). He is also claimed to be more interested in the bottom-line (off-field) than winning trophies (on-field). Arsenal’s fans are fed up with the lack of winning trophies. Also, Arsenal FC has sold their biggest stars in recent seasons: Robin Van Persie, “Cesc” Fabregas, Samir Nasri and Alex Song for about $140 million. Well, that’s a huge amount for such few players but the fans aren’t happy about Arsenal selling their best players on behalf of winning trophies.

  1. Patience: with the manager The manager Arsene Wenger is an institution in Premier League and despite of not winning a trophy since 2005, many respect his ability to perform big results despite of the club selling its profiles almost every season.
  2. Hasn’t won a trophy since 2005.
  3. Ambitions? The fans and media are questioning Kroenke’s true intentions of the ownership because Arsenal FC keeps selling their biggest stars.
  4. Rival ownership: Kroenke has a rivalry with the other big shareholders of Arsenal FC, Usmanov and Moshiri.

Randy Lerner, Aston Villa

“He’s probably the most well-likened owner in the league” it has been said. The former owner of NFL team Cleveland Browns has become so attached to Aston Villa that he actually has the club’s logo tattooed on his ankle. Lerner has invested about $150 million in equity and another $135 million in loans since his takeover in 2006. But the recent years have been quite unsuccessful for Aston Villa and Lerner.

  1. Dedication: Randy has been seen several times in the stands at Aston Villa’s stadium, Villa Park. As said before, he has also showed his attachment to the club with his tattoo.
  2. Investments & Spending: Besides of the figures mentioned on loans and equity, Lerner also provided former manager, Martin O’Neil (2006-2010) with $190 million for new players.
  3. Alex McLeish: Randy Lerner appointed McLeish, then head coach at relegated arch rivals Birmingham City, as a new manager last season. He became the worst manager in the history of Aston Villa with a win percentage of only 21,4%.
  4. Ambitions? Questions have been asked about Lerner’s ambitions the recent years. He was gladly investing and spending in the beginning of his reign and some suggests that these times are over.

The plusses are more likely to be considered “once” because right now/this and last season, Randy Lerner hasn’t been seen much in the stands and hasn’t been spending gladly on new players. There have even been rumours about Randy Lerner intending to sell his position in Aston Villa.

Ellis Short, Sunderland AFC

The club and Ellis Short strives to establish Sunderland AFC in the Premier League’s top ten and Short appointed Martin O’Neil (the man Lerner fired at Aston Villa) last season in order to achieve that.

This summer he funded $40 million for highly-rated players Steven Fletcher and Adam Johnson. Sunderland also introduced “Invest in Africa” (non-profit organization funded by Tullow Oil) as new kit-sponsor. The deal will bring in $30 million per season: “the most lucrative commercial deal in the club’s history” Short has said.

Latest figures show an increase in turnover up by $22 million to $128 million. The net operating loss tough is still high at $50 million.

  1. The appointment of Martin O’Neil and firing of former manager, Steve Bruce: showed that Short isn’t intending to see Sunderland below the top ten at a consistent basis.
  2. Commercial growth: The turnover has increased and shows that the club is getting forward off the field as well.
  3. The operating loss: is still very high and it’s just another good example of soccer club’s lack of presenting profits.

 

So how can these American ownerships prevent becoming total failures?

Here are some recommendations:

  1. “Action speaks louder than words” Many owners have talked about investments and huge ambitions but the reality is that they will only be remembered for what they (not) achieved not what they presented as ambitions.
  2. “Spend or die” Bear in mind that you will be judged on results and spending. Commercial growth is fine but lack of results on-field and spending on new players will have the fans questioning.
  3. “Respect, Trust and Collaboration” Fans will praise respect for the club and trust and collaboration in general. Take Tom Werner of Liverpool for instance. The Red Sox owner met the fans at a pub in Norway at a pre-season game to show his and FSG’s respect and willing to collaborate.

Conclusion: A best-practice success story is yet to be recorded.

Fans don’t really care about money and profits. It’s all about winning trophies and acquiring big players. The question must be, is it possible for the ownerships in modern soccer to succeed both on- and off the field? Experience from the English Premier League says no.
Please feel free to leave a comment. You might find similar examples of (un)successful ownerships in American sports.
 

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