Taking a chance

ALL THAT glisters may not be gold, but the English Premiership is revelling in the reverse of the old maxim. Whereas the product has been distinctly underwhelming this season, the rush of foreign speculators to England's verdant pitches has not been rivalled since the Forty-Niners descended on California midway through the 19th century.

Blink and you'll miss the latest club to be taken over. Last week it was West Ham, and this week it could be Liverpool. Others such as Everton are being lined up by a seemingly insatiable queue of investors who see gold in them thar stadia.

In Scotland it's a different story, with only Hearts under foreign ownership (although Celtic come pretty close, with Irishman Dermot Desmond owning just over 40% of the plc's shares).
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Vladimir Romanov gave a tantalising glimpse last season of what might be achieved by foreign lucre, but according to football analyst Alex Fynn, other Scottish clubs are unlikely to experience serious inward investment.

The exception is Rangers, who, with a turnover similar to that of West Ham and other middling Premiership sides, could find themselves courted by overseas suitors if and when David Murray sells his shares after 20 years at the Ibrox helm. But only the guarantee of continuous Champions League football would make even Rangers a truly attractive proposition.

"The English Premiership is unique, because it is the richest league in the world," points out Fynn, who acts as a rights adviser to clubs on both sides of the border.

"It is set to increase its wealth over the next television contract from 2007-10. Annual television revenue will go up from something like £500 million to £800m. Secondly, and this is overlooked by many people, overseas rights will shoot up from about £300m to over £600m in the same period.

"The thing about television revenue is that it's pure profit. There is absolutely no cost attached - it goes straight to the bottom line. That's the main reason why the English clubs are so attractive to investors."

Last week an Icelandic consortium headed up by the president of that country's FA, Eggert Magnusson, made a successful £105m bid for West Ham. It was the culmination of a battle fought with another group, fronted by Kia Joorabchian, for ownership of a club which has debts of £23m.

On the face of it this level of interest and investment in a financially struggling club is irrational, but West Ham, who have a turnover of £60m, are always likely to turn in a profit while they remain in the Premiership.

Once the new television contract kicks in next season they will receive an additional £10m of income.

"Revenues, including season tickets and sponsorship, are going up year by year, and three-quarters of the clubs in the Premiership make a profit before tax, so if you love football why wouldn't you want to invest in these clubs?" asks Fynn rhetorically.

"The only downside is that you've got to be able to guarantee Premiership football. The two year parachute for relegation might be £8m a year, but that's nothing compared with the current average Premiership television income of about £20m domestically and £5m overseas."

Put this way, the notion that any Premiership club might threaten its financial stability by voting to admit the Old Firm is even more derisible.

But, ironically, the ever increasing and desperate need to avoid relegation is probably responsible for some of the dire safety-first matches which are currently being witnessed in England's top division.

That, and the early confirmation that only Manchester United and Chelsea, who meet today at Old Trafford, can win this season's title, mean that while the Premiership is the most lucrative league, it is not necessarily the most interesting or entertaining.

But, according to Fynn, there is no sign of the proverbial bubble bursting. "People have been suggesting it was going to burst for years now." he points out, "but the new television contract will put the Premiership ahead of France and head and shoulders ahead of Italy, Germany, Spain and the rest.

"The Premiership is going to go from strength to strength, and as such offers the best opportunity for any sports-loving investor."

Empty seats at several grounds suggest Fynn's optimism needs to be tempered with caution, but until 2010 at least the financial outlook looks extremely rosy for those clubs that can stay in the top 17. The only other real concern for clubs is the players' salaries, but even these are now becoming more manageable.

"Despite the exorbitant wages being paid, many clubs are able to keep within the accepted wages to turnover ratio (about 60%) simply because of the increased revenue streams, particularly from broadcasting," says Fynn. "It's certainly much more healthy than it was five years ago.

"People will invest in football for two reasons: firstly it's an ego trip, and secondly it's an opportunity to make money if you're able to buy a Premiership club whose status is more or less guaranteed."

And therein lies the rub. Whereas Roman Abramovich is in football to lose money (over £100m so far at Chelsea), and others such as Magnusson are getting involved because they are besotted by football and its attendant perks, the danger is that some may view the current boom as simply a financial opportunity, and one that could involve asset-stripping.

"Because the cost of entry is going up all the time - at West Ham it was £100m-plus for one of smaller Premiership clubs - you tend to get consortia becoming involved, and when you get that you get people who are interested not just for football but for other reasons," warns Fynn.

"As a purist I was horrified to read that one of the people who might be getting involved in West Ham was just interested in the property assets rather than understanding anything about the team."

Thus far in England, none of the new foreign owners, including Malcolm Glazer at Manchester United despite the initial serious concerns, has given supporters palpitations. On the contrary, Randy Lerner was welcomed with open arms at Aston Villa, as were first Milan Mandaric and then Alexandre Gaydamak at Portsmouth.

Mohamed Al Fayed is not the most popular man in Britain, but few would doubt he has improved Fulham's standing.

It's a very different matter in Scotland, where the most cynical have doubted Romanov's motives from the outset - convinced the Russian-born Lithuanian will sell Tynecastle. But such was the fate of the ground anyway; his arrival, in fact, saved Hearts from that ignominy.

Had the Romanov revolution continued as it started last autumn, other foreign investors might have considered taking leave of their financial senses and investing in the likes of Aberdeen and Hibs for a share of the Hearts' owner's reflected glory. But now, thanks to his endless meddling in team affairs and brutal sacking of employees, Romanov's project is showing signs of turning sour; the prospect of other clubs being courted must accordingly be receding.

Not, according to Fynn, that the chances were ever great. "You can't compare Scotland to the Premiership because there are only two substantial clubs and even then the broadcasting revenue is minimal by comparison.

"Would Rangers be attractive to a foreign investor? Yes, but not as attractive as a stable English Premiership club, even one which is smaller.

"That's simply because you've got to compare the guaranteed income which a medium sized Premiership club gets from broadcasting to what Rangers and Celtic get. It's a comparison between single figures and well into double figures.

"Only if there was guaranteed Champions League income could Rangers be comparable to an English club. The group stage would defray a lot of costs which Rangers incur."

David Murray is on record as saying he will only sell his shares to an investor who has Rangers' best interests at heart. But should that preclude a foreign owner, as opposed to one from Scotland?

While many in English football are becoming increasingly agitated at the overseas takeover of their top clubs, Fynn is not concerned.

"It's open house for foreign players and managers," he points out. "Why shouldn't it be open house for foreign owners?"

Why indeed. Whether supporters like it or not the gold rush, at least in England, is likely to continue.

Taken from the Sunday Herald