|
Chelsea's Buck Says U.S. Team Owners May Struggle in England
25/05/2007 |
 |
 |
U.S. sports owners who buy English soccer clubs face a struggle to make money, even with their experience of running teams back home, Chelsea's American Chairman Bruce Buck said.
George Gillett and Thomas Hicks, who bought Liverpool in March, must tackle a system in which teams develop youth players, pay for their stadiums and live with the constant risk of demotion, unlike in North America, Buck said. Three Premier League teams are U.S.-owned and more may follow.
``The new Liverpool owners will be surprised how difficult it is to make money in football,'' Buck said in an interview to be aired on Bloomberg Television today. ``Hicks and Gillett are enormously successful but you just can't take any business model from one jurisdiction and say it's going to work in another.''
D.C. United owner William H.C. Chang and General Electric Co. said last week they may join the American push to grab a piece of the world's richest soccer league. Stan Kroenke, who owns U.S. franchises in basketball, hockey and soccer, has built up a stake in Chelsea's London rival Arsenal.
Buck, the chairman since 2003, has lived in Britain for almost 25 years and is part of owner Roman Abramovich's circle of advisers at Chelsea that includes Chief Executive Officer Peter Kenyon and Eugene Tannenbaum -- Abramovich's former adviser at oil company Sibneft OAO.
Among issues they've addressed that won't figure for many U.S. sports teams are the cost of developing players and the lack of local government funding for stadiums, Buck said.
Relegation
Perhaps the biggest difference with the U.S. is relegation, he said, in which three clubs get demoted every year. Relegated teams got only 18 percent of the Premiership average income of 68 million pounds ($135 million) in fiscal 2005. That gap will widen from August because of new broadcasting contracts.
``If you're bottom of the league in the U.S., you invest,'' he said. ``If you do that in the U.K., there's a very good chance you're throwing your money away. Relegation changes the whole complexion of the financial nature of sport.''
Manchester United is owned by Malcolm Glazer (Tampa Bay Buccaneers) and Aston Villa was bought by Randy Lerner (Cleveland Browns), while Gillett owns the Montreal Canadiens and Hicks controls the Dallas Stars and Texas Rangers.
Their Premier League purchases, sealed in the past two years, followed Russian billionaire Abramovich's 2003 acquisition of Chelsea. Abramovich has since spent more than 375 million pounds on players and aims to make the club profitable by 2010.
`Football Fan First'
The London club, which beat Manchester United in the F.A. Cup final six days ago, had a pretax loss of 80.2 million pounds in the year to June 30, 2006. United, the sport's most profitable team, generated cumulative net income of about 198 million pounds in the 14 years before Glazer took over.
``It's not a business in the traditional sense,'' Buck said. ``Abramovich doesn't want to lose money investing in football but profit was nowhere near his primary objective. You've got to be a football fan first.''
Chang, who part-owns baseball's San Francisco Giants, is among the growing breed of U.S. team owners who see an opportunity to bring North American sports marketing know-how to Europe. He said the Premier League remains ``good value.''
``There's tremendous potential to bring technology into sports marketing in Europe and monetize the brand,'' Chang said in an interview at the International Football Arena conference in Beijing last week.
Youth Academy
Buck says it's not so simple. Fans don't swap allegiances as in the U.S., while clubs foot the bill for developing players. Chelsea spent 30 million pounds on a training and youth academy. U.K. clubs also pay much more to charity, he said.
U.S. teams ``don't pay to develop young players, colleges and universities do,'' said Buck, a partner at the London office of Skadden, Arps, Slate, Meagher & Flom. ``Yes, they have community activities but not the kind of mandate we have in the U.K. to make a contribution to the community.''
U.S. sports franchises can threaten to leave cities unless local municipalities build them a new stadium, Buck added. In the U.K., teams tend to own their arenas and pay for upgrades or new stadiums themselves.
Liverpool, which lost yesterday's Champions League final to AC Milan, is building a new 215 million-pound arena, while Arsenal relocated to a 357 million-pound stadium last season.
`Anti-American'
The fans' tribal loyalty can spur opposition to changes in ownership, he said. The Independent Manchester United Supporters Association, set up during Glazer's purchase, continues to vilify the Glazer family even after the team this month sealed its first Premiership title since 2003.
Billionaire Thaksin Shinawatra, the exiled former Thai prime minister, will bid for Manchester City this week, his lawyer said May 21. Kroenke, the U.S. billionaire who owns the Denver Nuggets, Colorado Avalanche and Colorado Rapids, raised his stake in Arsenal to 12.2 percent last month.
``Maybe the Americans do have a lot to add but as an American who's been in the U.K. for 25 years, it's really difficult to understand how significant football is in the culture,'' Buck said. ``And of course there's an anti-American culture which isn't going to make their job any easier.''
(Source: Bloomberg.com)
|
| Back |
|
|
|
|
 |
|
