Foreign gold rush
West Ham, that quintessential East End working-class football institution, is to be taken over by an Icelandic consortium and become the fifth Premiership club after Chelsea, Manchester United, Portsmouth and Aston Villa to be majority owned by a foreign investor.
The shares of Bolton, Blackburn and Newcastle are substantially held in offshore tax havens, Fulham are owned by Mohamed al-Fayed, who now lives in Monaco, the American businessman Robert Earl recently bought a large stake in Everton, while other clubs are desperate to join the latest football gold rush overseas.
The question being asked, some 15 years too late, is: does it matter? For some, the dominant influences as football has rocketed from an undervalued game to a commercial commodity, the answer is no. Football, they say, is a business, the clubs are companies, their shareholders—like Terry Brown at West Ham who will make Â£33,4-million personally from this deal—are entitled to sell to the highest bidder, and foreign owners bring new investment to the world’s most popular league.
Many fans in their hearts know something is missing in that analysis, that the abandonment of football to market forces takes no account of the game’s heritage, nor of supporters’ emotional bonds to their clubs.
The belief that clubs’ sporting souls need protecting from bare financial speculation underpinned many Manchester United fans’ fierce opposition to last year’s takeover by the Glazer family, and fires the movement that has seen supporters’ trusts formed at most English clubs.
This modern idea, that football clubs are in their essence mutual organisations, belonging to their fans, grew as a reaction to the commercialism that gripped the game after the Premier League breakaway in 1992.
It drew on history, too: most football clubs, in their Victorian beginnings, were mutuals, formed by groups of men eager to play the game to provide constructive activities in grim industrial cities. A few, like West Ham, who began as Thames Ironworks in 1895, were supported by enlightened employers.
The Football Association (FA), the governing body charged with protecting the game’s laws and spirit, had a firm view when the clubs, in the 1890s, wanted to become limited companies. It allowed clubs to do so, which protected members from personal liability for the clubs’ burgeoning costs, and clubs could issue shares to raise new money. However, the FA prohibited directors from paying themselves salaries and limited dividend payments so that football clubs would not become vehicles for investors to make money.
Those rules remained in force until Tottenham Hotspur became the first club to float on the stock market in 1983. Spurs formed a holding company to bypass the rules and the FA allowed it without a word, just as it has nothing to say now about foreign ownership.
As more clubs queued up to float, the Football Supporters’ Federation never argued that the rules should remain unchanged into the era of billion-pound TV deals and foreign stars. Instead it supported the majority of the government’s Football Task Force, which argued in 1999 for more sophisticated regulation to enable the game to take advantage of commercial opportunities while remaining true to its sporting heart.
The majority’s report argued for supporters to be given a substantial stake in clubs, for restrictions to ticket prices, for a fit-and-proper-person test for football club directors and for the FA to satisfy itself that any takeover was in the club’s best long-term interests.
The FA and both the Premier and Football Leagues rejected that report, arguing in their minority report that regulation of the commercial era was unnecessary. The government, dazzled by the Premiership’s success, bowed to that view. Flotation on the stock market made fortunes for some individual shareholders, but did not help clubs to become financially stable.
There is no task force, no FA inquiry or any other assessment of this rush to foreign ownership. While West Ham fans blow bubbles at the arrival of funds from the investor and Iceland’s first dollar billionaire, Bjorgolfur Gudmundsson—Eggert Magnusson, the Icelandic football grandee, is only the principal frontman—there are plenty of squalls in the wind. Takeovers are increasing, not allaying, debt.
Chelsea, the champions whose impossible expenditure every club feels it has to match, exist on the continuing goodwill of Roman Abramovich. The Glazers piled around Â£660-million of borrowings on a club that was famously debt-free.
If Gudmundsson and Randy Lerner want their new acquisitions to compete, they will have to spend more money at West Ham and Aston Villa. Salvation by a foreign magnate can unravel, as Hearts’ adventure with Vladimir Romanov is doing in Edinburgh.
The foreign owners are mostly looking for a profit, which will also make decent reforms more difficult, like any return to greater sharing of money with Football League clubs or a proper reduction in ticket prices.
Campaigners point yearningly to Spain, where Barcelona and Real Madrid are still, gloriously, members’ clubs. Barça won the Champions League last season while keeping tickets at the Camp Nou affordable. Their players wear Unicef on their shirts, not the name of some gambling website—and pay the UN organisation for the privilege. — Â