ManU suitable jewel for Qatari crown

PUBLISHED : Wednesday, 16 February, 2011, 12:00am
UPDATED : Wednesday, 16 February, 2011, 12:00am

Rumours are again rife that Qatar Holdings, the investment arm of the royal family of Qatar, is about to buy the English Premier League soccer team Manchester United for around GBP1.6 billion (HK$19.98 billion). If so, it would confirm the so-called 'Red Devils' as the biggest in the big business of modern sporting giants.

The club has denied that there are any such talks, but such denials are often a precursor to a deal. It may be just another clever marketing ploy by the Qataris, who have shown an immense talent in generating free publicity. But the wider point is that soccer is a profitable game, at least for the big boys.

There are plenty of disagreements about how to measure what a sports team is worth. Traditionally, ticket sales were what counted. But Forbes magazine used a new formula to include the value of stadiums, sponsorships and television deals to calculate the value of teams as 'entertainment brands'.

The magazine rated Manchester United at US$1.83 billion as the biggest of all sports teams, considerably larger than the Dallas Cowboys American football team, which it valued at US$1.65 billion, and the New York Yankees baseball team, which came third at US$1.6 billion.

International accountancy firm Deloitte has considerable experience in calculating what people and companies are worth. Its influential annual survey of the soccer clubs has just been published and puts Manchester United in third place, below Real Madrid and Barcelona. This year's survey published by Deloitte's sports business group is entitled The untouchables: Football Money League and has a picture of a 1930s fedora on the cover.

The illusion to the mobsters of the Prohibition era is heavy-handed, just as is the suggestion that soccer teams, like the gangs of the Depression, continue to flourish in the face of slow growth, widespread unemployment and debt.

Deloitte finds that 'recession' is not in the vocabulary of the top European soccer teams. The 20 highest-earning clubs saw an increase of 8 per cent in their revenues in the last year to Euro4.3 billion (HK$45.2 billion). Real Madrid is top with revenues of Euro438.6 million, more than Euro40 million ahead of Barcelona, with Manchester United in third place on almost Euro350 million.

The report admits that there are many ways of estimating a soccer club's worth, including the number of fans, performance on the pitch, gate receipts, TV audience, and even the wealth of the club owners, but it prefers to concentrate on counting the hard brass of the clubs' revenues.

The report adds: 'We expect a battle between Spain's two superclubs for top spot in the Money League for the next few years at least.'

Barcelona's revenue will be boosted by a shirt sponsorship deal with the Qatar Sports Investment Agency, worth Euro165 million over five-and-a-half seasons.

English Premier League clubs have seven of the top 20 places, more than any other country, followed by other members of the big five leagues, four each from Germany and Italy, three from Spain and two from France. The poorer countries do not get a look in.

New European soccer rules supposed to ensure financial fair play will require clubs to balance their books, ensuring that expenditure does not exceed revenue over time, with exceptions allowed for developing new stadiums or a change of owners. Barcelona and English teams Chelsea and Manchester City have all recorded large losses recently, thanks to splurging on new players. It is doubtful whether they will level the playing field in favour of poorer clubs from poorer countries.

Some supporters of English clubs worry that they will be handicapped by higher taxes on players' salaries. British tax takes up to 50 per cent of players' salaries, whereas in Spain the rate is 22 per cent.

The abiding lesson of recent years has been that the clubs that are most successful are those who pay their players most.

Clubs in Spain also have the advantage of being able to negotiate their own television rights, although the elite English clubs will get a GBP600 million boost over the next three years from a new overseas broadcasting deal.

If the American Glazer family, which owns Manchester United, does decide to sell the club, perhaps for GBP1.8 billion some soccer insiders whisper, it would raise the value and the profile of the club and perhaps remove the shadow of the Glazer era. Malcolm Glazer, owner of the Tampa Bay Buccaneers, bought out the shareholders of Manchester United from 2003 to 2005 in a deal worth almost US$1.5 billion. To the anger of many United fans, he saddled the club with the debt, including interest of GBP60 million a year, and raised ticket prices.

Swapping an American owner for Middle Eastern oil-rich royalty would hardly raise eyebrows in England, where so much of the game is foreign-owned. It would intensify the rivalry with Manchester City, owned by Abu Dhabi interests. If the European soccer authorities really wanted to level the playing fields they could try to insist that English league clubs should have English owners and English players.

England gave the world the modern game of soccer (even if some Chinese say that it was an invention stolen from them), and English fans are so passionate that almost 60 per cent of them say they would rather spend a night watching a game than with the woman they love, but the English owners of clubs have largely sold out. Half of the 20 Premier League clubs, and all of the most famous, have foreign owners.

Ownership is one thing, but only 39 per cent of the 600-odd players on the roster of the English Premier League clubs are English, something that the England manager, an Italian, has criticised.

Another way of assessing popularity is according to how many fans a team has, globally. This traditionally has been a contentious calculation. But Facebook adherents say that the site offers a simple and accurate way of assessing fan support.

As of noon Hong Kong time yesterday, Barcelona is ahead with 9.37 million Facebook fans, with Manchester United a close second on 9.23 million.

The big names on the soccer field, however, did not top the earnings list in sport generally, according to Forbes which also ranked individuals.

Tiger Woods was still top of the heap earning US$105 million, though most of this was in sponsorship deals, some of which he has since lost following his marriage break-up and loss of form.

The highest ranked soccer player was LA Galaxy's David Beckham, formerly of Manchester United and Real Madrid, whom Forbes reckoned to earn US$43.7 million, mostly from sponsorships.

Cristiano Ronaldo of Real Madrid came 13th, with earnings of US$35.8 million in a list dominated by golf, boxing, basketball, baseball and American football stars.

English Premier League players get an average of GBP28,230 a week, less than half what Dallas Mavericks' basketball players get and a third of the salary of the New York Yankees.

And all of this, of course, in a job that can be cut short by injury is hardly in the same league as the money made by those Masters of the Universe who run hedge funds and rake in billions a year, not mere millions.

Striking gold

Revenues at the 20 highest-earning clubs amounted to Euro4.3 billion last year

Manchester United ranked third with this amount: Euro350m