Thursday, July 18, 2013

The Yanks are Coming, the Yanks are Coming!

It's no secret that the English love their soccer/football. One of my favorite sayings in the sport comes from Brazil when it comes to dealing with their national team: "The English invented it, the Brazilians perfected it". But the inventors of the game get tetchy when their top clubs are bought by non-English investors, and especially when the buyers are now coming from the colonies. Americans now own 6 Premier League clubs, which surprisingly is more there than Americans that owned the original MLS clubs in 1996. David Conn, a very good writer from the Guardian,  does not like the influx of Yanks in the Premier League, since they don't explain their motivations for why they bought in. Aside from the obvious "he's an anti-American jingoist" argument coming from some, does he have a point? Is the influx of American owners in the Premier League bad for the English game? If you believe, maybe you aren't quite as a patriotic as you thought.

Sports teams are very unique businesses. Even with the differences between the US and England, sports teams are still very similar businesses on both sides of the pond. They are part of the public trust, usually owned for more exposure, and often not run for a profit (in the English case, see Abramovich, Roman). One of my favorite quotes about sports ownership came from new Buffalo Sabres owner Terry Pegula when he bought the team. On whether he bought the Sabres to make money, he replied, "If I want to make some money, I'll go drill a gas well." The English certainly don't think clubs were made to make money either, but then why are the owners like John Henry of Red Sox and Liverpool fame, Randy Lerner of Aston Villa, and Ellis Short of Sunderland attracted to the Premier League? Cashing in on a global brand exploding in value.

The amount of money being pumped into the Premier League is stunning, and it's only growing. When clubs like Manchester City are spending near 100 million pounds on transfer fees alone, it's no wonder that American billionaires want to cash in on the boom. Bobby McMahon of Forbes put it perfectly when he said:

"When you combine revenue growth with a worldwide profit and global customers (fans) who exhibit some of the characteristics of junkies it's really a no brainer for any well-heeled businessman. Where else could you pick up a 5% share of a global brand for $300 million? Actually, the surprise is that there are any English owners left."

McMahon nails it on two fronts. One is the true explosion of value, and even on the pretense that sports teams are not bought for return on investment, the amount of money being put into the game means that any businessman with the wherewithal to buy into the Premier League means that for a publicity grab/vanity project, there's a lot of money to be made here. It's not that the clubs were designed to make money, but as an aside to what the true motivations are, it's certainly worth the splash. And for Shad Khan, he bought Fulham for the aforementioned $300 million, still a fraction of the price he paid to buy the Jacksonville Jaguars, which are one of the least valued NFL franchises. And for the wages? Still the NFL pays more to their players at the top end than almost any club, sans maybe Chelsea and Manchester City. So for Khan to buy Fulham and pay less at every turn than he does for the Jaguars, with the cross-promotion opportunities offered to him since the Jaguars are playing games in London, buying Fulham is a no-brainer. It also doesn't help that the English owners that remain have trouble competing on the same financial fronts that the more free-spending clubs do, and look at Everton for the pluperfect example. In fact, I don't think they'd be complaining if Khan bought their beloved club.

Conn also has the seemingly compulsory mention in article like this that the US is the only country never entranced by the 150 year old game of football. The US is just now being entranced by football, specifically the English game, as evidenced by NBC paying $280 million in rights fees to the Premier League for 3 years of airing rights. The Premier League is the most watched domestic league in the United States, way more than even the local league MLS, so the publicity for the new investors works both in England and the US. It's not just cashing in on a boom in England, it's cashing in on the impending boom in the US. Shrewd businessmen have to know when to buy and when to sell, and this is the time to buy.

Conn also wonders why no other country has their top domestic clubs being sold to foreign investors at the "alarming" rate England is having. Well, it does help that England has the perfect league for foreign investment. English speaking, widest in popularity, most competitive, and most potential for growing revenue across the 20 teams, as opposed to just two. In Spain, most clubs are in the midst of a financial crisis not just because the country is, but because all the revenue is siphoned by Real Madrid and Barcelona, and there's not much else to go around. In Italy, complicated rules of player movement, fans colored by hooliganism, and match-fixing scandals seemingly every day of the week turn off most investors, sans the new ones for Roma. And in Germany, who Conn mentions specifically, aside from Bayern Munich, what club name has the potential to become a global brand? While that league is more financially healthy than both the Italian and Spanish leagues, the possibility for revenue growth on the level of the Premier League is small. Whatever the motivation of the American investors is, the Premier League is the best soccer league in the world to buy into, bar none.

Maybe the motivation is to make money, or assist in growing the National Football League in England, or just to have their name gain some more clout. Whatever it is, American owners have found a potential gold mine in the Barclays Premier League that is just now starting to be discovered. If English fans are worried on the grounds of possible ground-shaking changes to the structure of the game, maybe those fears are slightly more founded, but even those don't make sense, despite the stupidity of the financial model the Premier League relies on. That conversation is for another day. But as of now, it just seems like another case of "The Yanks don't care for football, so why are they buying our teams?", and the anti-American narrative.

And anyone who has read this site before knows what I think about narratives.

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