Channel 4’s Dispatches programme, which was aired in the UK earlier this week, provided a dispiriting insight into the practices behind people supposedly in the business of brokering football club takeovers.
‘How to buy a football club’ may not have landed any killer blows on anyone famous or even significant in the football spectrum, and there is nothing to suggest any of the clubs mentioned would have entertained any of the offers being discussed.
However, the fact that the names of some of football’s most historic clubs were being touted about so freely – in this case to an undercover reporter who pretended to be basically after a quick buck – made for uncomfortable viewing.
Has football really come to this? An inflated game of Monopoly? Of course it has. And the Dispatches eavesdropping experiment should serve as a warning to responsible club owners everywhere.
Whether those featured in this particular programme were capable of sealing the takeover deals being discussed is almost irrelevant to the wider issue. After all, it would be absurd to deny that there are plenty of unscrupulous people who have made it into positions of power at football clubs.
One often hears of the term ‘due diligence’ during a takeover, and the central thread of the process is that it involves both the buying and selling party checking each other’s financial books. However, such ‘proof of funds’ should only be a part of the due diligence process.
It is impossible to guarantee new owners will fulfil their pledges, even if they are wealthy and the promises are written into the takeover contract. However, it is the responsibility of every club owner to question the motivation of a potential buyer and look beyond the bottom line finances.
In Spain, there is currently a farcical ownership soap opera being played out at Racing Santander, where the club is in a complete mess just months after Ahsan Ali Syed’s takeover. The club is in bankruptcy protection, the players are among the creditors and Syed, who tried to buy Blackburn last year, actually admitted to Bloomberg this week that he was unaware of the hiring of new coach Hector Cuper.
So what was Syed’s motivation for courting Blackburn and then Racing Santander, both of whom are not exactly obvious blood brothers in the football family?
Following the completion of his Racing takeover, Syed said: “Sport has always been a good investment opportunity; especially if it is combined with passion and (a) dream.”
A football club, though, is hardly ever a sensible investment opportunity, and if you are in doubt as to how dangerous it is to “live the dream” through a club, just ask a Leeds United fan.
History has shown that the high-risk strategy of buying a club in the hope that it can then be sold off when it reaches its highest price in the Premier League hardly ever works. So what can the current owners do to avoid financial meltdown following the end of their stay at a club?
Even though it would seem to be too ludicrously blatant to mention, owners need to be constantly aware that due diligence has to go beyond basic financial checks.
In the case of a prospective takeover, do the buyers really know anything about the club and its history? Why does someone with no links to football in the club’s region, let alone the country, want to invest?
Even if things do appear to add up on the balance sheet, if something else doesn’t seem right, responsible owners should walk away. It is all part of the common sense due diligence process.
If you think such a point is obvious, just look at how many clubs have fallen into the hands of unscrupulous buyers over recent years.
Common sense due diligence should also apply in the transfer market, especially when a club is looking to sell a player.
Consider this scenario: There is Club A, which appears to have surprising spending power, and Club B, a more established top club with a track record of delivering payments on time. If you were selling your star player and Club A had tabled a £10 million instalments-based transfer bid while Club B had offered £7.5 million, with whom would you do the deal?
For a long time, for example, people were wondering how Portsmouth could afford to sign such an impressive roster of players. As it transpired, they couldn’t, and several clubs ended up being owed transfer fees.
It is obviously not a surprise that football has attracted murky characters given the wealth that flows through the top of the game, and owners need to be reminded that they are nothing more than custodians of a club in shark-infested waters.
There are many responsible owners who appreciate that a club is not a play-thing. However, if these same owners can only see the dollar signs flashing during takeover negotiations and don’t consider the common sense questions, they are arguably just as guilty as those who end up running the club into the ground.
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Rory Squires is the Director of Squires Media Ltd, a provider of bespoke content, publishing and communications services for the international sports industry. Visit www.squiresmedia.com or email firstname.lastname@example.org for further information. Follow Squires Media on Twitter for more sports industry updates.
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