Ciggy wrote:The beautiful game doesn’t mean beautiful profits
by Andrew Neil on Sunday, 03 February 2008
When it comes to football, normal rules of business don't apply. You think with your heart, you do the sums with your feet and your make key decisions with your best pals over dinner.
So it is with huge surprise - and more than a little concern - that I see Dubai International Capital (DIC) is preparing another bid for Liverpool Football Club. By the time you read this column, the chances are DIC's US$500 million offer will have been accepted; one of the world's most famous clubs will be in Arab hands.
But I find this deal difficult to understand for several reasons. First, let's look at DIC's current investment strategy: it has major stakes in seven companies across the globe and in another seven private equity funds. According to its own website, DIC is "focused on acquisitions of market leading companies in Europe and North America, with a proven strategy and robust management".
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I could rest my case here: Liverpool FC is an iconic football team but "proven strategy and robust management" aren't words that quite go with it. The current owners paid US$340 million for the club last year; they took on US$87.7 million of debt; and soon agreed to the building of a new stadium. Now they have run out of cash and their total loans are approaching US$690 million. No wonder they need to get out in a hurry.
DIC can argue that Hicks and Gillett have made a mess of a fantastic brand and business; so stepping in makes perfect sense. They will point out that the boss of DIC, Sameer Al Ansari, is a lifelong Liverpool fan. This is what concerns me most.
Let's look at other "lifelong fans": Mike Ashley has pumped US$500 million into Newcastle Football Club, with no sign of any return in the next five years; Sir Alan Sugar eventually had to let go of his beloved Tottenham Football Club; Mohammed Al Fayed of Harrods fames is out US$700 million and counting at Fulham Football Club.
Football, whichever way you look at it, is not a business in which you will make money quickly. Which is why I fear Ansari and Co will come unstuck.
Their current investments abroad have all so far been admirable and with a clear profit return path. Take one of the most recent, a US$1.2 billion stake in Alliance Medical, a company which specializes in providing outsourced diagnostic imaging such as MRI scans.
DIC can open up the huge Middle East market. Nothing wrong with that - after all, that's what DIC exits for: to get into businesses, turn them around and get out.
But Gillett and Hicks got into Liverpool, realized they couldn't turn it around and got out in a hurry: the demands of 40,000 fans every weekend, the national media, the cries for new players and a new stadium, proved too much and too expensive.
Sameer Al Ansari is about to experience all this first hand. Football fans taking over football clubs have historically been marriages made in hell. Ansari is a smart man - if anyone can break the mould, he can. But I wouldn't hold your breath.
Andrew Neil is the former editor of The Sunday Times and chief executive of BSkyB. He is currently chief executive of Press Holdings Media, chairman of ITP, chairman of World Media Rights and a presenter of This Week (BBC1) Daily Politics (BBC2) Straight Talk (BBC News24).
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Feck me lynds i hope thats true and not a load of sh!te from andrew neil
newspaper in the hope we will be bought out by DIC. If they walked away when the bidding was around 150Mil why on earth would they try to bid now when the price will be 500Mil.
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