American owners have hogged the headlines at www.footballeconomy.com throughout January.  At the end of the month we received the news that Derby County had been acquired by American-based General Sports and Entertainment group, making them the fourth American owned club in the Premiership.

However, the real focus of attention has been Liverpool where the majority of fans would like to see the back of the American owners, George Gillett and Tom Hicks.  Indeed, only one of the existing American ownerships of an English soccer ‘franchise’, that of Randy Lerner at Aston Villa has worked out well as far as the fans are concerned.   When Villa played at Liverpool recently, their supporters ironically chanted ‘USA, USA’.   The Glazers remain unpopular at Old Trafford despite the success of Manchester United on and off the pitch.

It is tensions between the owners and manager Rafael Benitez that have turned the fans against the Americans, but there have also been tensions between the two owners themselves.   It was Gillett’s idea to take over Liverpool, but he needed the deep pockets of Hicks to bring the plan to fruition.  Over time, Hicks has become the more dominant partner.   There were reports that Gillett wanted out, particularly when he discovered the extent of the personal financial guarantees that could be required for a refinancing package.

Despite the global credit crunch (which saw the AAA rating of Arsenal’s bonds downgraded) the duo got their £350m refinancing package, but it is thought that it will have to be renegotiated in eighteen months’ time.  At the insistence of the Liverpool old guard, most of the debts are to be charged to the duo’s investment vehicle, Kop Football.

The money will provide some money for player trading and enable preparatory work to start on the new stadium at Stanley Park which is seen as essential as a revenue generator if the club is to start to catch up with rivals Manchester United.   However, the original ambitious plans for the stadium have been modified.

The story is by no means over.   Dubai Investment Corporation (DIC) hoped to buy the club last year.   They hoped that the troubles between Gillett and Hicks would give them a new buying opportunity and it was reported that they had started to sell assets to ensure that they had the cash available.   They were unhappy about the refinancing package as they thought it would put up the price of the club.   However, they are still there waiting in the wings and it could be that the club will change hands again within the year.

Peace breaks out in Europe

One of the biggest stories this month has been on our world football page.  Under the leadership of Michael Platini, Uefa have come to a peace agreement with the big clubs organisation, G-14.    Arsenal and Manchester United (but not Chelsea) were the English members.  G-14 is to be dissolved next month and replaced by a European clubs organisation that will have at least one member from each of the 53 countries represented in Uefa.   So Andorra, the Faeroes and San Marino will sit alongside England, Italy and Spain.

As their price for dissolving their organisation, the big clubs have seen one of their longest running grievances resolved.   In future they will be compensated when their players are called up for international duty and the amount made available will increase over time.

However, it may also be that G-14 could see that its influence in Brussels was waning.   Uefa’s agenda of creating social solidarity through sport was gaining ground in Brussels, as reflected in the European Commission’s white paper on sport published last summer.

One consequence of the dissolution of G-14 is that the idea of a European super league is at last off the agenda.  While the idea was attractive to some media interests, it never appealed to fans and would have led to a highly damaging conflict in European football.

Clubs in trouble

League 1 Luton Town have been through a very difficult period.  They suffered a ten point deduction for going into administration and despite winning a replay in the FA Cup against Liverpool saw some of their best players sold off by the administrators in a fire sale.  A new consortium is now close to being in place to run the club.  In the longer term, they need to get away from their cramped ground at Kenilworth Road and move to a new stadium projected for a site near the M1.    In the non-league, Worcester City’s plans to wipe out their debt by selling their stadium for housing and moving to a new stadium on the city’s edge provided by a developer has attracted criticism on planning grounds.

Bournemouth has given notice that they intend to go into administration.   The Cherries were one of the very first clubs to go into a form of community ownership, but this did not solve their problems and they had to sell off most of their ground and lease it back.   The town is prosperous enough but many of its citizens have little interest in football.   Those that are fans often have allegiances elsewhere or prefer to watch Championship football at Southampton.  

Sheffield Wednesday should be able to prosper, despite being in a two club city, but they continue to be beset by serious financial problems.   There are suitors around, but the complex ownership structure does not make for a quick solution.
 

North of the border

With limited television revenues and small gates, the Scottish Premiership is not an easy place to be if you are not Celtic and Rangers.  Despite a run to the Scottish Cup final, relegated Dunfermline Athletic reported operating losses of £137,908.  However, a loan of over £900k made by a company associated with two of the directors was generously written off.

Dundee United is currently third in the Premiership, but reported losses of £509,000.  Not only are they in a two club (but not large or prosperous) city but rivals Dundee are on the opposite side of the same road and the two grounds overlap.

Clubs in clover

Queen’s Park Rangers could claim to be the richest club in the world, but the reality is that one of the world’s richest men has bought a stake, largely for his son-in-law.  While Super Hoops fans are talking of challenging Real Madrid for European supremacy in a few years, there is to be no immediate bonanza.   A steadier development strategy appears to be envisaged which should offer a better chance of longer-term success.

Manchester United published an excellent set of trading results.   What was interesting was their insistence that they headed the English football financial league; although on a European level Real Madrid has a biggest turnover.  They were clearly peeved by claims by Arsenal that they were ahead of them in the money stakes.

Football Economy is a monthly article about the business of football by Wyn Grant, the publisher of footballeconomy.com.