Thursday, October 12, 2006

Money, money, money

I had a listen to the official MCFC podcast yesterday for the first time and within the other news and propoganda contained within it was the second part of an interview with Alastair Mackintosh, focusing mainly on proposed investment into the club.

The main statement that came from Mackintosh was:

"We are always open to the idea of new, appropriate investment. We continue to look for appropriate parties that might contribute to this football club. Money is money, as long as it is from an appropriate individual who continues to be a custodian of this club, and who keeps in mind our links with the community and in particular our fan base.

If someone was just looking at a football club as a property play, I don’t think they would look at Manchester City as closely as other clubs. I don’t want someone who wants to look at this football club as a property play, I want them looking at this as a football club. This is our home, I want it to be owned by Manchester City Football Club, not an external investor who wants to sell it on."

As Ollie pointed out in his post it sounds that ideal partner profile the club is trying to court is exactly the group that the Supporters Trust are aiming to set up - but as of yet they are still to receive a response of any substance from the club.

One thing that struck me though is would the club be so choosy that any potential investor 'ticked all the right boxes'? To the best of my knowledge the club have been seeking to attract significant investment (rather than an outright takeover) for the best part of three years now and have come up empty handed despite rumours of Norwegians, Russians and god knows who else linked to the club. I can't see that an investor would just look to pump in £10 million or so and be a silent partner or have a minor role on the board. Anyone who was serious would - I imagine, look to gain full control of the club (much like the Glazers or Randy Lerner have done with United and Aston Villa).

If that was the case and a 'sugar daddy' approached the club with a view to a takeover, would they be so strict that the criteria laid out by Mackintosh needed to be met? Could this even be demanded? This is assuming that Wardle et al would be looking to sell outright, but assuming they are surely they would be just keen to ensure their outstanding loan to the club was repaid and they received a tidy profit on their investment?

Maybe a little cynical of me, but I'm pretty sure areas such as 'club custodians' and 'community links' may not be too high on the list for prospective buyers.

vote it up!

1 comment:

Simon said...

I'm with you. As a businessman you look to gain a return on an investment. In that sense you are looking for one (or both) of two things.

1.) If you put the money in you need to get more out - invest £10m over x years, get repaid £15m. This is never going to happen in football because it is a black hole for money. Quite simply with the silly wage structures and appalling accounting practices use you'd never make a healthy return on your money.

2.) Publicity. If you have the backing of the supporters you have a fair army of people well disposed towards your products or services (presuming that you have a business and its products are marketing to the fans) likewise you have exposure on Sky, on the BBC and in daily newspapers - it's a handy way to raise the profile of a brand.

Of course you could just invest because you're a fan and don't necessarily want or need ROI beyond the team's success but I'm discounting that - this is business, there needs to be profit.

Investment in football is mad and is no less mad now in the Abramovich era than it ever was, football is a currency black-hole, money goes in, it doesn't come out. A take-over is a far more lucrative proposition because you then get the club's assets such as they are, (ignore the ground as selling off football grounds is such a PR own-goal as to be regarded as non-viable even where clubs own their ground), but these are depreciating assets with players getting older and progressively more knackered as time passes. You have an army of, hopefully, loyal fans who support you as long as you pump more money into the blackhole I mean club. You also have the Sky money which you don't get to see anyway as a business, it goes into the club. Selling off players is a bad idea as the club will probably get relegated, the fans will get pissed off, so that's no good. Cashing in on the fans is not viable, most footie fans don't have that much cash anyway and are notorious whingers if things are too expensive.

So basically the only benefit is that it's one big marketing jaunt. That's ok as long as you make sure you can maximise your marketing leverage - eg don't miss a trick on the marketing front. You CAN cash in on the fans by offering them stuff they need anyway but in a way that can support the club and give you a return - tie-ups with holiday companies, insurance companies, finance companies, utility, home improvement, car sales, car rental, travel, food, clothing companies where in return for their investment you publicise them to the fanbase who support the club by buying stuff they were going to get anyway from these companies. Beyond that I don't see the draw for big business, there isn't a magic pot of investors waiting to throw cash at football clubs.