Tom Belton assesses the future of football finance
After the abolition of the maximum wage, the Bosman Ruling, the Premier League, millionaire sugar daddies, and the collapse of ITV Digital, football fans could be forgiven for thinking that they had seen it all, but three weeks ago the football world witnessed an event that could spell the advent of an era that no one anticipated.
Step forward Roman Abramovich, billionaire oil tycoon, Russian State Governor and proud new owner of Chelsea Football Club.
Abramovich is one of the world’s elite capitalists.
Ranked by the Sunday Times as the 49th richest man in the world, he has amassed a staggering £4.8bn fortune in the space of 11 years. The scope of the man’s dealings in oil and aluminium have been mind-boggling, but ostensibly above board: he was investigated in 1992 for the alleged misappropriation of 55 railroad wagons full of diesel fuel but eventually cleared.
Abramovich is a tycoon on the Western model. Although the mainstay of his wealth comes from his controlling interest in Russian oil giant Sibneft, he also has a substantial holding in the national airline Aeroflot as well as a television station and the British management company, Millhouse Capital.
The immediate consequences of the takeover for Chelsea FC are twofold. First, they wipe out the estimated £96 million debts accrued by the holding company, Chelsea Village PLC, while overall control of the football club passes from their widely despised chairman (and architect of the Wembley fiasco) Ken Bates, to Abramovich.
Second, they become the cash-richest club in the world.
In this era of the ‘depressed’ transfer market, the sheer amounts of money involved have sparked a media bunfight. Chelsea have been linked with some of the best, and most expensive, players in the world. Even the mention of the word Chelsea in the same sentence as a footballer over the last two weeks has increased their transfer value.
On one hand, the money injection into English football might seem like a welcome relief, but who will really benefit? Chelsea are only seriously interested in buying the world’s best players, and by and large they are playing for the world’s best clubs—and it is no coincidence that this elite are also the richest. Some of this new money may trickle down to the lower echelons of the game, but it is unlikely to come in time for clubs such as Oldham and Luton who find themselves teetering on the brink of oblivion.
The reality of professional football is not about the Beckhams of this world, the public’s perception of footballers influenced by the newspaper and television coverage which concentrates solely on the top of the system.
Football in this country is arranged on a pyramid basis, and as you get further down the structure the finances become smaller and further spread out. While a top Premiership player can take home up to £100k a week and the Division One average wage is £3k, a footballer in Division Three can earn as little as £200—not to mention academy players who are exploited through Government ‘training’ schemes and the majority of them cast on the scrapheap at the age of 18 without a job.
Abramovich is not alone. There are already other bored billionaires sniffing around English football looking for a hobby, and clubs like Aston Villa, Leeds and Sunderland are ripe for the picking. The era of the mega-rich owner could be about to dawn.
If it does, it will spell the end of the game’s disastrous flirtation with the stock exchange. The Russian has already made it clear that he wants to take Chelsea off the Alternative Investment Market—a market which was dragging them slowly into financial oblivion.
Even the most staunch advocates of capitalism will openly admit that football and the city don’t mix. Since Millwall’s failed flotation in 1989/90 only Manchester United ever benefited from the partnership, but even that was a temporary affair. The recent sale of Beckham to Real Madrid only satisfied the shareholders’ lust for returns.
The simple fact of the matter is that clubs like Manchester United will no longer be able to compete with the spending power of Chelsea. Football is an expensive business, and rarely one that turns a profit. PLC boards and shareholders will always struggle to make returns on their investments—and those returns are always at the expense of football and ultimately of the fans.
How Abramovich deals with the people that really matter in football, the fans, remains to be seen, but you can rest assured that there will be happy faces around the streets of west London for a while to come.