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The Value of a Stake in The Beautiful Game: Strategic Intent Behind Premier League Football Club Own

Will Brookes
May 5, 20227 min read

In most industries, the benefits of owning a stake are self-evident. Generally, businesspeople see it as an opportunity to influence the long-term future of the company and, ultimately, enjoy a share of the company’s success. Football has always been different. Whilst modern football clubs operate as businesses, there is a distinct, intangible benefit that the owners derive from this ownership. Prior to the ‘modern period’ of English football, which can be said to have started around the turn of the millennium, ownership of a football club was generally seen as a philanthropic endeavor. Owners were typically well-respected members of a community and saw the ownership as a means of maintaining the football club as a social institution.[1]


This changed as the English Premier League (EPL) was formed and large clubs experienced two key changes to their customer base. Firstly, the global audience of topflight English football increased exponentially. Furthermore, these fanbases became increasingly diverse in terms of culture and location. Although this was arguably good for the sport, it meant that elite football clubs were no longer necessarily the localised social institutions than they previously had been. Over the past 25 years, this trend only continued as revenues and reach grew. One key statistic which represents both variables is TV broadcasting rights revenue. Whilst topflight football generated an annual average of 191 million GBP between 1992 and 1997, it generated an annual average of 5.1 billion between 2016 and 2019 – just 20 years later.[2] Additionally, a Deloitte Money Report released in 2020 deemed Premier League football to be ‘recession proof’ following consistent growth in the wake of the 2008 housing crisis. There is a caveat here in that the pandemic did leave a dent in EPL teams’ incomes, however that was largely due to government restrictions rather than financial difficulties.[3] As a result of this transformation, the EPL now has an audience of roughly 1.35 billion across 188 countries.[4]


Following this unprecedented growth, there are now owners who have taken control of EPL clubs with the intent of maximizing profits. For example, many clubs now have American owners, with 8 out of 20 EPL clubs being owned by American individuals or companies.[5] Perhaps the most famous of these transitions is Manchester United, who were effectively bought in 2005 when Malcolm Glazer purchased a 27.8% stake in the club and consequently had a controlling interest in a takeover. The same has happened at many other clubs who have been brought by foreign owners with the intent of making a profit. There are now only 5 EPL teams with British owners and only one team (Tottenham) in the ‘Big 6.’ In the interest of clarity, that is not to say that foreign owners are solely focused on profit whilst British owner are not. However, the influx of owners with no ties to a given club does imply a shift from ‘bourgeois philanthropy’ to profit-maximisation.


This process makes a lot of sense and, consequently, a simple narrative emerged – EPL clubs had potential to grow; therefore, wealthy investors got involved to realise that potential and take a share of the profits. This narrative featured two types of owners. Firstly, there is the regional investor seeking to maintain a football club for social and financial gain. Secondly, there is the outsider who invested in the club with the intention of running it as a business. In the case of the EPL the former seems to have replaced the latter. In spite of this narrative, there is a third type of owner who does not fit into either category, whose motives are a bit more complex.


In 2008, Sheikh Mansour dramatically bought over 90% of Manchester City’s stock (he would acquire the last 10% a year later) via the investment vehicle Abu Dhabi Investment Group (ADUG). Among other things, Sheikh Mansour is the Deputy Prime Minister of the UAE and a member of the royal family of Abu Dhabi. However, he has consistently asserted that his ownership is an individual venture as opposed to a ‘state-backed’ venture. That being said, there are some blurred lines here and many of the City Football Group’s business relationships are clearly forged with an agenda in mind. In fact, Thani and Heenan assert that Sheikh Mansour has used the football club to “promote Abu Dhabi – not Manchester – as a business, transport and sporting investment hub.”[6]


Despite this focus on Abu Dhabi and City’s global brand, Sheik Mansour and the new Manchester City ownership have done everything they can to win over the city of Manchester. Perhaps the most obvious example of this is the unprecedented amount of money spent on exciting new players. Since the takeover in 2008, Manchester City have a net spend of roughly 1.2 billion GBP in the transfer market – greater than any club in the world during that time period.[7] This newfound financial clout was epitomized in 2009 when Manchester City poached Argentinian international Carlos Tevez from long-term rivals Manchester United, incidentally one of the largest teams in the world at the time.


In addition to these ostentatious acquisitions, a large chunk of this investment is oriented towards long-term success. Manchester City’s chief infrastructure officer, Jon Stemp is quoted as likening Sheikh Mansour’s investments to an “iceberg coming out of the water,” claiming that “people only see the tip of it.”[8] The investment enabled Manchester City to create the most elaborate youth and training system of any club in the world, a monument to the transformation of the club. This investment has filtered down to local fans as well, with the manager of the club’s ‘City in the Community’ program, Alex Williams, claiming that City engage with “the best part of 50,000 young people in Manchester every year.”[9] Meanwhile the indirect benefits to the city are incalculable. Studies in Barcelona and Madrid have concluded that football is among the chief drivers behind the hospitality industry, this is starting to happen in Manchester as the M.E.N reported that almost 30 new hotels are expected by 2023.[10] The Chair of Manchester Hotelier’s Association has described this as an unprecedented expansion.[11] On a larger scale, the Thinktank Centre for Economic and Business research estimate that a city’s growth can be increased by over 1% by participation in a title race, a situation which Manchester City are now accustomed to.[12]


It is clear that Sheikh Mansour’s investment is the source of much soft power amongst football fans, but the question remains: what was the purpose if investing in the first place? As mentioned earlier, it has been used as a vehicle to further the interests of Sheikh Mansour and Abu Dhabi. In some cases, the benefits that this venture has brought to Sheikh Mansour are apparent. Etihad Airways was formed in 2003 by a royal decree and is owned by the government of Abu Dhabi; it is believed to be the second largest airline in the UAE. Since signing a lucrative deal with Manchester City, which includes naming rights to the stadium, the airline has grown enormously. In 2005, the airline carried roughly 1 million people to 21 destinations. By 2012 – 4 years after the takeover – it was carrying 10.3 million to 96 destinations.[13] It is hard to know whether this growth was caused primarily by the newfound prominence of the airline or the general increase in tourism to the UAE. Either way, the UAE and Abu Dhabi are clearly forging links with the rest of the world off the back of the association with City Football Group. Another often overlooked advantage is the establishment of relations with China via the Chinese consortium, CMC, which purchased a 13% stake in CFG in 2015.[14]


There are further examples here and there which demonstrate Sheikh Mansour’s use of CFG to promote other business ventures or interests of his. Overall, it aligns with the notion that the Gulf States are seeking to diversify beyond oil exports and, whilst this conflict of interest could be seen as unfair, it is true that football club owners have always used their platform to advertise and support other pursuits. However, this has serious consequences when applied to nation states. Though it is impossible to quantify the effectiveness of this strategy, it is clear that Manchester City and other clubs belonging to the CFG have been used to promulgate the appeal of Abu Dhabi and the UAE in what amounts to a modern-day propaganda campaign. Consequently, many football fans no longer associate Abu Dhabi with the Yemen Crisis, or their abhorrent human rights record, or the blatant abuse of migrant workers.[15] Instead they’ll think of Aguero’s iconic goal against QPR, or the 2020/21 Champion’s League run, or the shattering of the Premier League points record.


This issue is much larger than Manchester City as well. Many unsavoury regimes have identified football as a means of boosting their global PR. A commonly cited example of this is the Qatar World Cup. Although it is important to make the distinction between ‘sports diplomacy’ and ‘sportswashing’ so as not to disparage the genuine efforts of nations to forge connections without ulterior motives, Qatar does not fall into that category.[16] The outrageous human rights record combined with a distinct lack of ‘natural’ interest in football suggest that this is yet another example of sportswashing.[17]


In summary, there are myriad moral conclusions to be drawn from this modern aspect of the beautiful game. It is clear that some areas of high-level football are being appropriated in order to forge a positive association within the minds of the fans. Given the consistently laissez-faire approach of Europe’s footballing authorities to the encroachment of these nation states, there is no easy fix to what many would see as a serious issue. If nothing else, it is vital that fans are aware of the ways in which they are being manipulated to overlook the issues with their clubs’ patrons. Furthermore, this development only reinforces the professional football industry as one of the most influential businesses in the world. There is perhaps no industry outside professional sport in which the consumers have such a strong attachment to the brand. Of course, this is not necessarily a bad thing but it must be acknowledged, especially as more and more parties try to take advantage of it.


References

[1] Lassus, A., ‘Strategic intent behind foreign acquisitions and ownership of English Premier League football clubs’, (Helsinki, 2021), pp. 2-5.



[3] Lassus, A., ‘Strategic intent behind foreign acquisitions and ownership of English Premier League football clubs’, (Helsinki, 2021), p. 2.




[6] Thani, S. and Heenan, T., ‘The ball may be round but football is becoming increasingly Arabic: oil money and the rise of the new football order’ in Soccer and Society Vol.18(7), (2016), pp. 1012-1026.




[9] Ibid.



[11] Ibid.


[12] Ibid.


[13] Thani, S. and Heenan, T., ‘The ball may be round but football is becoming increasingly Arabic: oil money and the rise of the new football order’ in Soccer and Society Vol.18(7), (2016), pp. 1012-1026.



[15] Human Rights Watch, ‘World Report 2021’, (2021), Available at: https://www.hrw.org/world-report/2021/country-chapters/united-arab-emirates


[16] Soyland, H. S., ‘Qatar’s sports strategy: a case of sports diplomacy or sportswashing?’, (Lisbon, 2020).


[17] Ibid.

 
 
 

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