In the bad old days, ownership of English football clubs was a fiefdom whereby local bigwigs could demonstrate their importance to the community by piloting the local football team in their sporting endeavours. This breed of owner varied from the thoroughly incompetent to the sociopathic, from the true hobbyist to the man on the make. The more financially focused of these individuals are now sitting on the oodles of cash that their ownership bestowed.
Following the corruption that arrived hand in hand with the takeover of the national game by Sky Television, there was a rush for the leading clubs to go public to allow fans the chance to buy a very small slice of their clubs and to feel, in some insignificant way, that their club belonged to them. Such a type of share ownership was highly unusual and totally irrational in the main. Whereas City analysts bought and sold shares in the listed clubs relating to the real world occurrences that impacted upon a team's share price, the true fan bought and held without any assessment of the underlying value in the stock or any atmospheric analysis of the sector. The resulting financial adjustments cost the fan so that the money could be redistributed to the far more deserving pockets of the analysts.
In addition to the belief mechanism that might persuade a fan to hold a share in his club whatever the fundamentals might indicate, public ownership of football clubs possessed another structural peculiarity. For example, if Villa and Birmingham were publicly owned and circumstances suggested that the Villa share price was overvalued while the Brum price was indicative of value, what should be the rational behaviour of a Villa fan holding shares in his/her club? To maximise utility, the fan should sell Villa shares and use proceeds to purchase shares of the Blues. And does anybody believe that such a transaction might have occurred? There are clear parallels in this type of irrationality in trading with the attitude of ethical investment houses which avoid highly abusive industry sectors like arms, pharmaceuticals, the nuclear industry, commercial logging etc. The prime difference, however, is that atmospheric analysis favours these investment boutiques in some respects as the global system must change to attempt to combat global warming.
As the wave of new hyper owners have moved in on the English game, there are currently only three Premiership clubs that are still publicly owned. Arsenal are suffering the distraction of Kroenke's attempt to take the club private while Birmingham's plight is similarly poised in relation to Yeung. If either of these individuals are able to persuade one other leading shareholder to sell (and everybody has their price) then only Tottenham will remain publicly owned and there are rumours of ownership machinations here too.
We have detailed previously the psychopathic reasons behind the tyrants taking their ventures private. Privacy avoids regulation, undermines hostile external interests and allows far more creative accounting with respect to tax and the use of Offshore Financial Centres (OFCs). Furthermore, the decision-making core is very limited allowing the financial strategy of the club to be symbiotically correlated with the other business operations and financial circumstances of the owner(s).
So what is the real difference between the likes of Rick Parry, Ken Bates and Martin Edwards and Thaksin Shinawatra, Carston Yeung and Alexandre Gaydamek? The most obvious and the most irrelevant differentiation is nationality. Xenophobia has formed the bedrock of all media analysis regarding the wave of takeovers with the degree of fuss being dependent on the cultural lack of equivalence. So Mike Ashley is as pure as the driven snow; the Americans, Russians and Israelis are a little more dodgy but leveraged buy-outs, arms dealing and oil kickbacks are what we do so that's okay; Shinawatra and Yeung, however, are beyond the pale. Which, of course, they are. But so too are Gaydamek, Abramovich, Hicks, Gillett, the Glazers, Magnusson etc. Much has been made, quite correctly, of the human rights abuses by Shinawatra in Thailand where he ordered a shoot to kill policy regarding drug dealers and enforced a severe clampdown on muslims in the south of the country leading, in one particularly horrendous instance, to large numbers of innocent people suffocating to death in overloaded prison lorries. The other hyper owners are equally responsible for the carnage that their financial strategies have created. We could dissect any of these owners but we'll choose Gaydamek as the structure at Portsmouth includes several parallel features to Shinawatra. Firstly, we are dealing with shadow ownership which is illegal under Premier League rules. Secondly, Gaydamek senior is avoiding mainstream Europe due to an arrest warrant for illegal arms dealing regarding the overthrow of Savimbi in Angola. Thirdly, there is a Russian-Israeli link to underground betting markets. Fourthly, Frannie Lee is as dodgy as Harry Redknapp. And, fifthly, Portsmouth are heavily compromised by the bungs inquiry and were one of the select clubs raided by the City of London police last month.
There was virtually no public or media uproar relating to Gaydamek's takeover yet we see many similarities between the two scenarios. The powers that be in the English game are more than happy for the media to focus on the xenophobic route as this direction prevents a thorough analysis of what is being done to our game. Psychopaths, of which Gaydamek and Shinawatra are textbook examples, tend to behave to a similarly abusive template in all of their business activities. What are the potential routes ahead for these hyper owners and the sport that they are in the process of corrupting?
Assuming that the Birmingham takeover progresses, exactly half the Premiership is now privately owned by this new breed of operator. When absolute ownership is in too few hands and when those hands have a history of extremely abusive business and life behaviours, the game is inevitably in considerably more trouble than if we were just dealing with the likes of Alan Sugar. The illegal betting strategies, the corruptions of match outcomes, the enslaving of 2nd and 3rd World players via illicit contractual arrangements, the coercion of players and officials will be the norm - not the exception but the norm. From a market analyst perspective, this infrastructure is already in place to a large extent and we are now merely dealing with the degree of manipulation and corruption as opposed to the probability of such corruption existing at all.
So, the corruption is inevitable and the game is seemingly up but what is the likely fallout for our new footballing world?
The polarisation in wealth will lead to a European Super League sooner rather than later and many lesser clubs will cease to exist (as is already happening in the secondary footballing countries in Europe whose territories are permanently excluded from the Champions League). Despite Platini's statements regarding the meritocratisation of the game, it simply will not happen and, indeed, any impetus from UEFA towards making it happen will merely hasten the inevitable Super League. The prevalence of gambling corruptions, insider trading, slavetrading of players are the only business options for the disenfranchised clubs.
Although it has taken some time to get around to it, we would wish to culminate this post by focusing on the likely short term impacts of the structural machinations that are destroying football. What is likely to happen this season?
There is an enhanced volatility to be taken into account when addressing the current state of play that simply didn't exist when the wave of takeovers began. After several years of a myopic bull market, the start of season 2007/08 coincides with a major global credit squeeze. All private equity firms and other speculators that have been dependent on the recent cheapness of money will be affected by these new global financial conditions. It is to be expected that the impact on the debt markets will be substantial and, as investors steer clear of riskier debt, in the words of The Economist "the takeover bids that have pumped this year's stockmarket froth will be curtailed and the most debt-laden borrowers may find it impossible to raise funds". Within English Premiership football, there will be four tiers of impact.
Firstly, the individuals at the top of the Forbes Rich List will not have their strategies affected holistically as such individuals are sitting on treasure chests of cash and assets. However, the independently super-wealthy are committed to projects globally of which Premiership football is only one and their assets may well be redistributed to enhance their own financial returns which, after all, is what they are in the game for ie cash and profit as opposed to any love of the Liverpool Reds. Abramovich's tightening of the purse strings at Chelsea is probably indicative of such profit maximisation.
Secondly, the owners who have saddled themselves (and their "beloved" clubs) with excessive debt are in for a painful period of repricing of risk which is bad news for Manchester United and the Glazer family. Repayments will spiral and there will be significantly less money for business operations.
Thirdly, the tyrannical owners who are dependent on the black and grey markets, creative accounting and downright illegality and criminality for their cash will be affected to a lesser extent as their businesses bypass many of the more formalised financial structures. Despite this proviso, the chain impact of the credit squeeze will inevitably reach the OFCs too as the knock on effect of the financial slowdown bites through.
Fourthly and most worryingly are the owners who are simply out of their depth with the new debt environment. Mike Ashley at Newcastle is undoubtedly one such character. As we have previously posted (see: http://footballisfixed.blogspot.com/2007/07/man-out-of-his-depth.html), Ashley is already compromised and the collapse of Kieran Dyer's transfer to West Ham was entirely caused by Ashley attempting to up the transfer price by £2 million ($4 million) after an agreement had already been reached. Ashley's businesses have lost fifty per cent of their value in five months and his credit is being crunched by the developing debt crisis. Highly leveraged operations, of which Newcastle is a prime example, are likely to unravel in full public gaze.
The credit squeeze will, consequently, be a permanent atmospheric stage for the coming Premiership season and one that may not be excluded from any sector analysis.
However, the situation might become worse. The markets are factoring in a 10% readjustment to prick the financial bubble that has been created by the behaviouralist bull run. There are a range of scenarios that might come to pass and a blip caused by a credit readjustment being followed by more rampant market gains is only one of the many possibilities (and not, in our view, the most likely). Despite the slave labour in the Third World that underpins all aspects of the recent buoyancy of markets, the more weighty fundamentals currently in play act AGAINST the capitalist infrastructure. Most obvious is the impact of climate change and the necessary downsizing of the economies of the planet that will be required to address this major systemic risk. Capitalism is still at the phase of playing with climate-related markets and transferring risk and responsibility around as if we were dealing with standard macro or micro parameters. We are not. Systemic risk overshadows all other market and economic systems. What use is a currency in armageddon?
There are numerous other macro and micro issues that might also lead to more than a correction in global share prices. America is likely to achieve a recession this year as the housing bubble has burst more aggressively than the Federal Reserve had projected and the American population literally have no savings for the inevitable rainy day. Combined with increasing protectionism particularly with regard to the advance of China but also related to the Doha Round of trade talks, the Americans are very likely to shut up shop which will merely exacerbate the depth of the recession. Even without America travelling down its well trodden protectionist route, there is a growing awareness among 1st World consumers that the incredibly cheap products from the workhouses of Asia are equally incredibly poorly made. There has been an exponential increase in faulty goods being the result of this globalised shareholder capitalism. The consumers in the west have been fooled by cheap but shoddy products and the financial gains made by the globalised companies will be compromised by both this factor and the dynamic towards wage increases for the abused workers at the bottom of the pile (particularly in skilled production). The fact that many western firms are now advertising, as a competitive advantage, that their call centres have returned to England/US rather than Mumbai/Bangkok is indicative of this reversal - "reward us for offering you what you used to possess, please".
To some extent, the global financial hierarchy and elite can determine the time frame for major financial system adjustments - not an invisible hand but a coordinated corporate one. The credit squeeze was scheduled by the leading lights of Davos but the full impact is not always easy to control as people just will not behave as rationally as they should.
For the exposed financial strategies of the new breed of Premiership owner, the next few months could be increasingly stressful. For the beleaguered football supporters in Newcastle, Manchester, Birmingham and London, that stress will be shared as they watch their beloved team implode in a manner that will make Leeds United's fifteen point deduction seem like a fun option.
To keep ourselves amused until then, we can always refer to the comments made by Shinawatra's lawyer Noppadon Pattama regarding the extrajudicial killings allegedly ordered by the new Manchester City owner: "there has never been a proper probe. His Excellency has never ordered any official to kill anyone."
Oh well, that's alright then. If we are to come across his Excellency's freebie noodles ever again (as offered prior to the Valencia game at the weekend), we might well partake in the safe knowledge that that peculiar taste isn't related to blood money.
© Football Is Fixed/Dietrological
