In a previous post (http://footballisfixed.blogspot.com/2006/12/las-vegasisation-of-football.html), we addressed the complete absence of the issue of betting when the media confronts the ongoing stream of takeovers of Premiership football clubs.
For sure, the lucrative television rights, sponsorship and global merchandising prospects play a part in the strategies of the tycoons taking over our game but the financial gains from global gambling opportunities are truly stratospheric.
Global betting turnover on a major Premiership game can exceed £200m and the average turnover on matches in the top English league is around £50m per game. Ownership of the participatory clubs releases huge potential revenue streams for the investors whether they elect to link closely with one particular bookmaker, trade on a proprietary basis or work with a consortium of market makers.
Let's look at some comparative figures here to demonstrate the destabilising impact of gambling on football.
* Projected cumulative Premiership revenues for 2007/08 = £1.7bn (this is equivalent to an average of £85m per club - although there is a greater slice of the pie for the big 4). These figures cover tv rights, merchandise, ticket sales etc.
* Manchester United sponsorship deal with AIG = £14m per year (over four years).
* Hicks and Gillett paid approximately £220m to takeover Liverpool FC.
* Liverpool v Chelsea had a global betting volume of £225m on just one match. Working alongside compliant Asian or European market makers would enable Hicks and Gillett, for example, to finance their takeover of one of the Big 4 teams within one season simply by betting on their teams matches selectively. And, this is without their betting/trading activities particularly tilting the markets. Obviously, a more psychopathic approach to trading on the betting markets could guarantee the returns in a shorter period.
To understand how the Premiership is being primed for this future, we need to look at the regulatory, territorial and business structures that are being gradually put in place to facilitate this operation.
The British government has spent much of it's terms in office cosying up to the betting industry on a range of levels - the super-casino in Manchester; the forthcoming relaxation of regulatory barriers to further super-casinos around Britain; sympathetic treatment of betting taxation issues; the refusal to face down corruption in the sport; the lax safety nets for punters addicted to online poker, casinos, the National Lottery and other gambling products etc etc. Britain is now the most favourable gambling location in the west. Bookmakers that moved offshore (primarily to Gibraltar) in the 1990's are returning home to find a far more supportive environment (although some layers are maintaining their offshore trading rooms for global trading practicalities).
Additionally, as London is a leading global finance centre, the supportive expertise and trading infrastructure is already in place. All of the major City firms are taking a proactive interest in football nowadays.
Most English football clubs are in private ownership which prevents public scrutiny of their financial operations. This inevitably attracts investors who are experienced in the "wild west" form of capitalism where anything goes in the pursuit of profit. Nobody will have full access to the balance sheets of people like Abramovich and Gaydamak. These individuals create complex accounting structures across different territories to disguise their proprietary financial operations.
The combination of infrastructure, expertise, regulatory environment, business structure and complicit government is ideal for the project's foundation.
Comparatively, in the US (hardly wet-behind-the-ears when it comes to shareholder capitalism), the NFL prohibits a) club owners having links with bookmakers, b) club branded credit cards being foisted on gullible fans and c) most online gambling. So, England steps up to the plate and US investors look across the Atlantic for a favourable environment.
Let's look at the individual investors (and potential investors) for some further clues as to these operator's hidden agendas.
* Tom Hicks - Hicks has had a long term interest in leveraged buyouts and has close associations with the Private Equity industry. The man has a history of utilising creative destruction forms of capitalism. He is a personal friend of George W. Bush.
* Randy Lerner - Having started out as an investment analyst (he specialised in arbitrage which is the market activity that adds least value to the financial system), he became chairman of MBNA credit card firm in 1993. MBNA was the world's largest independent credit card issuer.
* Eggert Magnusson - Made his money out of brewing beer in Russia after the Iron Curtain came down - 'nuff said...
* Roman Abramovich - The 11th richest man in the world has current legal issues including France commencing money laundering investigations into companies linked to Abramovich. A friend of Russian oligarch, Boris Berezovsky.
* George Gillett - Similarly to co-conspirator, Tom Hicks, Gillett has a long history around the Private Equity industry. His financial CV includes the creative use of American bankruptcy laws to dissolve his own business while walking away with $32.1 million - which he used to restart his business empire. He's big in meat. We suggest Liverpool closely check the small print!
* Arcadi and Alexandre Gaydamak - It is a generally accepted fact within the game that Arcadi is in control at Portsmouth although his son covers for him. Arcadi Gaydamak is a bit of an operator. This man travels on his Angola passport to avoid the French arrest warrant that exists for illegal arms dealing, tax evasion and money laundering. He was allegedly involved in the Mossad-backed regime-change in Angola when Savimbi was taken out and the west exerted control over Angola's oil industry. He is currently seeking a populist political ticket in Israel.
* The Glazers - Much has been written about the Glazers and we won't revisit the evidence here as there are numerous websites addressing the Glazers hidden agenda. Malcolm is another who counts George W. Bush among his friends.
* Sheikh Mohammed bin Rashid Al Maktoum - Even richer than Abramovich (5th richest person in the world), Big Mo has extensive horseracing interests - being a leading partner in Godolphin. His wealth is estimated at £14bn (which is an awful lot of shirt sponsorship deals!).
* Stan Kroenke - Linked to Wal-Mart by marriage and business, Kroenke is now also linked to Arsenal. Nepotistic advantage is the basis of his business empire.
The majority of the individuals mentioned above are in the Forbes 400 as one of the richest people in the world.
Why are people from this strata of society taking an interest in the English game?
It must be something to do with the tradition, the passion, the kudos, a lifelong love of the game, the footballing culture, the crowds and the atmosphere... that sort of thing.
In our estimation, we will see the first £1.0bn Premiership betting market in the next 2-5 years. Such enhanced liquidity will allow bets of £5m to not be worthy of note in the marketplace while the truly colossal positions will be hovering around the £100m level. For one football match!
Gillett and Hicks got Liverpool on the cheap.
If I were a young moneyhead, I would have to consider the opportunity of taking up a career in football refereeing!
