Abu Dhabi doling out the cash left and right.
Abu Dhabi's rulers move from falcons to football
By Rob Hughes and Landon Thomas, Jr. Published: September 2, 2008
LONDON: Sports teams have long been the playthings of the rich. But by swooping in to buy the English soccer club Manchester City, the ruling family of Abu Dhabi has demonstrated just how much money it now takes to play in the big leagues.
"Our goal is very simple - to make Manchester City the biggest club in the Premier League," Sulaiman Al Fahim, a property developer who is reportedly managing the Manchester City purchase for Sheik Mansur bin Zayed Al Nahyan, said in an interview with the BBC. "We will buy whatever is needed."
"You cannot put a figure on what we will spend, like £100 million," Al Fahim added. "More than that might be needed."
Soccer may not yet compare with investing in modern art or real estate or blue chip stocks. But the intense interest in Manchester City, a club with a long history but a bare trophy cupboard, illustrates just how much the bull market in commodities has turned oligarchs from Russia, steel magnates from India and sheiks from the oil rich kingdoms in the Persian Gulf into acquisitive buyers of prized and highly visible Western assets.
More than half of the 20 clubs in the Premier League, the most prestigious in England, are now owned by foreign businessmen. The sale of Manchester City on Monday may have done little more than hand over ownership of the club from the exiled former Prime Minister of Thailand to the royal estate of Abu Dhabi.
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Still, it represents an important shift. It may be the first, but it is unlikely to be the last, venture into English soccer by the rulers of the Gulf states. Abu Dhabi moved swiftly, almost secretively, to buy Manchester City even as its better-known neighbor, Dubai, has been bidding for two years to purchase Liverpool.
There is a game within a game going on. Before they had oil, from 1958 onwards, the families ruling the kingdoms of Abu Dhabi and Dubai - the Nahyans and the Maktoums - amused themselves with competitive falconry. They still have that, and the families today are somewhat intermarried. But in recent years Abu Dhabi has felt overshadowed by the more entrepreneurial and flamboyant rulers of Dubai, who have turned their kingdom into a magnet for global business.
Despite commanding more than 9 percent of the world's oil supply, Abu Dhabi has sometimes seemed jealous of Dubai's ability to draw attention to itself, in part by creating a hub in the Middle East for prestigious sporting events.
As the emirates get richer, Western entrepreneurs who bought into the soccer league on the expectation of making money are finding that they cannot keep up. That is why most experts in the field say that it is only a matter of time before Tom Hicks and George Gillett Jr., the American sports entrepreneurs who control Liverpool, cut their losses and sell the club to the persistent bidders from Dubai.
As for Abu Dhabi, it accrues a yearly cash surplus exceeding $50 billion. Its sovereign economic fund, the Abu Dhabi United Group, is, by most outside estimates, worth a trillion dollars and rising. It has a 7 percent stake in Citigroup. It invests in Ferrari and General Motors. Also planned are a $1 billion museum modeled on the Louvre in Paris and a new campus, to open in 2010, that will be a branch of New York University.
It is arguable that none of those projects achieved the same global headlines as the takeover of Manchester City, followed up within hours by the purchase of Robinho, a Brazilian world star, from Real Madrid for £32.5 million, or $59 million. Hours before that midnight deal, Chelsea, the London club owned by the Russian billionaire Roman Abramovich, was trying to tie up a $50 million deal for the same player.
Abramovich has already spent five times that sum on Chelsea after rescuing the club from indebtedness five years ago. Abramovich, reflecting the scale of his fortune, never talks about his motives or complains publicly when, for example, he offloads two players - Andrei Shevchenko to AC Milan and Shaun Wright-Phillips to Manchester City - for a fraction of the $100 million he spent on them.
He knows, as most of the entrepreneurs must, that buying into soccer is a financial loser. Mohamed al Fayed, the Egyptian owner of Harrods who became the first foreigner to buy an English team, Fulham FC, in 1997, is on record as saying it is impossible to make money out of club ownership.
This despite the $5.3 billion that the 20 Premier League clubs share from television rights over the current three-year contract. As quickly as the money trickles in, it seeps out on acquiring the world's best players and paying their multimillion-dollar wages.
So why do so many rich foreigners invest in English soccer?
Abramovich bought a Western persona at a time when one or two other oligarchs were being locked up in Moscow jails. Thaksin Shinawatra bought a way of keeping himself in the public eye - in England where he seeks asylum and in Thailand where he once hoped to go back.
By contrast, the Glazer family that borrowed to buy Manchester United and the two Americans at Liverpool made what they thought were sound investments in an English sport they believed could be more profitably marketed abroad.
But many years ago, when Gianni Agnelli, the chairman of the Fiat empire in Italy, bought world-famous players for his team, Juventus, he admitted that it was a frivolous pleasure that became addictive. He preferred it to buying paintings to lock away in a vault or racehorses or acquiring more property than he could manage. "I spend more than I should, in time and money," Agnelli once told the International Herald Tribune. "But I find it compelling." |
