I don’t think Dangote can afford to buy Arsenal – Etcetera

Aliko Dangote

Dangote’s net worth is about $15.7 billion, Arsenal football club

is worth about $2bn but singer turned writer Etcetera

doesn’t believe he can afford it. See his opinion below

and tell us what you think

You have sold some shares and you’ve got some

money to spend. Now you want the ultimate: Your

own football club. Hold on there, are you sure?

Football clubs are a nightmare to run. In fact, almost

two-thirds of premiership clubs have been in

receivership at some point. Remember Portsmouth

FC ploughed through four owners some seasons

back and landed itself a debt of £60m and relegation

in the Championship.

Etcetera kaybaba
Etcetera

 

Think of Leeds United’s tragicomic collapse; the balls-up at

Cambridge United; Rotherham going into receivership in

2006 and 2008; Southampton’s sorry saga. And, of course,

Crawley Town getting a winding up order years back. So,

what do we know? Don’t buy a football club for the glory.

So, before Dangote aspires to join Abrahamovic, Glazers

and Al Mansours, he should make sure he knows his stuff.

But does Dangote know how much these football clubs really

cost?

It is often mistaken that these clubs go for a quid. For

instance, Swansea City was bought by investors for £100,

and sold four years later for a £1. But beware: underneath

those figures lies a pile of debt.

Does Dangote have the cash, can he do an Abramovich?

No, he can’t. New UEFA Club Licensing and Financial Fair

Play Regulations already in place, require clubs to balance

their income and expenses. Dangote cannot operate under

such rules. The premiership is too organised and

transparent for any businessman to easily manipulate. The

wage structure of footballers is too large for a

businessman like Dangote to take on. Let us forget that

those goons at Forbes have told us that Dangote is Africa’s

richest man. As it stands, he cannot afford the outright

purchase of a big football club like Arsenal. It is as simple

as that. He will go broke. It is a possibility if we are talking

about a club in the coast of West Africa. Dangote has most

of his wealth in shares and physical assets and the football

business requires liquid cash to sustain. Have we all

forgotten that the same Dangote got a 3G licence and sold

it to Etisalat? He is a very smart businessman who knows

how to pick his areas of investments.

Can he get Bank backing?

Unlikely! No serious private equity firm would get involved

with a football club. They are not proper businesses. Too

much politics, too many egos. And there’s no proper exit

route – the history of football clubs on the stock market is

chequered, to say the least. They are rich men’s toys, great

for entertaining your mates, and that’s about it. I don’t think

Dangote can afford such an expensive toy.

A lot of people think it is relatively easy to make a million

pounds by being the owner of a football club. That all you

have to do is put in that first two million pounds. But these

people should also know that since the English Premier

League was formed in 1992, football finances have dried up

to the extent that making a million pound profit is no longer

a walk in the park. It is also the case that buying a football

club is unlikely to yield that much of a return. Despite the

significant TV and other commercial revenues, football

clubs in England’s top flight still struggle to break even.

This is ironic, given the goal of setting up the Premier

League was to stabilise club finances.

Is Dangote putting his heart over his head?

Yes I think so. Simon Jordan, in his autobiography, tells the

story of how owning a football club can go terribly wrong.

Jordan amassed a fortune of £75m in the early days of the

mobile phone revolution. In 2000, he paid £10m to take

control of South London football team Crystal Palace,

becoming the youngest football club chairman at the age of

32. He was warned by many not to do it, but having

watched the club since his childhood, he could not resist.

Fast-forward 10 years and the club was in administration

and Jordan’s personal wealth largely wiped out. It is

reported that Roman Abramovich, the Russian owner of

Chelsea, has written off more than one billion pounds he

ploughed into the club since acquiring it in 2003. Catching

him up fast is Sheikh Mansour from Abu Dhabi, who has

invested close to one billion pounds in Manchester City

since 2008. Can Dangote write off such a huge amount of

money? It is in fact the amount of money he borrows to

invest in businesses. But again, I think Dangote is just

trying to hype himself. Most of the serious money flowing

into football recently has come from the Middle East. The

Qatar Investment Authority (the country’s sovereign wealth

fund) bought the French Ligue 1 side Paris St Germain in

2011 and has gone about transforming them in the same

way Sheikh Mansour has Manchester City. Forget those

guys at Forbes, Dangote is not in the same league as these

guys.

The Glazer Family bought Manchester United in 2006,

recognising the immense value of its global brand as a cash

generator and the opportunities to enhance it even further.

The cost of buying the club was loaded on to the club itself,

with the revenues it generates used to pay the debt and

interest that the Glazers undertook to buy the club.

Eventually, the hope is that the club will essentially pay for

itself leaving its American owners in possession of a multi-

billion pound asset but till date, the Glazers are still

gnashing their teeth and are still neck deep in debt. When it

was speculated that a Middle East consortium was willing

to pay £1.5bn for Arsenal Football Club, it was stated that

Stan Kroenke, the American who owns about 63 per cent of

the shares in the club, would have made just £400m on his

shares. So, given the appalling financial returns, why do

people buy football clubs?

Who can buy Arsenal football club?

Anyone can buy Arsenal football club, but that anyone

doesn’t include anyone who obtains bank loans to fund a

business. Sir John Madejski, chairman of Reading Football

Club, describes the ideal football club owner as having deep

pockets, mercurial, and not faint-hearted.

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Mr Cage

Damilola is my name, Blogger and Social media enthusiast. I blog about News, Entertainment, gossips and everything you can think of. .

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