Why foreign owners have the potential to both build and destroy clubs

For those who watched the documentary on QPR last weekend, it will come as no surprise that questions are being asked of foreign owners in English football. On the same day, Andre Villas-Boas was sacked after only eight months in charge at Chelsea, the 8th manager in 9 years under the Russian owner, Roman Abramovich. Add to this the animosity that surrounds the handling of Aston Villa by it’s US owner Randy Lerner, the issues that surrounded Liverpool under Hicks and Gillett and the ongoing protests regarding Man Utd and the Glazers and the picture of foreign owenership in English football is not all rosy.

There is a lot of issues with the immense money in the English game; it has caused teams to overspend and be put in major financial trouble, think Leeds United and now Rangers. It also creates unjustified and unrealistic expectations of the fans, who with high investment expect success immediately. This mentality of more money spent equals more trophies is pernicious for the sustainability of the league.

There are certainly advantages to foreign ownership; investment in transfer fees and high wages brings in more talent and hopefully improves the standard of the side. With the money in the game today and the potential riches of the Premier League and Champions League, English football is a delightful prospect.

It is not about making money for these owners, it is more of a past time or a spot of enjoyment. These owners are wealthy business men who have made their money in other avenues; Arbramovich made his money in oil, Briatore with the Benotton clothing company, Randy Lerner inherited the MBNA bank holding company and the Glazer’s have a vast investment portfolio most notably in the food processing industry. They do not look at owning a club as an investment; it is a way to enjoy the wealth they have accumulated. Yet is this a healthy way to run a club, like some play thing? Without the serious passion and love of the club?

The QPR documentary is an extreme case of foreign ownership in English football but this remarkable documentary gives us all an insight into how some owners view their purchases. From May 2008 – January 2010 there were eight full time or caretaker managers in place with the longest run under Paulo Sousa for 5 months! The fans displeasure with the running of the club was evident and success only came when the volatile and rash Briatore opted to leave the running of the club to others. Achievement came when a stable manager in Warnock was given the freedom and time to run the team.

Treating Chelsea like Russia is a remedy for disaster. 

Attention must be looked at the running of Chelsea. When one looks at Chelsea’s success in recent years then seven cups in seven years does not appear a bad return. However, the elusive Champions League trophy is still out of grasp and the signs are that the current side assembled is simply not good enough to compete. It is Abramovich's desperation to win this trophy which has resulted in the high turnover of managers. 

A winning side cannot be assembled over night and be expected to then go and be successful. They need to be developed and brought together as a team. Abramovich’s impatience and perhaps poor advice has led him to prevent development occurring. Instead, the team moves from manager to manager on a continual basis with no clear direction about where to take the club.

Why has Abramovich bought in only successful managers? It is because the Russian mentality is that “if he is successful there he will succeed here.” No consideration has been given to the differences in style, language, tactics or general suitability in the appointments. Simply success; a World Cup winning coach in Scholari, Champions League winners in Mourinho and Ancelotti and a Europa League winner in Villas-Boas.

All these coaches have different methods of how to play the game, yet share the fundamental element that a foreign owner requires, a history of success. Sacking Ancelotti in hindsight was not the best move and brining in a successful yet inexperienced manager was always going to proof to be problematic. Will another high profile manager improve the team? What must be important now is that Abramovich develops a longer term plan for this team. However, is he willing or interested in this? For him it has always been about immediate and instant success.

Why has there been so much change at the club? It comes down to the psychology of the owner and his belief in success. His nationality plays a huge part in his belief and actions; he has a belief that money equals success because in Russia this has been the answer. His handling of "inferiors" is Russian in his ways; simply he does not enjoy being spoken to in certain ways and expects his way to be followed. In Russia authority is centralised  and change is imposed from above. Rights and views, especially against the regime are subordinated for the apparent communal good. This can be seen in Chelsea's handling of managers and of Ray Wilkins. 

Running Russia and a European football club is not the same, it requires more than money; it requires management, discipline and leadership. By not keeping a solid foundation at the club the team has not been allowed to evolve and develop, any new manager does not have long enough to develop his team.

Why are Man Utd, Arsenal and Barcelona successful, on and off the pitch. Because they have a solid foundation, a long term manager and a plan to develop the club. They are not attempting to do it all in the space of a few seasons. Long term development; from the youth academy to the senior side is developed to provide success but also sustainability. Quite simply Chelsea lack this development plan and philosophy.

The trail of money

It is important to note that the rich buisnessmen of Russia were instructed to invest in sport to improve Russia’s standings in the eyes of the world and were instructed to do so also in order retain their independence. Aѕ Abramovich ѕаіd іn a rare interview wіth Thе Observer newspaper іn 2006, money “саnnοt bυу уου happiness. Sοmе independence, yes.”  Abramovich contributed a lot of time, money and favours to guarantee Russia’s world cup bid for 2018. In doing so he has paid his dues and retained his freedom.

Suleyman Kerimov, owner of FC Anzhi Makhachkala who have the highest paid footballer in the world in Samuel Eto’o playing for them, was instructed like Abramovich to invest in sports to retain his freedom. FC Anzhi is based on Dagestan; a place affected by Islamic insurgency, occasional outbreaks of separatism, ethnic tensions and terrorism since the 1990s.  Kerimov has invested in the team and area to improve standards and to improve Putin’s standings in this mixed region. 

These owners don't have genuine interest in the teams or even football. They are at the mercy of the Kremlin who believe that these men have a duty to serve their country for what their country has given them. Fans of these clubs cannot deny what their wealth brings, but the ethics of this is not questioned enough in my opinion. 

Financial fair play rules

Chelsea have benefitted hugely from Abarmovich's funding since his takeover in 2003, but UEFA is cracking down on funds from benefactors in a bid to make clubs self-sufficient. Former Chelsea chief executive Peter Kenyon had vowed to see the club break even by the 2010-11 season back in December 2008, but last year the club reported a loss of £70 million. With UEFA threatening to throw clubs out of the Champions League from 2014 if they spend beyond their means, Blues chairman Buck says they are working harder than ever to improve their financial plight.

Income across the top leagues across Europe has continued to grow to a new record every year ; in 2010 the figure was £12 billion up by £700 billion from 2009. It is players wages which are the biggest element at £14 billion. All together club’s losses have gone from £600 million to £1.4 billion. Uefa presented this to demonstrate a need for change.  

To prevent a potential crisis.

The new rules will require clubs in UEFA competition to have limited their losses in the two previous financial years to a maximum of £40 million if that is covered by an owner. If there is no rich man to bankroll a club the total losses in 2012 and 2013 financial years can amount to only £5 million.

The new rules allow clubs and their owners to spend unlimited amounts on stadiums, youth development and infrastructure. The idea is to move towards a more stable planning, rather than lurch between transfer windows desperately seeking new rich buyers to scoop loses. This shows sustainability and investment.

Questions have been raised regarding the financial fair play rules. On paper they appear to offer sustainability and look to prevent teams like Leeds and Rangers from over spending to keep up which ultimately forced a team to live beyond their means. Yet is this right? However does it not cause disadvantages to those teams who seek to be a top club?

New money makes the old dominant clubs fearful, their era of continued success and qualification for the Champions League have generated continued millions and this has resulted in their high revenues. New money has given clubs like City, Chelsea and PSG opportunities to challenge the top sides. This competition should be applauded and not condemned. Of course it is not good for the smaller clubs, the gaps in fees and wages becomes uneconomical and when small clubs attempt to play catch up they end up getting into trouble.

Brian Marwood, chief of football operations believes “why should somebody be penalised for wanting to be successful?” Why should PSG, Malaga or Man City be held back.  How can a club not become a top one without serious investment? In comparison to the old football money and status of Bayern Munich, Real Madrid, Barcelona and Man Utd, without money no club can topple these dynasties. Is this right?

Man City, owners doing it right?

At Chelsea and now Man City the salaries given have completely upended the cost of football in England. Most of the top clubs are massively in debt thanks to tyring to keep up with the inflated salary scale created by the billionaire's spending. 

City have invested immense amounts in the past four years, on players and wages in particular. City boasted the biggest loss in the history of football at £197 million in the last financial year with a wage bill of £174 million. This is craziness and has completely imbalanced the league.

Yet they have invested in a team which was not equipped previously to challenge for the title. They have, like Chelsea, given a new challenge to United, Arsenal and Liverpool. 

Looking at City now they seem equipped for domestic and European football, in the space of four years they have developed a side capable of challenging the top teams. And Harwood believes that last year was the bottom of the curve in terms of spending. With his opinion being that they have the pieces in place for the future now.

Importantly, in comparison to Chelsea, the owners have given time to their boss. He has been allowed to develop and bring in the players he believes are required for long term success. As evident from last season, the team were accused of being too defensive in their style. Yet Mancini was thinking longer term, he believed that building a defensive foundation was the key to long term success. Developing a strong core of players and being tight at the back has enabled City to play with more flair and style this year, while having the best defensive record and sitting top of the league. 

Would Abramovich had been as understanding in his pursuit of success? The evidence would indicate not. And so the owners at City appear to have more understanding about what is required for long term success in England and Europe.

Long term development

The worry is that these owners will lose interest and will pull their money out, thus causing high debts because of high wages. I can understand there is a desire to protect football clubs from suffering from debts, yet I cannot see the Abu Dhabi group doing this, they are investing in the future of the club with serious ambitions to develop a world class team and foundation. This should be admired and commended.

The key must be, does the club have genuine owners who really do want to invest, who really do have the money to attain sustainability. Why should they be penalised? If a team can cope with their spending then why shouldn’t they be allowed to invest to improve the side?

In order  to try to create a similar environment to that of United and Barcelona, City  needed to spend higher fees and wages to attract the players; they had the belief that with initial success on the field allows the club to gain a foothold in the European market and thus allows for long term development.

At City their ideas for the future are based on building a state of the art academy similar toBarcelona’s La Masia; with new facilties and a link with a school, indicating a willingness to educate and develop their own players in order to rely less on high transfers. This model has shown to work for Barcelona, yet has taken twenty years to fully achieve the aims set out in the early 90’s.

Success over development

For all these advantages that foreign owners bring, we have a league filled with 60% foreign players who are restricting the development of home grown British talent due to the demands of success.

Do top clubs like Chelsea and Man City really want to develop young English talent or is short term success their key focus? There is no doubt that senior level success must be a major part of development, yet teams like Chelsea must now invest more in to developing for the future. If not then they are failing the youth of today and the future.

A lack of investment in high quality facilities has left the UK behind nations such as Holland, Germany, France and Spain and this is evident in the players we produce. An academy costs maybe £5 million a year to run, so if you can get maybe one player every year or 18 months into the first team, look at the transfer fees you've saved. The economics are pretty clear. Implementing it is much more difficult.

English football hаѕ bееn more thаn рlеаѕеd fοr wealthy benefactors frοm around thе world tο bυу up іtѕ marquee clubs аnd, аѕ Abramovich dіd аt Chelsea, soak up thеіr debts аnd υѕе thеіr rubles, dirhams аnd dollars tο mаkе thеm competitive again. It has helped improve sides but is has also reduced the quality of players and coaches of English heritage.

Yet these foreign owners have responsibilities to invest in the future not just the present. It must be required that anyone willing to invest in an English side has the intention to lay down plans and invest in infrastructure, facilities and high quality coaching in order to improve the long term development of English players and sustainability of the clubs. Without this promise we cannot allow another Chelsea to happen.