A sporting chance

On a freezing night at the end of November, Chelsea was taking on Manchester City in a cup game. After exactly 16 minutes, a round of applause rang around the stadium from the Chelsea fans. For those in the know, it was a sign – a sign of loyalty to the former manager Roberto Di Matteo, a legendary Chelsea player who wore the number 16 shirt and who was recently sacked.

It was also a signal the fans disapprove of the new manager. And, more subtly, it was a criticism of the man who chooses the managers, the club’s owner Roman Abramovich, the Russian billionaire who bought the west London club in 2003. Since then the team has had great success on the pitch, and Abramovich has poured an estimated £2 billion (€2.5 billion) of his own money into Chelsea – or Chelski, as some call it. But still the fans have at best an ambivalent attitude towards him. Many hate him. It’s enough to make you wonder why anybody would bother buying a sports team.

Abramovich is perhaps the highest-profile wealthy owner of a UK Premier League club, but he is by no means the only one. Liverpool FC is owned by the Fenway Sports Group, which also owns the Boston Red Sox baseball team. Birmingham FC is owned by Hong Kong businessman Carson Yeung; Aston Villa by US businessman Randy Lerner. The list goes on, and includes a good number of family business members. English football might be a special case, but it’s a story that’s repeated in many other sports and countries. A sport like Formula One is as much a business as a sport.

Clearly people do not buy sports teams to be loved (or it they do, they are misguided). So why do they do it? The most obvious answer might be to make money. But that’s notoriously hard to do in football. A mobile phone entrepreneur who took over another London club, Crystal Palace, in the early 2000s saw the club guzzle £35 million of his fortune. However, says Stefan Szymanski, professor of sport management at the University of Michigan and co-author of Soccernomics, football is a special case.

“The more efficient the market, the harder it is to make money,” he says. “That’s basic economics. And in football the player market is very efficient. If a player gets better he can ask for more money, and if he doesn’t get it he moves clubs. It ends up being cheaper for you to let him go.” Players move freely across a global marketplace. And it’s very hard to actually turn a profit. “The economics of football are simple – you get what you pay for in terms of talent. The more you spend on players the more successful you are, the more successful you are the more money you make. But at every level you only break even,” Szymanski says.

But other sports are not such black holes. North America, says Professor Simon Chadwick, a sport business expert at Coventry University Business School in the UK, is “an especially lucrative environment”. This is largely to do with the way the sports are structured there. In baseball, American football and basketball the US is the world’s biggest league and there is no real competition for players from others countries.

Also, there are far fewer teams – in top-flight American football there are just 32 teams in a population of 300 million, compared to about 100 professional teams in the English football league, in a population of 60 million. In the US, every game is a sell-out. It’s far easier to make money. “In Europe,” Chadwick goes on, “it is more difficult and requires a longer-term strategic commitment to building a sustainable business.”

Interestingly, when the Indian Premier League (pictured, right), a cricket competition, was set up in 2008 it was deliberately designed on the American model, says Szymanski, who had a small hand in helping design it. It has proved extremely popular with billionaires, who have been able to make vast amounts of money from it.

Szymanski says: “Those franchises have been hugely profitable. One owner I know said that at the start of the first season his family wondered why on earth he wanted to buy a franchise, but by the end of the first season it had tripled in value.” If football is pure, open capitalism, the IPL is a cartel. That makes it a good business prospect.

But of course people want to own sports teams for other reasons. To become famous, for a start. “I know successful businesspeople who just can’t believe what a profile they get when they buy a sports team,” says Szymanski. For some, that’s part of the joy – in the IPL the billionaire owners revel in the publicity, and off-the-pitch clashes are almost as much fun as the games – but that high-profile can equally make you a hate figure.

That’s because sports teams, although they can be seen as businesses, are not just businesses. Fans have a strong emotional bond with them. No matter whose name is on the cheques, the fans will always feel they are the true owners. It takes a certain kind of person to make it work. Simon Chadwick says: “Fans are not simply customers – they are much more engaged with the club and embedded in a deep relationship with it.”

To flourish as an owner you have to “understand that and take them with you on the journey”, he says. The Glazers, owners of Manchester United, have turned it into a well-managed and commercially savvy organisation, but a failure to communicate with fans means the owners are almost universally loathed by the club’s followers.

“If you want to survive as a king you had better get the consent of the people you rule,” says Szymanski. “You need consent and to be able to work with people around you. If you are the kind of businessman who says it’s my way or the high way then football is not for you.” Sheikh Mansour at Manchester City (pictured, left) has been good at this – perhaps not surprisingly, given that he is in fact royalty. Gutsy, aggressive entrepreneurs with tough-talking management styles tend to struggle, says Szymanski, while consensualism flourishes.

In fact, sports clubs resemble family businesses in important ways; they tend to have roots in a town or city, and arouse strong loyalty. Family business members often have the more sensitive style that would make them ideal sports team owners. In theory, anyway. But then again, since when did theory mean anything in sport? 

FAMILY-OWNED SPORTS TEAMS
When Sheikh Mansour bin Zayed Al Nahyan from Abu Dhabi bought perennially underachieving English football club Manchester City in 2007, people were sceptical. But he has spent almost £500 million on players, taking them in 2012 to their first league win since 1968.

Qatari Sheikh Nasser Al-Khelaifi took control of French side Paris Saint-Germain in 2011. He has so far spent more than $130 million (€99 million) on players.

Lakshmi Mittal, chairman of the family-owned steel giant ArcelorMittal, owns a third of London football club Queens Park Rangers.

Italy’s Agnelli family, which owns Fiat, has controlled Turin’s Juventus football club since 1923.

Silvio Berlusconi, former Italian prime minister and head of a family-owned media empire, bought AC Milan in 1986 and his injection of cash led the club into a golden era (AC Milan's Ruud Gullit pictured, right).

Family ownership is more usual in baseball. The New York Yankees is controlled by Hank and Hal Steinbrenner. Hal took over when his shipping entrepreneur father, George, died in 2010. The family has owned the team since 1973.

The Pittsburgh Steelers were founded in 1933 by Art Rooney, and are in their third generation of family ownership.

Further afield, South Korea’s family-owned chaebols Lotte, Samsung and Hyundai all own baseball teams.