tpyo
18-08-2012, 09:49 PM
Let's predict the future!
As I was discussing the future of AFC in another thread and discussing the relative changes of fortunate over the past few decades I was thinking it might be nice to think about the future and how it might impact the teams in the EPL.
While I appreciate this is mostly conjecture and my figures are probably a bit off and out of date in places it's fun to think about. Especially since our club (Arsenal) is arguably one of those that tries to look towards the future the most (in terms of finance at least!). So lets begin!
In we want to analyse the future we have to bear in mind the driving forces of the respective owners of the clubs and where most of their money comes from. It's important because its part of how long they might hang about and what might effect them. It's important to consider the economic, political and "random" events that could effect them.
This is my take on the big clubs in the EPL.
Club
Purpose
Money
Net Worth (est)
Strategy
Arsenal
Investment
Sports, Retail
$3.2 billion
part of a global sports brand
Liverpool
Investment
Sports, Trading
$1.1 billion
part of a global sports brand
Man U
Investment
Asset stripping / various assets
$2.7 billion
part of a global sports brand
Man City
Vanity Project
Oil
$4.9 billion
part of the Abu Dhabi's global brand
Chelsea
Vanity Project
Oil, Aluminium
$9.2 billion
?
Economic Stability
* The Yanks
In the case of the Yank owners these individuals also own other sports companies. You can quite clearly see an economic strategy of tying these clubs together to provide benefits in terms of brand promotion (sponsorship) and licensing/streaming arangements. In the same way that a union can negotiate from a stronger standpoint these investments can collude to offer more attractive offerings to potential sponsors. Also the lessons learnt from each respective sport can be applied to the others. These three investors have the clearest and most obvious plans for their EPL clubs.
However they are all vulnerable to economic misfortunate in the US. Slow growth / a dipping interest in sports or a broader economic collapse could affect them severely. All of the owners possess relatively diverse assets (Glazers - various, Kroenke - Retail and Development and Henry - Financial Services) with the Glazers having the broadest spread.
However it is worth considering that Malcolm Glazer's history is of asset stripping. While he might be past that stage of his business career he'll certainly be able to consider it an option if times turn out tough due to his vast experience in it.
* Roman Abramovich
Chelsea are the most confusing from an economic standpoint. Ambramovich's other assets don't tie into the club and he doesn't really use the club to promote them. If anything most of the changes Abramovich has made are attempts to make Chelsea more self-sustaining. This suggests he is not willing to have it as a millstone around his neck forever and suggests investment could well dip or be completely removed. His money relies on the Oil markets and Aluminium so be sure to make note of how these markets are performing if you want to foresee a Chelsea demise.
* Mansour bin Zayed Al Nahyan
Now lets not fuck around, Mansour bin Zayed Al Nahyan's family is crazy, crazy rich. It's estimated that the family as a whole is worth over £1,000 billion. He is the half-brother of the Emir of Abu Dhabi and is part of the ruling family. Abu Dhabi is the most profitable of the UAE countries and the money they make from Oil and gas is INSANE. However they presently are _very_ reliant on the Oil although are trying to diversify into tourism and financial services. Therefore you can see how Man City can possibly sync into their strategy of a brand to use for their diversification plans. It can help promote their tourism, airlines and financial services as well as any other market they choose to enter in the future. The more they win the EPL and CL the more powerful this tool becomes. Consider Man City's worth to the Abu Dhabi family proportional to their success. As they won the EPL last season and look poised for future successes we are slowly losing the possibility that the brand will not take off.
The oil market will always be a key indicator of the stability of Man City for the foreseeable future.
Political Stability
* The Yanks
We all know that despite America's political schism between right and left they have managed to muddle their way through the past century without too much hassle. While the political rhetoric appears to be getting worse with the introduction of Fox News and the retaliation by networks like MSNBC its hard to argue the certainty of American political strife or revolution in the coming decades. Individual rights are generally respected and the country is usually very accommodating of wealthy individuals.
* Roman Abramovich
Russia is arguably a faux democracy, especially since the re-election of Vladimir Putin as President after he took a "break" of four years to be Prime Minister (o_0). If we accept the faux democracy argument one can look at Russia in the same way as any Hereditary Rule system. While a HR system has more stable and direct decision making (which can help the economics to be stable as long as the leader has good judgement) it can also be unpredictable in terms of the rights of individuals (Pussy Riot getting 2 years for hooliganism), unpredictable at the time of succession and susceptible to revolution. As the downtrodden Russians are a long history being ruled by an iron fist and can be politically meek coupled with a very hardline military (the countless stories from Chechnya) the chances of revolution appear to be low. The more likely factors to affect Abramovich are some sort of political putsch, succession issues (if Putin dies) or change in Putin's favour. It's possible that if the politics of the Kremlin change Abramovich could go the same way as other oligarchs leaving him in jail with his assets frozen.
* Mansour bin Zayed Al Nahyan
Mansour bin Zayed Al Nahyan is in a very comfortable spot politically. The emirate is governed by a somewhat confusing hereditary rule system and as the half-brother of the current Emir he is not immediately part of any succession issues that could possibly arise. Instead the more likely problem could be from the population of Abu Dhabi itself. The city state has grown massively in the past decade which could lead to social issues with a burgeoning population bereft of any form of political power. Note that only 13% of the population of the UAE are citizens and there is no naturalisation process. While the states within the UAE are typically benevolent towards their population its not impossible to image a future without political upheaval.
Succession
It's important to consider the succession of the owners of the clubs and how soon the club might pass hands into another owner. As we saw with Nina Bracewell-Smith, even if you are a fan of the club you may well sell on the shares and be uninterested in running the club and have different ideas to your predecessor. So lets take a swift glance at succession.
John Henry - Age 62 - Wife and 2 daughters one from a previous marriage.
Malcolm Glazer - Age 84 - Wife and 6 children
Stan Kroenke - Age 65 - Wife and 2 children
Roman Abramovich - Age 45 - Partner and 7 children from previous marriages.
Mansour bin Zayed Al Nahyan - age 42 - 2 wives and 4 children
The clubs at most risk of succession difficulties would be Manchester United, Arsenal and Liverpool.
Kroenke's son Josh is already the president of two sports clubs (The Denver Nuggets and Colorado Avalanche) and several of the Glazer family are on the boards of the Tampa Bay Buccaneers and Manchester United. This suggests they are being groomed for succession. The only difference is that the Glazer family is large and the Kroenke family is small which could possibly lead to issues with dividing the inheritance once Malcolm Glazer passes on.
John Henry's succession appears more awkward. He has a child born around 2009 with his new wife and an older daughter from a previous marriage. Neither seem to placed in the public eye that much which asks questions about the succession.
With both Man City and Chelsea's owners being under the age of 50 succession is less of an issue of immediate concern.
Collapse of the football market
In this event the bubble bursts and clubs and licensing rights become a fraction of what they are worth and debt becomes crippling. From some statistics I gathered (2010, sorry its not more recent) Manchester City, Chelsea and Manchester United are by far and away in the worst positions.
Team
Operating Profit
Debt
Arsenal
£58.8m
£297.0m
Liverpool
£24.9m
£261.7m
Man U
£91.3m
£716.6
Man City
£-34.2m
£194.4
Chelsea
£–£11.4m
£511.6m
Its not inconceivable that Ambramovich could opt to sell his club as keeping it would result in much further expense, it's also likely that Manchester United would be sold due to their insane debt. While Manchester City might attempt to reduce their budget its totally conceivable that Mansour bin Zayed Al Nahyan may continue to run it at a greater loss to promote Abu Dhabi possibly selling portions of it to his vastly wealthy family to reduce his burden.
Conclusion
It's interesting to consider the potential for change in the Premier League in the future. There scenarios that were not considered as their outcome is obvious: Massive drop in the price of oil, UEFA actually implementing financial fair play properly, the introduction of more super investors to new clubs in the EPL or even situations that result in a loss of CL football for the EPL (like in the late 80's early 90's).
One really important question to ask to really judge the health of Man City is the _reason_ it was bought by Mansour bin Zayed Al Nahyan. Is it a family decision to create a vehicle to promote the Abu Dhabi brands or just a personal extravagance? Even if it is the latter could it succeed enough over the next few years to convince other family members of its worth to Abu Dhabi to provide more investment?
I think the club in most danger in almost all scenarios is Chelsea. The investment simply doesn't make any sense and is vulnerable to almost every single change except economic collapse that is limited to the US alone.
On the other hand one thing that I did note that hopefully cheers people up a bit is that whatever happens Arsenal is in a decent spot at worst. I think whatever happens we'll always have a stab at competing for the EPL and be finishing somewhere at the top of the table.
As I was discussing the future of AFC in another thread and discussing the relative changes of fortunate over the past few decades I was thinking it might be nice to think about the future and how it might impact the teams in the EPL.
While I appreciate this is mostly conjecture and my figures are probably a bit off and out of date in places it's fun to think about. Especially since our club (Arsenal) is arguably one of those that tries to look towards the future the most (in terms of finance at least!). So lets begin!
In we want to analyse the future we have to bear in mind the driving forces of the respective owners of the clubs and where most of their money comes from. It's important because its part of how long they might hang about and what might effect them. It's important to consider the economic, political and "random" events that could effect them.
This is my take on the big clubs in the EPL.
Club
Purpose
Money
Net Worth (est)
Strategy
Arsenal
Investment
Sports, Retail
$3.2 billion
part of a global sports brand
Liverpool
Investment
Sports, Trading
$1.1 billion
part of a global sports brand
Man U
Investment
Asset stripping / various assets
$2.7 billion
part of a global sports brand
Man City
Vanity Project
Oil
$4.9 billion
part of the Abu Dhabi's global brand
Chelsea
Vanity Project
Oil, Aluminium
$9.2 billion
?
Economic Stability
* The Yanks
In the case of the Yank owners these individuals also own other sports companies. You can quite clearly see an economic strategy of tying these clubs together to provide benefits in terms of brand promotion (sponsorship) and licensing/streaming arangements. In the same way that a union can negotiate from a stronger standpoint these investments can collude to offer more attractive offerings to potential sponsors. Also the lessons learnt from each respective sport can be applied to the others. These three investors have the clearest and most obvious plans for their EPL clubs.
However they are all vulnerable to economic misfortunate in the US. Slow growth / a dipping interest in sports or a broader economic collapse could affect them severely. All of the owners possess relatively diverse assets (Glazers - various, Kroenke - Retail and Development and Henry - Financial Services) with the Glazers having the broadest spread.
However it is worth considering that Malcolm Glazer's history is of asset stripping. While he might be past that stage of his business career he'll certainly be able to consider it an option if times turn out tough due to his vast experience in it.
* Roman Abramovich
Chelsea are the most confusing from an economic standpoint. Ambramovich's other assets don't tie into the club and he doesn't really use the club to promote them. If anything most of the changes Abramovich has made are attempts to make Chelsea more self-sustaining. This suggests he is not willing to have it as a millstone around his neck forever and suggests investment could well dip or be completely removed. His money relies on the Oil markets and Aluminium so be sure to make note of how these markets are performing if you want to foresee a Chelsea demise.
* Mansour bin Zayed Al Nahyan
Now lets not fuck around, Mansour bin Zayed Al Nahyan's family is crazy, crazy rich. It's estimated that the family as a whole is worth over £1,000 billion. He is the half-brother of the Emir of Abu Dhabi and is part of the ruling family. Abu Dhabi is the most profitable of the UAE countries and the money they make from Oil and gas is INSANE. However they presently are _very_ reliant on the Oil although are trying to diversify into tourism and financial services. Therefore you can see how Man City can possibly sync into their strategy of a brand to use for their diversification plans. It can help promote their tourism, airlines and financial services as well as any other market they choose to enter in the future. The more they win the EPL and CL the more powerful this tool becomes. Consider Man City's worth to the Abu Dhabi family proportional to their success. As they won the EPL last season and look poised for future successes we are slowly losing the possibility that the brand will not take off.
The oil market will always be a key indicator of the stability of Man City for the foreseeable future.
Political Stability
* The Yanks
We all know that despite America's political schism between right and left they have managed to muddle their way through the past century without too much hassle. While the political rhetoric appears to be getting worse with the introduction of Fox News and the retaliation by networks like MSNBC its hard to argue the certainty of American political strife or revolution in the coming decades. Individual rights are generally respected and the country is usually very accommodating of wealthy individuals.
* Roman Abramovich
Russia is arguably a faux democracy, especially since the re-election of Vladimir Putin as President after he took a "break" of four years to be Prime Minister (o_0). If we accept the faux democracy argument one can look at Russia in the same way as any Hereditary Rule system. While a HR system has more stable and direct decision making (which can help the economics to be stable as long as the leader has good judgement) it can also be unpredictable in terms of the rights of individuals (Pussy Riot getting 2 years for hooliganism), unpredictable at the time of succession and susceptible to revolution. As the downtrodden Russians are a long history being ruled by an iron fist and can be politically meek coupled with a very hardline military (the countless stories from Chechnya) the chances of revolution appear to be low. The more likely factors to affect Abramovich are some sort of political putsch, succession issues (if Putin dies) or change in Putin's favour. It's possible that if the politics of the Kremlin change Abramovich could go the same way as other oligarchs leaving him in jail with his assets frozen.
* Mansour bin Zayed Al Nahyan
Mansour bin Zayed Al Nahyan is in a very comfortable spot politically. The emirate is governed by a somewhat confusing hereditary rule system and as the half-brother of the current Emir he is not immediately part of any succession issues that could possibly arise. Instead the more likely problem could be from the population of Abu Dhabi itself. The city state has grown massively in the past decade which could lead to social issues with a burgeoning population bereft of any form of political power. Note that only 13% of the population of the UAE are citizens and there is no naturalisation process. While the states within the UAE are typically benevolent towards their population its not impossible to image a future without political upheaval.
Succession
It's important to consider the succession of the owners of the clubs and how soon the club might pass hands into another owner. As we saw with Nina Bracewell-Smith, even if you are a fan of the club you may well sell on the shares and be uninterested in running the club and have different ideas to your predecessor. So lets take a swift glance at succession.
John Henry - Age 62 - Wife and 2 daughters one from a previous marriage.
Malcolm Glazer - Age 84 - Wife and 6 children
Stan Kroenke - Age 65 - Wife and 2 children
Roman Abramovich - Age 45 - Partner and 7 children from previous marriages.
Mansour bin Zayed Al Nahyan - age 42 - 2 wives and 4 children
The clubs at most risk of succession difficulties would be Manchester United, Arsenal and Liverpool.
Kroenke's son Josh is already the president of two sports clubs (The Denver Nuggets and Colorado Avalanche) and several of the Glazer family are on the boards of the Tampa Bay Buccaneers and Manchester United. This suggests they are being groomed for succession. The only difference is that the Glazer family is large and the Kroenke family is small which could possibly lead to issues with dividing the inheritance once Malcolm Glazer passes on.
John Henry's succession appears more awkward. He has a child born around 2009 with his new wife and an older daughter from a previous marriage. Neither seem to placed in the public eye that much which asks questions about the succession.
With both Man City and Chelsea's owners being under the age of 50 succession is less of an issue of immediate concern.
Collapse of the football market
In this event the bubble bursts and clubs and licensing rights become a fraction of what they are worth and debt becomes crippling. From some statistics I gathered (2010, sorry its not more recent) Manchester City, Chelsea and Manchester United are by far and away in the worst positions.
Team
Operating Profit
Debt
Arsenal
£58.8m
£297.0m
Liverpool
£24.9m
£261.7m
Man U
£91.3m
£716.6
Man City
£-34.2m
£194.4
Chelsea
£–£11.4m
£511.6m
Its not inconceivable that Ambramovich could opt to sell his club as keeping it would result in much further expense, it's also likely that Manchester United would be sold due to their insane debt. While Manchester City might attempt to reduce their budget its totally conceivable that Mansour bin Zayed Al Nahyan may continue to run it at a greater loss to promote Abu Dhabi possibly selling portions of it to his vastly wealthy family to reduce his burden.
Conclusion
It's interesting to consider the potential for change in the Premier League in the future. There scenarios that were not considered as their outcome is obvious: Massive drop in the price of oil, UEFA actually implementing financial fair play properly, the introduction of more super investors to new clubs in the EPL or even situations that result in a loss of CL football for the EPL (like in the late 80's early 90's).
One really important question to ask to really judge the health of Man City is the _reason_ it was bought by Mansour bin Zayed Al Nahyan. Is it a family decision to create a vehicle to promote the Abu Dhabi brands or just a personal extravagance? Even if it is the latter could it succeed enough over the next few years to convince other family members of its worth to Abu Dhabi to provide more investment?
I think the club in most danger in almost all scenarios is Chelsea. The investment simply doesn't make any sense and is vulnerable to almost every single change except economic collapse that is limited to the US alone.
On the other hand one thing that I did note that hopefully cheers people up a bit is that whatever happens Arsenal is in a decent spot at worst. I think whatever happens we'll always have a stab at competing for the EPL and be finishing somewhere at the top of the table.