Taking coals to Newcastle. Why buying Utd is a waste of money
So a consortium of Nigerian businessmen want to pay $700 million (a figure that could rise to the $900 million that the current club owner wants) to buy Newcastle United! Ever since Russian oil billionaire Roman Abramovich bought Chelsea F.C it seems to be every billionaires dream to own a club in the English Premiership League (EPL).
When I first read about the Nigerian bid to buy Newcastle Utd I was impressed. I thought WOW here are some African dudes on the verge of acquiring a fairly high profile English football club. But at the back of my mind something about the proposed transaction made me uneasy.
My initial euphoria was dampened when I realised that running a profitable football club in the EPL or anywhere else for that matter is very very difficult. Even clubs that are highly successful on the pitch tend to be unprofitable. Football economics is pretty ugly. The single biggest cost in running a football club is the cost of acquiring and keeping talent and it’s a figure no club can get a handle on. One of England’s best run clubs Arsenal F.C in it’s recent financial results indicated that player wages for the year came in at $200 million about the same amount at Manchester Utd. Chelsea FC are top of the wage bill pile. Add to that the cost of buying players and judging from the last transfer window, transfer prices just keep going up and up and up.
So if their chances of making a decent dime are virtually zero, why are our four erstwhile Nigerian businessman plonking money into Newcastle FC. It’s hard to say. Most buyers of football clubs do it for some sense of personal pride and fulfillment.
Whilst acknowledging the Nigerians right to invest in any business they choose, it seems rather odd to throw $700 million into what is likely to be a black hole. Surely there are better investments in Nigeria itself or elsewhere on the continent or the globe for these guys to put their money into. This scenario reminded me of the R1 million a month (About $150,000 at the time) SAFA the South African Football Association were paying former Bafana Bafana coach Carlos Alberto Parreira. A look at Parreira’s record with Bafana shows that was money badly spent. With that kind of money SAFA could have hired a competent local coach and had plenty of money to spend on more useful things like developing talent (which SA sorely lack).
When Kalusha Bwalya offered to coach Chipolopolo he asked for $10,000 per month and the Zambian FA balked at the figure! Now imagine if SAFA had hired a local and paid that sort of figure just how much money they could have ploughed elsewhere. The bottom line is competent local coaches are cheap. This is a lesson that Zimbabwe by necessity learned. After years of hiring expensive (by our standards) foreign coaches and failing to qualify for any major tournament we broke the duck when a ‘cheap’ local coach got us to the Nations Cup final in Tunisia a feat repeated 2 years later with another ‘cheap’ local coach. The economic crisis in Zimbabwe taught us to look for resources from within and to our surprise we discovered that we were better than we thought. It’s a lesson SAFA and our consortium of Nigerian businessmen still have to learn.
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I don’t think these guys are interested in making a profit. I think it’s the sheer glory of owning a Premiership League club. Imagine wht this would do for their standing in their community, their country, the world?
It’s an instant ticket to fame- an expensive one, but a ticket nontheless!
I tend to agree with you Caleb, because whilst they bid for the club the 4 Nigerian businessmen have insisted on remaining anonymous. Their spokesman says they are used to getting things their own way in Nigeria and if they are unsuccessful in their bid they don’t want to have egg on their face. But fair play to them if they win they may just solve the riddle of making the club profitable.