Morning/avo/evening
all. The main focus today will be on the recent financial developments at
Cayman U, but before we get into that lets go round the grounds and take a look
at last weekend’s action.
First off to the
Tour, where pre-race favourites Cadel Evans and Bradley Wiggins have moved
clear of the field. Wiggins’ Sky teammate Chris Froome is a surprising third
place, just 14 seconds behind Evans, but given that his job is to sacrifice his
own body for the team cause, it is unlikely that he will rise any higher. Vincenzo
Nibali and Denis Menchov are both riding well and are two and three minutes off
the yellow jersey respectively, but unless one of the top two has a crash they
are probably going to have to settle for fighting it out for the final place on
the podium.
Crashes are of
course an ever-present threat, and the first week saw some horrific incidents
that forced the retirement of contenders Ryder Hesjedal and Samuel Sanchez, and
caused significant losses in time to other potential winners such as Frank
Schleck, Jurgen Van Den Broek, Alejandro Valverde and Robert Hesink. The crash
that ended Hesjedal’s race was so bad that all of the eight riders in his team
that were still competing went to ground in the same incident, at excess of 60kms
per hour. Hideous.
Two epic mountain
stages are on the cards for today and tomorrow, and Evans will at some point
need to try to attack and regain the minute he lost to Wiggins in the first
time trial, so interesting times lie ahead.
UFC 148 was pretty
entertaining stuff, and the main event had me jumping up and down on the couch
like a bearding Cruise as Anderson Silva retained his title. His challenger,
Chael Sonnen, attempted to employ the exact same tactics that came so close to
bringing him victory in their first bout, a technique known as ‘ground and
pound’. Silva is no fool though, and with almost two years since their first
encounter he was more than ready for Sonnen. The champ withstood Sonnen’s
initial pressure in the first round, then kept the fight ‘standing up’ in the
second, and it wasn’t long before Silva’s fluid evasiveness and lightening
quick striking had the belt secured around his waist once more, with the ref
stopping the fight just two minutes into the second round. Another amazing
display by Silva.
The co-main event,
which Joe Molloy so accurately described as being between ‘two lumbering light
heavyweight veterans’, was interesting for kind of depressing reasons. The NFL
in the US is slowly beginning to acknowledge the terrible long-term effects
that repeated concussions can have on players’ wellbeing, and this is something
that MMA in general will definitely need to address. The slurred pre-fight
interview of Forrest Griffin and the cross-eyed blankness of his opponent Tito
Ortiz as he went into the third round were very unsettling to see. However,
this is too big an issue to address today, so I’ll be taking an in-depth look
at concussions in sport in an upcoming Comments.
There was also yet
another entertaining Formula 1 race over the weekend in the form of the British
Grand Prix. Red Bull driver Mark Webber took out the race, but not before an
exciting late battle with Ferrari’s Fernando Alonso. And as has become the norm
since the technical changes introduced at the start of the 2011 season (you can
read more about those alterations here),
there was plenty of overtaking throughout the race. Which was nice. The new
tires in particular seem to be having an effect, but Martin Brundle mentioned something as he commentated on the race that was interesting. He thinks that not
only is it the changes to the cars themselves, but after eighteen months to
adjust to the new rules, the drivers’ mentality has also shifted. Where they
would have previously gone out on race-day expecting the GP to just be a 300km
procession, they now really believe that overtaking is a possibility, and not
just on certain parts of certain circuits. Drivers are now attempting and
completing passes in places that would have been unthinkable even as little as
three years ago, and as a result the spectacle has become much more
entertaining for all concerned. This season has seen a plethora of different
race winners and the signs for the future all appear to be very promising.
But on to the main
story for the day, the financial miasma that professional football is sinking
into.
Cayman United
It would be
unworthy of me not to be upfront from the get-go here: I dislike Manchester
United intensely. I hate their manager, many of their players, and the
bandwagon-riding nature of far too many of their supporters. If they never win
a trophy again the world will be a happier place for me. That said, you have to
have respect for their success, and the fact that most of the time they have
played pretty entertaining football in achieving their victories. That is, up
until a couple of seasons ago when everything began to change.
So what happened?
Well, in 2005 the club was bought by an American named Malcolm Glazer, a man
who made most of his fortune from property investments, and had little
knowledge or interest about football. He bought the club using a method known
as a leveraged buyout, which has since proved disastrous for Man U. I have a
reasonable knowledge of economics and such, but this is a fiendishly complex
piece of chicanery which I will attempt to explain in the simplest way
possible.
Basically
it is a very dodgy means of buying a club that is facilitated by the myopic
suits at the Football Association, and the greed of bankers. Imagine this:
there is a club that is valued at $1000, a measure of its players, stadium,
sponsorship etc. Every week, the club brings in $10 profit from ticket sales,
shirt sales etc. You want to buy the club, but you only have $500. So first you
go to the bank and say please lend me $500 to buy a football club. They say ok,
but how will you pay us back? You promise to give them $5 every week from the
club’s profits. Ok, they say again, that’s fine, but of course you’ll need to
pay interest so that we can line our pockets too.
Next, you go to the F.A. and tell them you
want to buy a club, paying half with your own money and half from the bank. You
have to pass what is called The Fit And Proper Persons Test, which looks at
your personal and financial history. It should be noted here that Thaksin
Shinawatra, with a long history of human rights abuses whilst leader of
Thailand, who was proposing to buy Man City with money he had embezzled in his
time as President, passed this test with flying colours. Put simply, the FA
don’t care who you are, or whether you are going to saddle a club with debt
burdens that could ultimately bankrupt it: see Leeds, Portsmouth, Crawley and
many others.
So now you have your club. You owe the bank
a large sum, but that’s no problem for you because you are using the club’s
money to service this debt. Yes, that’s right: you are using the club’s money
to buy the club. But then problems start to arise. Your players are getting old
and you need to buy new ones. Some of your players are going to other clubs
that offer better wages. However, your hands are tied. Your club brings in $10
profit every week, but half of that instantly goes to the bank, so you have
very limited means to keep your players, or to buy new ones (again see Portsmouth
and Leeds.) So, of course, your club’s supporters become unhappy. Your team is
starting to lose regularly. What is more, your stadium is old and
uncomfortable, and it has too few seats. At a bigger, newer stadium, you could
charge more for tickets and sell more
of them. But again, your hands are tied. With only $5 a week to spend, there is
no way at all to finance a new stadium (see Liverpool).
Your club is now in a downward spiral. You
owe money to the bank; your team is shite; your stadium is outdated; your
supporters are livid. You need to sell up and fast, and you offload your club
to the first person who comes along. And the cycle begins again.
Now not all of this applies to Man U, but
much of it does. The Glazer family needed around £660 million to make the purchase, and split
the costs between themselves and the club. They borrowed money from a variety of
banks and hedge funds, and next thing you know Man U owes £62 million every year in interest payments alone. The
Manchester United Supporters Trust issued this statement: "'The amount of
money needed to be repaid overall is huge... 'The interest payment is one thing
but what about the actual £660 million? It is difficult to see how these
sums can be reached without significant increases in ticket prices, which, as
we always suspected, means the fans will effectively be paying for someone to
borrow money to own their club.'” What a disaster. And on top of all
this, it should be noted that the Glazers also have the gall to take huge sums
out of the club’s finances each year to pay themselves dividends.
And despite many insistences
from the owners, the CEO and the manager Sir Alex Ferguson that this would have
no repercussions on the club’s transfer policies, it clearly has. The huge sum
they received from the sale of Cristiano Ronaldo has not been reinvested in
replacements. Other clubs around Europe, and more pertinently for Man U
supporters another club on the other side of town, are now consistently
out-bidding them for top players. This has had two extremely harmful effects.
Firstly, last
season they won nothing, and were humiliatingly bundled out of European
competition at the first significant hurdles. And secondly, in a desperate bid
to raise money to reduce debt, the Glazers are now about to float the club on
the New York Stock Exchange through a company registered in the Cayman Islands.
In a bid to make the investment seem more palatable, the latest financial
figures they have released as part of the prospectus do not include last season’s
figures, which would show the negative effects of diminished television incomes
due to European competition failures. And piled on top of all of this, the
shares are split into two categories, with the Glazer family getting all the ‘A’
shares, and new investors only being eligible for ‘B’ shares which do not
provide any voting rights. Sham, shambles, shameful.
This whole
situation differs greatly from that at other Premier League financial
heavyweights Manchester City and Chelsea. Both of those clubs have also been
bought by foreign owners, but not in the form of loans. Instead these cash-mad
billionaires have chosen to spend literally hundreds of millions of dollars of their own money on a sports team in a country far from their own. This raises
many other serious questions about the long-term financial stability of the
sport, particularly as to what would happen if these owners suddenly got bored
and decided to sell up, but more on that in another Comments. The point today
is to highlight just how quickly and easily one of the largest and most
successful clubs in world sport can so quickly be brought to its knees by
unsound financial practices, aided and abetted by toothless, cowardly
regulators. Parallels with many other aspects of financial free-marketry and
economic collapse are very easy to make, and it is sad and depressing how
insidious the effects of unchecked commercialism are on every aspect of
society. As I said at the outset, as a supporter of Arsenal I dislike
Manchester United, but as a supporter of sport and football in general, I
absolutely detest Cayman U.
Phew, what a
mouthful, more than enough for today. Back Friday with weekend previews, but
before I finish the stats for last Friday’s blog were intriguing, with a
massive number of readers cropping up suddenly in Latvia and Russia; anyone who
can provide a reasonable explanation for this, please get in touch.
Cheers.
I should have warned you about my Eastern European fans. Just the mention of the name Hardtimes can get you out of all sorts of mischief in Latvia.
ReplyDeleteIn regards to UFC 148, I loved Silva's defensive jiu-jitsu in the first round. Sonnen couldn't do any damage from the top and as soon as he made a mistake in the second, the Spider struck and it was over.
UFC wise this week keep an eye out for Kiwi lad James Te Huna as he fights the man with the best nickname in sports, Joey 'The Mexicutioner' Beltran. That's on UFC on Fuel 4.
Bless you for continuing to watch all the other sports that don't involve punching.