The Not So Beautiful Game English Football's Fortunes Fade In Global Downturn

With problems ranging from the weak pound to billions in debts and investor losses, many football clubs in England's Premier League are seeking new owners. With the world's billionaires hit by the credit crunch, however, is there anyone out there still willing to buy?

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The interior architect from London had assumed that the people at FC Chelsea would talk about everything, just not the cost. He was wrong. In the end his meeting with Peter Kenyon, the club's chief executive, was cut short after a few minutes once the architect's plans to expand the fitness center in the club's Stamford Bridge Stadium were rejected for being too expensive.

The elite London club, the most glamorous address in international football ever since its acquisition by Russian oligarch Roman Abramovich, has been forced to tighten its belt. By the end of last year, the financial crisis had reduced Abramovich's worth from $23.5 billion (€18 billion) to all of $3.1 billion (€2.4 billion). Officially, club management claims to be independent of the shrinkage in its benefactor's fortune. It has even promised that the club will be financing itself by this summer.

However, the club's management has not explained how it expects to reach that goal. Abramovich has pumped about £600 million (€660 million) into Chelsea since 2003. In the 2006/07 season alone, the club lost close to £75 million. The numbers for last season will not be released until February, but even greater losses are expected.

The world economic crisis poses a threat to almost every club in English football. More than half of the clubs in the Premier League depend on contributions from their often-foreign owners. They are still rich, despite the crash on the financial markets, but most are no longer wealthy enough to support a money-burning operation like the Premiership. The clubs have combined debts of roughly £2.5 billion.

In the boom years, owning an English football club was the ultimate status symbol for billionaires -- as much of a "must have" as a private Airbus, designer yacht or Pacific island. Anyone wishing to unload their acquisitions could easily find an even more impulsive buyer. Former Thai Prime Minister Thaksin Shinawatra, who acquired Manchester City in 2007 for about £80 million (€88 million), sold the club last September for more than twice that amount to a sheikh from Abu Dhabi.

A Sluggish Transfer Market

But those days are gone. Anyone who wants to get out now faces a big problem: the so-called "credit crunch." "There are about 15 clubs up for sale, but no one is buying," complains Frenchman Arsène Wenger, the manager of London's Arsenal club. Other clubs up for grabs include such illustrious names as FC Everton, Newcastle United and FC Portsmouth.

Investors are not even interested in the current title contender, FC Liverpool. The two American owners, Tom Hicks and George Gillett, who are certainly willing to sell, burdened the club with £105 million in debt in connection with the acquisition. The Bank of Scotland, their main lender, plans to renegotiate the credit lines soon -- not a good sign.

The situation is also precarious for West Ham United, which Icelander Björgolfur Gudmundsson acquired for £85 million in 2006. The Reykjavik businessman, who, together with his son, owned 42 percent of the now-nationalized national bank, Landsbanki, has recently lost a sizeable portion -- an estimated £250 million (€275 million) -- of his fortune. This is also roughly the price the Scandinavian is now asking for the club. Gudmundsson, the well-known journalist Martin Samuel wrote recently, is apparently living in a bubble.

Fading Pull of British Pound

The liquidity problems are most evident in the transfer market, which is open for the entire month of January. Last winter, an unprecedented sum of £150 million (€165 million) was paid for new players, but this year there has hardly been any movement at all, although Manchester City's Abu Dhabi owners are reportedly offering AC Milan £100 million for Brazilian star Kaka. Even Manchester United has only taken on two new players, a pair of young Serbs from Partisan Belgrade, while Arsenal is only looking to beef its squad up with one signing, Zenit St. Petersburg's Andrei Arshavin. Chelsea is holding off altogether, now that Abramovich has imposed a hiring freeze.

Things are hardly helped by the fact that the British pound is losing its ability to lure foreign stars to play their football in England. In the last 12 months, the currency's rate against the euro has dropped by almost 20 percent. "The party is over," wrote the London daily newspaper, The Times. The fact that the clubs pay their players exclusively in the British currency, means that an enormous black hole has opened up for all the players from the euro zone. On July 1, 2007, the £122,400 that Manchester United pays its Portuguese striker Cristiano Ronaldo each week equaled €181,702. Last Friday, the same sum was worth only €135,762.

Now the clubs are even trying to cut back on their stars' base salaries. Chelsea, for example, wants to significantly decrease the guaranteed weekly fee of £121,000 it pays German star Michael Ballack, who is currently in negotiations for an extension of his contract, which expires in June. To make up for the loss, Ballack would be paid performance bonuses based on how often he plays, how many goals he shoots and how the team is ranked.

The negotiations are scheduled to be complete in early February and Ballack is willing to talk. After all, by playing in Premiership, he can still make more money than anywhere else in the world.

Translated from the German by Christopher Sultan

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