Sales pitch for ‘sleeping giant’ club that could net a profit

Rob Wilson is often asked just how easy is it to make money out of football. His reply is always brief.

“The short answer is, not very,” says the football finance expert and senior lecturer in sport management at Sheffield Hallam University. “In the late 1980s and early 1990s, when clubs floated on the stock market they were seen as a new type of investment which people could make money out of.

“There was a queue of people with money lining up to become shareholders, but it didn’t last.

“By the late 1990s, people began to realise that while they were being sold a business they weren’t being run like one. Investors didn’t get the returns they had hoped for and it didn’t take long for the mood to change.”

The last decade has been littered with cautionary tales, but while those with the kind of money to transform a side’s fortunes may be less willing to invest, it hasn’t stopped clubs scouting for financial salvation.

This week, Leeds United confirmed talks are underway with potential investors. The news hardly came as a surprise. While a significant amount of money has been invested into Elland Road under the chairmanship of Ken Bates, he hasn’t exactly endeared himself to fans. A 14th place finish sealed the Leeds Utd Supporters’ Trust’s opposition.

It is understood that three groups have declared an interest in the club, but turning initial inquiries into hard cash is notoriously difficult for a side whose Premiership ambitions have been repeatedly thwarted.

“There are some businessmen like Roman Abramovich who just want a trophy asset,” says Wilson. “These are people who have vast amounts of money, who want a club which they can flaunt to people on yachts. Every so often they may get the chance to hold the European trophy aloft, but it’s also a perfectly legal way of avoiding paying at least part of a hefty tax bill.

“Would someone like that be interested in Leeds United? I’m not so sure.”

The arrival of big bucks into the game has driven a wedge between some supporters and the money men they accuse of ransacking the sport they love. However, fans also now demand success and that can’t be achieved with passion alone.

“Let’s be honest, Leeds has not been managed well in the recent past,” says Wilson. “The club spent lots of money on dreams that were never realised, so when Ken Bates came on to the scene he was able to buy it relatively cheaply.

“Over the last few years, he has been trying to restore its financial health so Leeds can become a viable going concern, but that doesn’t mean attracting investors is any easier. Just like any other business which has failed in the past, football clubs can become toxic.

“I can’t fault Ken Bates and the board at Leeds, but when you listen to the fans who speak with so much passion it, it’s equally hard not to feel their pain. Leeds United remains a huge club and they just feel that they have been badly treated under the current set up. They want the club to buy players, they want to be successful.

“The problem with football today is that many clubs find themselves in a no-win situation. The board of directors at Arsenal have had all sorts of grief from fans in the early part of last season because they hadn’t spent money on players and they weren’t doing that well.

“However, as a business it was and is financially sound. The question fans have to ask themselves is do they want success if the result is a club saddled with debt?”

While there have been scant details on the faces behind the three expressions of interest in Leeds, any deal will depend on the assets actually being put on the table.

“The ambiguity surrounding who actually owns the club, the ground and the training facilities has been a source of much discontent,” says Wilson.

“If the entire package was up for sale you’d probably be looking at between £50m and £60m. However, if it’s just the players and what Leeds is effectively looking to sell is its brand then that would drop to around £15m.”

So, given a bottomless pot of cash, would he invest?

“I like to think I’m more of a cautious financial planner than to risk it on a football club, but I’m also really passionate about sport and Leeds does represent a good investment opportunity.

“The club is a bit like Southampton in the fact it’s a sleeping giant and if investment saw them promoted to the Premiership then you’re looking at a windfall of around £120m. Now, that is tempting.”