BUSINESS & ECONOMY 13

The Epoch Times

August 15 - 21, 2007

Takeovers spell the end of football’s Premiership plc

LONDON (Reuters) – As Eng-
lish soccer clubs are being taken
over by foreign billionaires, the
era of stock market-listed clubs
could soon be over with a new
wave of owners opting to stay
out of the financial spotlight.
But if fans, politicians and
newspapers take moral um-
brage at the foreign-led takeo-
vers, few are mourning the end
of the publicly listed club.
Going public became some-
thing of a craze for Premier
League clubs in the mid-1990s.
At its peak, fans and investors
could buy shares in 10 of the 20
current Premier League clubs.
Only a trio of Premier
League clubs still have publicly
tradeable shares following the
latest buyouts which have seen
Manchester City purchased by
ousted Thai prime minister
Thaksin Shinawatra and New-
castle bought by reclusive Brit-
ish retail tycoon Mike Ashley.
Only Arsenal, Tottenham
Hotspur and Birmingham City
remain, although takeover ru-
mours surround all three fol-
lowing big changes in their ma-
jor shareholders in the last few
months.
Heralded in the 90s as a
more democratic ownership
structure and a way to pump
cash into clubs, stock listings
have come to be seen as a mis-
take by many: unprofitable
for investors, unrewarding for
teams and costly for fans.
“What investors didn’t ap-
preciate is one of the peculi-
arities of football,” said Chris-
tine Oughton, director of the
Football Governance Research
Centre at Birkbeck, University
of London.
Making a profit is the over-
riding goal for most companies,
she said: but soccer clubs have
the even higher priority of win-
ning games. They also have to
pay out around 60 per cent of
their revenues to players.
Alan Sugar, the outspoken
former Tottenham chairman
and star of TV reality show
The Apprentice, claimed run-
ning Spurs had been a com-
plete waste of time. He labelled
football “prune juice econom-
ics”, referring to the way rev-
enue is washed out of clubs in
multi-million pound transfer
fees and wages.
He sold the last batch of his
shares in the club for £25 mil-
lion in June.
Sky’s the limit
The big hope for investors in
the 1990s was a new lucrative
contract with Sky television.
While clubs were right that
soaring revenues were just
around the corner, the money
often did not make it to bot-
tom line as it was sucked up by
spiralling player wages. Share
prices crumbled.
When American billionaire
Randy Lerner bought Aston
Villa, the club’s shares were
worth just half of the £11 they
listed at in 1997, while New-
castle shares were 30 per cent
lower than their IPO price
when Ashley scooped them up
in June.
This despite a more than
1,300 per cent rise in annual
TV revenues since 1992.
Love for their club makes
fans vulnerable investors. Tot-
tenham fans would never swap
their shares for stock in Arse-
nal, even if their fierce north
London rivals did look set to
deliver better profits.
Floating on stock exchang-
es did offer benefits, allow-
ing teams such as Manchester
United and Arsenal to raise
capital to invest in stadiums.
But the need for financial
transparency shackled clubs in
the fast-moving and shadowy
transfer market.
“People who run these clubs
ultimately want to have free-
dom of movement,” said Jim
McLean, a soccer financing ex-
pert at business advisers Grant
Thornton.
For some people poor prof-
itability may matter little and
the lure of owning a premier
league team remains strong,
Thornton added.
“They want to enjoy the
benefits and the prestige that
flows from being involved in a
well-known football club.”
Fans
Despite racking up hefty loss-
es, some fans view the end of
the plc era with a touch of sad-
ness.
“They didn’t get a sufficient
slice to exercise financial clout
but at least they had a right to
turn up at shareholders’ meet-
ings and ask questions,” said
Malcolm Clarke, chair of Brit-
ain’s Football Supporters’ Fed-
eration.
Clarke said Barcelona, Real
Madrid and several German
clubs offered the ideal of demo-
cratic control for soccer clubs
where supporters’ associations
wield the power.
But for now at least, Eng-
lish soccer clubs have settled
on one kind of corporate struc-
ture. Whether their owners are
foreign or domestic, they are
nearly all alike in their prefer-
ence for privacy.

Apple’s Friday
David Paul Morris/Getty Images

slackers
success is cost firms
£50m a
a lesson in year

corporate
LONDON (Reuters) – Busi-
nesses are losing more than
£50 million a year because of
employees leaving work early
on Friday, according to a re-
cent survey.

strategy
By HEIDE B. MALHOTRA
Epoch Times Washington Staff
Apple Inc. is riding high. In the
last quarter, it shipped almost
1.8 million Macintosh comput-
ers, sold 9.8 million iPod mu-
sic players and its iPhone—a
revolutionary new product that
went on sale in June after an al-
most hysterical media blitz—is
expected to reach sales of more
than 1 million within the next
three months, according to a re-
cent Apple press release.
Apple also claims that it has
sold more than three billion
songs—downloaded from its
iTunes music software—and
has five million songs, 550 tel-
evision shows and 500 movie
titles for purchase, more than
those offered by Amazon.com
and Target.
“We are thrilled to report
the highest June quarter rev-
enue and profit in Apple’s his-
tory, along with the highest
quarterly Mac sales ever,” said
CEO Steve Jobs in a recent
press release.
Alongside the company’s re-
surgence, Apple’s stock (NAS-
DAQ: AAPL) has also enjoyed
high returns. At the end of
2002, its stock hovered around
$14 (£6.90) a share. It jumped
to around $65 (£32) a share by
the end of 2004. At the end of
2006, Apple was trading at $85
(£42) a share, eventually mov-
ing up to more than $120 (£59)
by May of this year.
Taking the hint
Harvard Business School has
followed Apple’s fortunes
and misfortunes since 1992
and included the company as
a case study in its MBA cur-
riculum. The case has been re-
vamped five times, including a
video lecture from John Scul-
ley, former Apple CEO (1985
– 1993), going over blunders he
should have avoided.
“This is a case where you
can focus on strategic success
as well as strategic failure,”
said Harvard Professor David
B. Yoffie, in the article “HBS
Cases: The Evolution of Ap-
ple,” published last month. He
continued, “There aren’t many
instances where you have both
sides so nicely paired [the ups
and downs of a company].”
The Apple case study reso-
nated well with Harvard stu-
dents and generated deep dis-
cussions. When Apple was in
ICONS: Apple’s latest iMac and iPhone are the most recent additions to a range of modern technology icons and symbols of Apple’s business success
Robert Sullivan/AFP/Getty Images
the dumps, everyone said that
they saw it coming, but when it
was doing well, students were
confounded when Yoffie point-
ed to problems in the making.
“Student opinion of Apple
tends to be excessively posi-
tive or excessively negative,
depending on the company’s
current fortunes,” suggested
Yoffie.
The case study’s latest ver-
“When Apple sion, “Apple Computer, 2006,”
was in the discusses in detail the strategies
used by former Apple CEOs,
dumps, everyone the reasons behind the strate-
gies and why a given strategy
said that they was ineffective.
saw it coming” “The company always looks
a little different, yet many of
the core issues that pose chal-
lenges for it remain constant,”
indicated Yoffie.
Yoffie suggested three dif-
ferent strategies in the 2004
“Where Does Apple Go from
Here?” article. The most dras-
tic change was to “build their
business off of the digital home,
the iPod, iTunes, iPhoto, etc.,”
said Yoffie. He also suggested
that Apple restructure from
a computer manufacturer to
a consumer electronics firm.
He proposed to use Macintosh
computer sales as a cash cow
and build up the other products.
Another suggestion was to
once again start licensing the
Macintosh operating system
(OS), which was stopped after
Jobs took over the CEO posi-
tion. A window had opened
into the software market, with
Microsoft products becoming
pricey for consumers.
Lastly, Yoffie suggested out
of self-interest (he held board
membership in chipmaker In-
tel) to throw in the towel on
its own OS, license Microsoft
Windows and become a big-
time computer manufacturer.
Jobs, who assumed the CEO
position in 1997, must have fol-
lowed the Harvard discussions
closely. Apple went innovative
under his leadership, as it in-
troduced the iMac, iPod, and
iTunes. The OS X operating
system and iPhone appeared
and sourcing chips from Intel
panned out. At the same time,
to emphasise the new direc-
tion as a consumer electronics
manufacturer, Apple ditched
the word “Computer” from its
official name.
Customer voices
Apple’s products are some of
the most sought-after, and its
retail stores are often crowded
with customers. When the lat-
est product, the iPhone, hit the
market on June 29, media re-
ported long lines in front of Ap-
ple stores of consumers waiting
to buy the phone. The lines had
formed a few days before the
event and people had brought
mattresses and food, just so
they would be one of the first to
get the iPhone.
“Apple brings several things
[to the market]: really sleek
cool hardware, great software
and a cool hip image,” said
Eric Clemens, professor at the
University of Pennsylvania’s
Wharton Business School in a
recent Wharton publication.
Additionally, Apple is the
current front-runner as a “tech-
nology leader of the digital liv-
ing room,” Clemens added.
The top excuses for start-
ing the weekend early are a
long lunch, doctor’s appoint-
ment and an out-of-office
meeting near to home.
“Our evidence suggests
that more and more workers
are seeing Friday afternoon
as an unofficial holiday,” said
Pam Rogerson, head of per-
sonnel at Employersafe.
“We have estimated that
this is costing British business
just over £50 million a year,
which all goes to form part of
the overall £13 billion cost of
workplace absenteeism.”
The company has devel-
oped a software system which
detects patterns of absence
and recommends appropri-
ate disciplinary action.
Employersafe also said the
“Friday Feeling” trend has
been reinforced by motoring
“More and more
workers see Friday
afternoon as an
unofficial holiday”
organisations which report
that the Friday rush hour
now starts around noon.
Research by the Confed-
eration of British Industry
(CBI) suggested earlier this
year that managers believe
one in eight of all workplace
absences are due to staff fak-
ing illness and the favourite
days to do so are Fridays or
Mondays.

     

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