Mihir Bose: Dyke’s cure for depression is in his own hands

Greg Dyke says Manchester City winning the Premiership is depressing, given how few English players they have. There is, of course, nothing he can do about how City chooses its team, let alone force the City manager to field more players so as to help Roy Hodgson when the England manager comes to select his squad.

Yet there is one way the chairman of the Football Association could get over his depression. That is by getting the FA to pass a sporting regulation similar to one that many countries have. This is to make sure foreigners just do not waltz into England country and buy an English club. Make no mistake, the FA has the power to do that.

The FA is the regulatory body for football in England. Every year they license the leagues including the Premier League. Without such a license the Leagues could not operate. And if they want to justify their action they could just point to other countries, as for instance the land of the free and brave, America. Such are the controls the American sporting bodies exercise that the Glazers could not have bought an NFL, a MLB or NBA franchise in the way they acquired Manchester United.

The American sporting model is not only very different to the one in England but, in essence, the Americans operate what they call sporting socialism. The clubs in the league see themselves as a chain of restaurants where every restaurant in the chain must be given equal rights to prosper. There may be no promotion or relegation but the bottom club in the league gets the first pick of next year’s college players.

Also the NFL, MLB and other leagues vet possible buyers and the existing clubs meet and vote to decide whether a new owner can be accepted. And, of course, in Germany, majority holding of a club must remain in German hands. This means that a German Manchester City could not have been sold first to Thaksin Shinawatra, the disgraced Thai prime minister convicted of corruption in his homeland and living in self-imposed exile in the Middle East, and then to Sheikh Mansour of the royal family of Abu Dhabi.

Now it will be argued that Glazers buying Manchester United is very different to Mansour acquiring City. As Alan Sugar once put it to me: “When you consider the Glaziers, they did nothing. What they did was in the boom days when you could go and borrow anything, they borrowed £600-700 million for a takeover bid for Manchester United. Merchant banker, financial advisers, lawyers, all got their fees. They all must have made five million quid in fees throughout the whole thing. These Glazers don’t care because it’s OPM, other people’s money.

“You have a fee for recommending this deal, you climb on board. The advisers get their money. The Glazers don’t care, the Glazers will borrow a little bit more. This is just a transaction for them. And if the market would have gone on like this, some other nutter would have come along, convinced another bank to give them a billion pounds and they would just do a transaction where the same advisers, accountants and lawyers would still cop their five million here and there and the Glazers would walk away with a net £100-200 million. That’s the Glazers for you, right. And to a certain extent maybe the previous owners of Liverpool [Gillett and Hicks]had the same thing in mind.

“We’ve seen Manchester United, we’ve seen Liverpool, we’ve seen Aston Villa being bought by outside institutions if you like for the wrong reason. The purpose of buying a football club is not really because of the passion for the game of football in England, for the development of the game of football in England. The sole purpose is, they’re buying a franchise which one day they hope to sell on to someone else. It’s just a commodity for them. Should that be allowed?”

Now it will be said that Sheikh Mansour, like Roman Abramovich, has not borrowed money but put his own money in and transformed City. And what a transformation. Before the Abu Dhabi royal family arrived the most precious memory for many City fans, including such high profile ones as Will Greenwood, was the victory over Gillingham in the 1999 second division play off. This was when City came from 2-0 down to win and as Greenwood once told me he would happily surrender his rugby World Cup medal to live through that Wembley experience again. And whimsical as this sounds from a man who created sporting glory for millions of rugby fans it was a view shared by many City fans. Then came Sheikh Mansour and suddenly City fans found their fantasies had turned into reality.

Nevertheless, the Sugar question remains: should English football allow anyone to buy a club? As Sugar points out: “In America, the Americans have had the foresight of saying no foreign owners of media. Rupert Murdoch had to change his nationality in order for him to acquire media assets there. The Football Association may in its wisdom many years ago have said no foreign ownership of football clubs.”

Sugar is not an isolated voice on this issue. Gordon Taylor, chief executive of the Professional Players Association, has similar views and this worry about foreign ownership is also echoed by Mark Warburton, the former City trader turned football manager who masterminded Brentford’s promotion. As he told me: “Everyone is asking about foreign players and foreign coaches but very, very few ask about foreign owners. I just wonder what happens in five year’s time? Premier League talks of decision being taken by 14 out of the 20 clubs at a meeting. What happens if we have 17 overseas owners? And there is a vote about relegation or promotion. How does that work? Some of the foreign owners are fantastic but not all of them understand the game. The emotional side, what it means to the fans. How you interact with them?”

And when I asked him what he felt the FA should do his response was that while he needed to think more deeply about it, “there has to be some sort of control. Is there some sort of test you place in terms of boxes that have to be ticked before being allowed to take over a club? Promises and commitments to make about what they will do in the future to the community, to the staff. I am not sure how you do that. For me at the moment foreign owners are a far bigger concern than foreign coaches. It is very rarely mentioned. I think it should be mentioned far more often.”

It is interesting that I am writing this as there is much debate going on about the Pfizer taking over AstraZeneca and the commitments the Americans are supposed to have made. So why does not Dyke’s FA demand similar guarantees from foreign owners?

Of course in the case of Manchester City we have been so lax that the tax payers of this country have effectively subsidised a foreign owner. To understand how this subsidy works we need to go back to Thaksin Shinawatra and his takeover in June 2007. Thaksin had been looking for an English club for years having fallen in love with the Premiership when he was owner of television rights in Thailand. He had failed to buy Fulham and Liverpool before being offered Manchester City for around £60 million and snapped it up. It may seem strange that he should buy a club which had achieved nothing for nearly four decades and had finished 15th and 16th in 2006 and 2007. But Manchester City had one big advantage over Liverpool and Fulham. They had a brand new stadium, having moved from Maine Road, its historic ground, to the City of Manchester stadium.

The stadium had been constructed for the 2002 Commonwealth Games with public money:£78 million from Sport England and £49 million from Manchester Council. But the authorities, anxious not to have a white elephant on their hands after the Games, decided the best option was to rent the 48,000 seat stadium to Manchester City. In return for that Manchester City give Maine Road to the council. They also paid £15 million to rip off the running track and convert the Commonwealth Games arena for football. But the best part was the outrageously favourable deal on the rent: a small yearly rent which only became substantial if more than 36,000 turned up for a match. This meant that the club paid between £1.4 million and £2.5 million a year in rent for seven years between 2003 and 2010.

For this the club got a state of the art stadium. Arsenal’s Emirates stadium cost £440 million and landed the Gunners with debts of £250 million. Tottenham are struggling to raise the £500 million odd they need for a new stadium. Manchester is not London, but a new stadium of the standard Manchester City got could well have cost the club a few hundred million, if in the first place they could have managed to borrow the money.

Francis Lee, who was then very involved in running City, has claimed great credit for the deal, although many think David Bernstein was the man more responsible. But whoever played the crucial role it was a great deal and, says Lee: “The new stadium made it attractive for people to buy into it.” It was certainly the carrot as far as Thaksin was concerned. Years later explaining to American professor Tom Plate why he chose Manchester City, a club and a city with which he had no known connections, Thaksin said: “Manchester City is a team with good fans and good infrastructure. It’s not too difficult to improve.”

Observe the word “infrastructure”. This makes it very clear the City of Manchester stadium was crucial to the deal. Thaksin could hardly have said good infrastructure if City was still playing at Maine Road. And for the new owner given that the stadium was in place then, as Thaksin said, it was not difficult to improve. Of course this improvement would require money. Thaksin, himself, did not put in much money and if he had any master plans for the club he never let on, unless bringing Sven Goran-Ericksson as manager is considered a master move. Thaksin appears to have seen it as something enjoyable to do while in exile. For him, sitting in the directors box ranked alongside playing golf. It was something to take his mind off as he endlessly plotted a return to power in his native land.

However, a year after he had bought it, he found the Bank of Thailand had frozen his assets. Had they not done so he would probably still be enjoying owning Manchester City. That is when he sold it to Sheikh Mansour for a reported £150 million, making a profit of £90 million. The new owners had money, knew they would not have to build a stadium, unlike rivals such as Liverpool, and the purchase fitted in neatly with their plans to promote their state.

This deal for a Premiership club had come in what may be called the third phase of Arab investment in western assets. The first phase in the 1970s had seen the Arabs give money to western investment banks to invest on their behalf. The second phase, in late 1980s early 1990s had involved buying financial stakes in institutions. The third phase started in the early part of the new century, with another oil boom, and saw investment in companies like P and O with the Arab investors also putting in their own management teams as part of their investments. Abu Dhabi’s investment horizons had also expanded after the death of the conservative and cautious ruler, Sheikh Zayed who ruled both UAE and Abu Dhabi. Younger, more energetic, dynamic men had emerged and they were tired of being outpaced by Dubai. More so as Dubai did not have oil and had to be rescued by Abu Dhabi after the crash of 2008.

Sheikh Mansour has never told the world why he bought City. According to City chairman Khaldoon al-Mubarak, who has given the odd interview, the Sheikh is an astute businessman who believes, “you can create a valuable proposition in football that has not yet been accomplished”. Al Mubarak, who also heads the country’s Executive Affairs Authority and has a role in making sure Abu Dhabi conveys the right image to the world, sees owning the club as bridge building between the Arab world and the west. There has certainly been no lack of money to build this particular bridge and City’s rise to supremacy has seen billions spent on the squad. So much so the club has run into problems with UEFA over the financial fair play rules.

Yet not a penny has had to be spent on acquiring a new stadium which would have been the case had Manchester City still been at Maine Road. For new owners like the Americans in Liverpool, a new stadium is always the biggest headache. Abu Dhabi did have to pay more in rent when the lease was revised in 2010-2011 and the stadium was renamed after the country’s airline Ethiad. The naming meant that the unsuspecting public might think this was a stadium owned by the club. In reality, the club continues to rent but has started paying a single fixed sum, which goes up in line with inflation with additional payments linked to City’s participation in European competitions. Estimated rental receipts for the five years from 2011/12 are £20 million. The figure is a substantial increase on the figure Lee and Bernstein negotiated and the council makes much of the club’s commitment to helping regenerate one of the most deprived areas in Manchester.

But all this cannot deny a quite remarkable fact about the champions of England – that it is a club owned by a foreign state yet the stadium in which it plays has been funded by British tax and rate payers and is owned by the local council. In other words, the British have funded a vehicle for a foreign state.

Of course, when the stadium deal was done, Manchester City was not owned by Thaksin or Mansour, but given that public money was involved, why were restrictions not put on any future sale of the club? Why should British public money fund what is meant to promote the goals of a foreign country? And of course all these questions would not arise if the football authorities were to say no foreign owners please.

But far from saying that the Premier League is proud of the fact that it is owner neutral, which means anyone can own a Premiership club. And for people like David Richards, former chairmen of the Premier League, the arrival of foreign owners has enhanced the League. As he told me: “Roman Abramovich brought another dimension to the game. He brought super, super stars. He has done a fantastic job. He changed the title run. Now you have got Manchester City. It is good, it gives people hope. Sheikh Mansour has taken Manchester City to a totally different dimension to what anybody would have perceived Manchester City to be. It has made the League better.”

But it has also made Greg Dyke depressed. The question is will the chairman of the FA do anything about it? Or will he just moan?

Mihir Bose was the first sports editor of the BBC. He has worked for various media outlets and launched the Inside Sport column for the Daily Telegraph. Now a freelance journalist he has written 28 books. His latest book: Game Changer: How the English Premier League Came to Dominate the World was published by Marshall Cavendish for £14.99. Follow Mihir on Twitter @mihirbose