So You Want To Buy A Football Club
by Peter Reeves
August, 2016
I met up today with a past business associate as he stopped off in Bangkok on his way firstly to Australia and then on to China. It had been quite a few years now since we worked together as independent consultants for a Premier League and two Championship clubs in developing strategic marketing plans to maximize potential income. He was the driving force. One of these people who ‘makes things happen’. He now works for a very wealthy businessman, also a past acquaintance of mine, handling this gentlemen’s sporting investments of which there are many. The investment portfolio he manages is approaching 50 million UK pounds and one of his roles is now identifying future potential investment and purchase options. A shrewd and hard-nosed negotiator with an eye for possibilities he knows his stuff and he knows his football. Inside out. And he doesn’t suffer fools gladly. I therefore have to be careful.
It was no chance meeting. I had been discussing with firstly his boss and then with him about the possibilities that exist in football mad Thailand. I produced a full report for him, naming a potential purchase opportunity and giving a full description of how it could be managed including the names of a revised European coaching team and ‘real’ academy coaches and some senior management I had already had initial conversations with, a staff and management costing, and everything he would need to know. Structuring it not like a Thai club but like a successful European operation. We met for 5 hours to discuss it.
He had done his homework. Working for someone like his boss he has access to information not readily available to the average individual and can tell you what colour boxer shorts someone is wearing that day if you ask. How he finds out all this stuff I don’t know. I don’t bother to ask. For the first two hours, after the ‘how are you’ niceties and the ‘do you remember when we did this episodes’ over the first of many coffees, I went through the plan I had previously forwarded to him for this club and he sat patiently listening. Asking relevant questions, identifying the sources of my information, analyzing, making notes and commenting. It all seemed to be going rather well. But then typical him, having lulled me into a sense of enthusiasm for the project, and allowed me to indulge myself, the hammer fell and he took over the dialogue and issued his own assessment of the footballing position here with a damning indictment. If you don’t want to know the score- look away now.
It is not possible to comment on everything we discussed and certainly names will not be mentioned but I found it slightly off-putting that he knew so much about so many people here that a couple of months ago he probably only knew by name.
Football in Thailand, he commenced, is akin to a ‘hobby farm’. The clubs are not businesses and are not run like them. They are also not football clubs because they are not managed correctly. They are the playthings of various individuals or other businesses some of which are used as an external marketing tool and some who are involved for their personal gain, by which he does not mean financially. The governing body of the PL, totally inadequate, ignorant of how to manage football and incapable of setting parameters and regulations and enforcing them that will benefit the game overall and as a spectator sport. Responsible to no one. They cannot be the decision makers, even if they had an idea what decisions needed to be made, because they are possibly not the real brokers. The club’s, or rather certain clubs, could pull the strings and any decisions that might affect these clubs and various individuals might not be permitted. There are therefore no effective management controls in place to regulate what is happening and move forward.
The Thai FA itself, impossibly outdated in its approach to the game a basic workable structure and what is required to make it successful. In his opinion then, a football nation governed by incompetence and a lack of understanding. As the legal purchaser of a football club in Thailand you are then placing your investment in the hands of an incompetent structure in the midst of a conglomerate of favoured individuals. Not the basis for a sound and worthwhile investment that could produce results. For things to change there would have to be a complete overhaul from top to bottom. He thought that unlikely given the nice comfortable lifestyle enjoyed by those who would fight tooth and nail to make sure they maintained the balance of power. He was truly shocked about some of the ‘self-serving platitudes’ he had read in the press and on various sites giving lip service to an idea that things are improving and the future rosy. He remarked rather harshly that if they are considering Thai football to be professional either these people are in someone’s pocket or they know nothing about the game at all in which case they should be moved on to McDonald’s or something similar. He continued, moving on to specifics.
To successfully run any football club the strategic financial business plan relies on many things but should not include sponsorship income (which can disappear), TV money (an indeterminate variable) and must rely on its own revenue generating activity, outside of the personal wealth of the owner or any other institutions or bodies that may support it visually or otherwise. Sponsorship and media income are considered the icing on the cake, not the basis for a financial business plan. He thinks it quite likely that there is not one club in Thailand that is actually practically solvent, that is, where income (that is ‘earned’ funds) exceeds expenditure, though obviously he hasn’t investigated them all. He also thinks that even if you include sponsorships etc., then the majority still aren’t. Just having a look at average attendances though and anticipated costs for each club paints the picture. Therefore ‘external’ funding is required to perpetuate them.
The shortfall in some cases he thinks cannot come from single individuals because the amounts over a prolonged period of time are too great and sooner rather than later clubs will fold as we have seen. He continued that therefore on that assumption there are very few clubs in Thailand that are worth a penny, let alone millions of baht. Who spends a lot of money on an insolvent business with little chance of initial improvement that might need 3 or 4 times the purchase price just to keep it alive while the mess was cleared up. He thought though, that the ‘European’ club structure I described would make an impact, enthuse the current and potential supporter base, infuriate those purporting to run the game and that the club would find success on and off the field. The money of course to achieve that being initially available while the business plan began to produce results. Anticipation rose again, but that was just a prelude to the hammer falling a second time.
Had I seen the latest results published in the FT, and their findings across European clubs as to their financial performance, using financial performance indicators (not football results) to determine their success and financial credibility. It’s a bit like the IMF and their financial rating for a country. Of course I hadn’t. Interesting reading. Here are a few positions on ‘that’ European league table. Number 1- Ajax Amsterdam, 2-Arsenal, 3- Glasgow Celtic, 4-Manchester United, 8-Bayern Munich, 9-Manchester City et al. No Madrid, No Barca, No PSG. His point? They are all managed (off the field) by people that are ‘professional’ football people who understand the game and what is required to make it successful entertainment (entertainment is what it is supposed to be), but who also have as their prime ‘goal’ financial stability and have surrounded themselves with people who know how to achieve it.
I hear you say, here we go….money, money, money. Well yes. With no money there is no club unless you are going to use a ‘sugar daddy’ owner or acquire the working capital from elsewhere, and there is no developmental future in that. Especially if one day the pot runs dry and he leaves the club in meltdown. That is just surviving from hand to mouth. Clubs can and must earn it themselves in a structured way aiming for longevity of income as these clubs listed do. And on that list were some ‘smaller’ clubs eg Toulouse and St Etienne. Not all footballing giants. Do they do that here? Don’t need to answer that do I.
So, he went back to my proposal. The stadium is not big enough. That ends the conversation, he confirmed. You cannot put enough bums on seats to firstly pay all the bills and secondly to accrue development capital for playing staff, management costs or facility. He estimated that a club here properly organized, staff and management wise, with its full range of on and off field programs would need an average attendance of around 17,000 at an average price of 110baht entry. That includes 50 baht for kids, certain other free concessions and no increased entry prices for ‘away’ fans. It also included free water offered to all small children, a season ticket discount and club membership discount. That means a stadium capacity of 20,000 to allow for further growth. The figures include a 20% contingency for future investment in the club and allows no income from sponsorships, TV etc. for the reasons previously given. Anything less than those attendance figures and there are potential problems I showed him the average attendances for the PL at the moment. He knew them. He raised his eyebrow and just said “So where’s the future?”
He hears a lot about (from me) the loyalty and enthusiasm of Thai fans but said “so where are they?” They can’t and won’t do what’s necessary here to build progressive clubs. It’s not in the understanding of the PLT or the Thai FA that they can’t or that others can just do it better. As a footballing country with a future it is nothing and will stay nothing until there is a change of emphasis and philosophy and until owners realize the club does not exist to get their face on the TV, and all the enthusiasm of the fans, excluding the hardcore, will waste away in time. If it hasn’t already in some cases. He diversified and mentioned, in Thailand it’s not just football though is it. With a population approaching 80 million they managed just two gold medals in Rio. The UK with its 69 million managed 27. That seems to indicate that most sports here, not just football, have got their infra-structure wrong and their priorities in the wrong places. There are cultural issues of course to consider, but that is sometimes used as an excuse for under-performing. Quite often used as an excuse to cover up individual failings.
He concluded that whilst there are many elements of Thai business that are successful, marketed well and very profitable and should be recognized and applauded as such, football is not one of them. It is likely it never will be. The very basic tenet of what a football fan is and what they need is a mystery to owners and governing bodies alike. They don’t grasp it. “You can dress it up as much as you want, believe what you are told and live in some dream world if you like, but the reality is a mess from top to bottom. People are told and believe the product is satisfactory. It is not. The product is more than what happens on the pitch, though that is an important part of it. Fans accept it, some because they know no different and others because they can’t change it.”
He left to get a few hours’ sleep before his onward flight where he is doing some business in Australia. Another country that is in some areas on a downward spiral footballing wise at the moment but the difference here is that they know it and are doing something about it. And then on to China where money is being thrown about like confetti but who are at least trying to build a proper foundation for the future in the midst of all the chaos.
I got back in the car for the drive back with plenty to think about and whilst true to form he had been hard, at and times harsh, I found it difficult to disagree with much of what he said. He had watched some matches before his arrival. Players need to grow up was one comment, they act like little babies. Officials mostly appalling. Quality of the football, in the main very poor. Why are non-footballing executives on the pitch and in the dugout, entertainment value, outside of the downright comical, very low. From the performance of the teams, inadequate coaching in most cases a manifestation of the fact that the majority of so-called coaches haven’t got a clue, hence this constant merry-go-round of appointments and sackings by management who also haven’t.
Looking at the state of some of the stadiums (only on TV I Might add) a disregard for fans safety. I told him about the incident At Korat with their 35,000! He was unaware of that one and asked what punishment the club and the GM received. Just nodded knowingly when I said nothing. He continued that the majority of clubs seem to be living out an Alice in Wonderland existence. Pretending they are having junior programs, pretending they have fans welfare at heart, pretending that standards are being taken care of and that they have adequate coaching programs at the clubs, pretending to themselves they are doing a good job.
He did say that he had found 2 clubs who did seem to have enthusiastic junior programs and a couple trying to engage with their fans without using facebook as their first line of information passing (a fact he found very amusing) He also said that there were a few foreign players worth their high salaries in amongst a majority who were here because they can’t get clubs in a decent league and see a fat salary for doing very little.
He had commented on something he had read about the match between Bangkok Utd and Muangthong Utd being more entertaining than what was served up at the recent Euro’s. He said, yes, as a one-off it may have been but then I see under-14 games in Europe that also are. In the Euros there was just a bit more at stake. You’re playing against quality, not some ramshackle of a team, who if you make a mistake will hurt you. It’s a one-off match you must not lose. Of course it will be cautious. It’s naïve to expect anything else.
Thailand, he says, wants to make its mind up about its status and position in world football and how it sees itself. And that has to be an honest appraisal not a fairy tale. When it’s convenient to cover their inadequacies and poor performance they claim to only have had football for 15 years but then in the next breath announce and celebrate the centenary of football here with FIFA representatives. Even a quick glance by those incompetents will tell them that whilst someone may have kicked a ball in anger 100 years ago, there was no structured football. As there wasn’t in most countries. More fairy tales to delude. It can’t be both. It’s this continuing dream world existence. As he said so often during the meeting “there is no reality here, no understanding, it’s all a glorified hobby that some buy into”. He had closed with his usual waxing lyrical. “I am English, but until there is major change here it’s unlikely you will find this mad dog going out in this midday sun! Keep in touch” I will. And me, off to find a 20,000 plus seater stadium not being used. Perhaps Lewis Carroll might have some ideas.
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