Post by QPR Report on Nov 12, 2008 7:53:17 GMT
Sporting Life - TAKEOVER BROKER ENDURES DIFFICULT TIMES
Keith Harris, the man who has brokered five Premier League takeover deals, believes the credit crunch could affect clubs seeking new owners as benefactors become more cautious.
Harris, who has masterminded deals at Chelsea, Aston Villa, Hull, West Ham and Manchester City and is seeking buyers for Newcastle and Everton, claims the economic downturn has made it tougher to find investors willing to risk moving into the top echelons of the game.
"It has never been more difficult to find
buyers," said Harris.
"It's no longer a question of price negotiation - it's should we? People are wondering if now is the time to spend."
Harris is particularly concerned Liverpool may find themselves in financial difficulty if joint owners Tom Hicks and George Gillett fail to pay back a reported £350million worth of debt.
He also claims Merseyside rivals Everton are no longer a realistic proposition to be bought out.
"Liverpool's debt is due in January, with maybe a six-month extension," said Harris.
"The two banks which are the principal lenders - the Royal Bank of Scotland and Wachovia - are two of those that have suffered. Whether they want to lend it again or not, they may not be able to."
Equally alarming, said Harris, was the situation at Everton where there has been no movement in terms of a buyer for the Goodison Park club who, like Liverpool, want to build a new stadium.
"There is no progress at all," said Harris, chairman of Seymour Pierce investment bank and a former Football League chairman.
Harris, speaking after a private address to football financiers in Zurich, re-iterated there were still two offers on the table for Newcastle but refused to name them.
"The work is progressing. They are wealthy investment funds, not from the Middle East but they do tick the test," he added.
"The people behind
them are first rate. They are capable of doing the deal and of investing in and managing the future.
"I don't know how to predict when we might do the deal."
Harris believes the Premier League's fit and proper persons rule should be reviewed after the debacle of former Manchester City owner Thaksin Shinawatra, who was in charge at Eastlands for a mere 14 months before selling the club to Abu Dhabi Investment Group for almost double what he paid.
"When he was first introduced to me I competed with another major investment bank to become his advisor.
"It wasn't me who said Man City, it was him who wanted the club," said Harris.
"We did an investigation into him by one of the big detective agencies. We found there was a military regime that was out to get him at all costs.
"We found that none of the allegations were proven and there was
sufficient doubt in everyone's mind as to what the motivation was of the
military government - in short we thought it was out to get him.
"I actually I thought I was siding with the underdog but it went wrong which is sad. I think that probably what will happen now is that there will be an amendment in the way the Premier League view these (kind of) circumstances."
Harris believes there has been too much negative publicity when it comes to the amount of debt accrued in English football and questioned FA chairman Lord Triesman's widely-reported comments that the deficit figure was £3billion.
"The numbers he has used are slightly inaccurate," said Harris. "The published figure is £2.5billion of which £900million is soft debt with no interest costs.
"The problem is only serious if the debt is with clubs which do not generate the cash to service it."
David Conn/The Guardian
Hammers and City takeovers went wrong, says deal-makerHarris fixed sale of five top-flight clubs but admits to game of risk and feels foreign money is the future
David Conn in Zurich
guardian.co.uk, Wednesday November 12 2008 00.01 GMT
The Guardian, Wednesday November 12 2008
Article history
Former Prime Minister Thaksin Shinawatra of Thailand sold Manchester City after 14 months at the helm. Photograph: David Longstreath/AP
Keith Harris, the chairman of the merchant bank Seymour Pierce and a former Football League chairman, is the prime deal-maker who has engineered takeovers of four Premier League clubs in the past two years. He is currently seeking buyers for Newcastle United and Everton, but acknowledged yesterday that his deals at West Ham United and Manchester City had gone "wrong". In the turbulent financial climate, he said, fans cannot expect the deals always to go according to plan.
Of the four takeovers on which Harris has most recently worked he cited as great successes the record of the United States businessman Randy Lerner at Aston Villa and the fortunes of Hull City under the ownership of a consortium led by the Essex-based property investor Russell Bartlett.
However, at West Ham the Icelandic businessman Bjorgolfur Gudmundsson has suffered a severe dent in his wealth due to the banking and economic collapses in Iceland and Harris said he expects to be appointed shortly to sell the club on again. At Manchester City the former Thai prime minister Thaksin Shinawatra was already facing criminal charges in Thailand and had his assets frozen when he took the club over in June 2007. Fourteen months later he had to sell and has since been convicted of corruption. Last week he was refused permission to return to Britain.
Harris said he had hired a private detective agency to investigate Thaksin's record before the City deal and decided the charges were politically motivated by the military government. However, Harris agreed, given the Thaksin experience, that selling a football club to somebody facing criminal charges puts the club at risk and the Premier League should not allow it in future. The league's "fit and proper person test" currently bars only people who have been convicted of criminal offences, not those being prosecuted.
"It is rather sad at the moment with Thaksin's visa being revoked," Harris said. "I don't think at that time I could have done any more investigation. But I think the Premier League will amend the way it views these circumstances."
Harris spoke about English football's glittering success and current financial challenges at an International Football Arena breakfast meeting in Zurich. He adamantly rejected the Uefa president Michel Platini's recent warning that English clubs risk losing their identities, arguing instead that more overseas takeovers are inevitable.
"In the UK we are no longer as important as we were. Our pockets are not as deep and Barclays Bank [in which Abu Dhabi's Sheikh Mansour bin Zayed al Nahyan, Manchester City's new owner, recently bought a 16% stake], like many of our football clubs, has gone to where the wealth and economic power lies. We cannot regulate against this in a free world and have to accept these changes, embrace them and deal with the issues they create."
Explaining the motives of the businessmen coming in, Harris said they regard football clubs as "trophy assets" but he also convinces them they can make substantial profits without having to put additional money into the clubs after buying them.
"I have been able to demonstrate that if you do it correctly, the club should generate sufficient cash to fund itself, so having bought it you shouldn't have to put more money in unless you choose to. And you can generate a return of 5-10% in the value of the club every year over a period of seven to 10 years."
Lerner, whose sensitive and shrewd stewardship of Aston Villa is the deal of which Harris is most proud, plans to own Villa for just that, seven to 10 years.
However, Harris's own experience of other deals has shown that the course of football club takeovers does not always run smoothly. Discussing the collapsing fortunes of Gudmundsson, whose Icelandic bank, Landsbanki, was nationalised last month at a loss to its principal shareholder of about £250m, Harris said it could not have been foreseen when the Icelander bought the club for £85m two years ago.
"He was one of the wealthiest men in what was a very wealthy country," Harris said regretfully. "His intentions were entirely honourable. The fact that the Iceland banking system was over-leveraged and hanging by a thread, I don't think anybody knew at the time. The collapse was due to the turbulence of the global financial system and not something anybody could have envisaged."
Harris emphasised the seriousness of the world's financial crisis, referring to the situation in Zurich, Europe's private banking capital, where the giant global financial institution UBS has recently been bailed out by the Swiss government. The turmoil is making it more difficult, he said, to find buyers for England's football clubs.
"It is not a question of price negotiation," he explained. "But people are wondering: 'Should we?' Is now the time to spend the money? Should I be buying what are essentially trophy assets today?"
Newcastle, Harris said, is still a desirable club to buy, because it has a 52,000-seat "fabulous stadium" already developed in a one-club city where the supporters have amply demonstrated the fierceness of their devotion.
The owner, Mike Ashley, who bought Newcastle only last year, has not fallen victim to the financial crisis but Harris said Ashley is committed to selling because the St James' Park faithful turned against him after Kevin Keegan's resignation as the manager. There is, Harris confirmed, "an interest from two parties, wealthy investment funds, not from the Middle East", adding that the US magnate, Philip Anschutz, reported to be interested, is not one of them.
Everton, the other Premier League club which has instructed Harris to seek investment, is, he said openly, not as encouraging a proposition to buyers looking to increase the value of their investments.
"There is no progress at all," Harris said. "The demographics of Liverpool as a city are not hugely compelling. It is not a very wealthy city; Everton share the city with another club which arguably has been in the vanguard for the last decade and they both have a stadium to build. So the economics need a lot of looking at."
Of English football's general health Harris said many Championship clubs have serious problems and are losing money, caused substantially by the "huge gulf in income" between the two leagues. He believes that the debts of the Premier League clubs are not at "high-risk level" as the FA chairman, Lord Triesman, warned last month, pointing out that much of it is "soft" interest-free debt to owners and most other clubs make enough money to service their bank borrowings.
However, he said, he is concerned about Liverpool, who owe £350m to two banks, Royal Bank of Scotland and Wachovia, which have suffered severely in the downturn. The money is due to be repaid in January, although Liverpool have an option to extend the loan until next July. After that, Harris said, they will find it difficult to extend or refinance the loan. They would have to raise cash, which could be difficult, and the club, owned by Tom Hicks and George Gillett, could then be in trouble, Harris said, before adding that a solution was likely to be found.
"It's a brave banker that would repossess Liverpool Football Club," he said with a smile.
Mr Fix-it
Harris has acted as financial broker on takeovers of five Premier League clubs
Chelsea July 2003
Harris worked on the £17m acquisition from Ken Bates by the Russian oligarch billionaire Roman Abramovich.
Aston Villa August 2006
Harris brokered the £62.6m takeover by US credit card billionaire Randy Lerner.
West Ham United November 2006
The Icelandic banking and economic meltdown has led to severe losses for Bjorgolfur Gudmundsson, who bought the club for £85m. Harris expects to be instructed shortly to find new investment for the club.
Hull City June 2007
One of Harris's lower-profile deals - Adam Pearson sold Hull for £10m to three businessmen led, according to Harris, by the Essex-based property investor Russell Bartlett.
Manchester City June 2007
'It went wrong,' Harris said of the takeover by Thaksin Shinawatra, who had criminal corruption charges laid against him and his assets frozen in Thailand. Harris conceded that clubs are placed at risk by being sold to somebody facing criminal charges.
www.guardian.co.uk/football/2008/nov/12/premierleague-westhamunited