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From the Economist: Here comes Fanchester United


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Shareholder democracy

Here comes Fanchester United

Jun 14th 2007

From The Economist print edition

Buying a football team used to be a rich man's game. Not any more

YOUNG football fans dream of playing for their favourite teams; older fans dream of buying them. For most people, however, a club is beyond their means, so they must indulge their managerial ambitions in other ways, such as fantasy-football games or computer simulations. But now Will Brooks, a British football journalist, has devised a novel scheme to allow fans to own and manage an English club for real.

Through his website, launched in April at myfootballclub.co.uk, Mr Brooks hopes to sign up at least 50,000 fans prepared to pledge £35 ($70) each. (So far he has signed up nearly 35,000.) The syndicate will then use at least £1.4m of its funds to target a team for a takeover bid. Mr Brooks stresses that this is a non-profit venture for genuine fans who want to make a real difference to a club in need. Because the acquisition will not be financed by debt, there will be no interest payments, and since no money will be taken out as dividends, any profits can be reinvested. “The club should therefore be on a much more secure financial footing than the standard shareholder-ownership structure,” says Mr Brooks.

Leeds United is top of the fans' shopping list, according to votes cast online. Catastrophic financial mismanagement and spiralling debts lie behind the club's demotion from the top flight of English football to a division two tiers below in only five seasons. Last month the club said it could not even afford to pay the expenses of medical volunteers who attend its matches. But Leeds may not be the eventual takeover target. Mr Brooks has brought in Michael Fiddy, a lawyer and former managing director at Fulham, to make sure that the target club is in good financial order.

Once a club has been bought, every decision—from picking players for the squad to choosing tactics to identifying candidates for transfers—will be made by the syndicate's members. Instead of a manager the club will have a coach who will say what he thinks is best for the team; his proposals will then be put to an online vote. It may not be easy to find a coach willing to agree to these terms, but if the club is successful, the coach “will become well known and respected for having the courage to try something new,” says Mr Brooks. And if things go wrong? For once, the fans will not be able to blame the manager.

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In a somewhat similar vein, in the proposed new startup American football league, the season ticket holders would also be shareholders. Getting slightly further afield but still on topic, there is a silicon valley investment firm that is planning to securitize 20% of the future earnings of young athletes. In a way I'm only surprised that this kind of thing has taken so long.

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You can take over a football team with only about $3 million? If that's the case, why didn't the star players ever do what these fans are doing? I know this isn't the NBA we're talking about, but even with salaries in the hundreds of thousands this would seem doable.

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You can take over a football team with only about $3 million? If that's the case, why didn't the star players ever do what these fans are doing? I know this isn't the NBA we're talking about, but even with salaries in the hundreds of thousands this would seem doable.

One of the UK members can doubtlessly add more color, but Leeds is sort of like a minor league team. I wouldn't be too surprised if you could buy a AA baseball team for a few million, and I think that is about the right analogy. No way in hell you could buy a team like Manchester United or Real Madrid without spending at least 100 times that, and probably much more.

Edited by J Larsen
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Leeds used to be a great team. They've gone down the plughole since 2004 though. Here's a history of their awards & etc.

http://www.leedsunited.com/page/Hon/0,,10273,00.html

Edit: Actually, I should think their ground ought to be worth a hell of a lot of money.

MG

Edited by The Magnificent Goldberg
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Edit: Actually, I should think their ground ought to be worth a hell of a lot of money.

Do teams generally own their stadiums in England? Here the norm is for the hosting city to pay for the stadium and lease it to the team, typically at a rate far below market.

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...there is a silicon valley investment firm that is planning to securitize 20% of the future earnings of young athletes. In a way I'm only surprised that this kind of thing has taken so long.

This reminds me of Joe Frazier's deal. He was funded by a group of investors called Cloverlay, who for their investment received some of his earnings, and also managed his money so that he was far better off financially than other top boxers (many of whom like Joe Louis were mismanaged and wound up with little).

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Edit: Actually, I should think their ground ought to be worth a hell of a lot of money.

Do teams generally own their stadiums in England? Here the norm is for the hosting city to pay for the stadium and lease it to the team, typically at a rate far below market.

Yes, I think so. Many of the football clubs have been around since the late 19th C.

MG

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Edit: Actually, I should think their ground ought to be worth a hell of a lot of money.

Do teams generally own their stadiums in England? Here the norm is for the hosting city to pay for the stadium and lease it to the team, typically at a rate far below market.

Yes, I think so. Many of the football clubs have been around since the late 19th C.

MG

Right, I knew that, but I thought that they were playing in modern stadiums.

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