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Restructuring Club Ownership In NPFL: Lessons From Asia

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The world has been wowed with Chinese clubs offering double of the weekly wages in the English Premier League to attract top profile players to the Chinese Super League.

Expectedly, star players are looking that way. Carlos Tevez who had an influential place in Manchester City and helped them to a glorious title journeyed off to Shanghai Shenhua for £635,000 a week just as Oscar did to Shanghai SIPG.

Didier Drogba has been there and there was news in January that EPL’s poster boy and Manchester United’s all time highest goal scorer, Wayne Rooney, has considered heading east.

The rich Chinese club owners are not paying as much just to feed the fun of their fancy neither was it for fun too that the Government of China itself bought about 13% shares into Manchester City.

While the clubs provide rallying hubs and serve as huge public relations and tourism vehicles for their host communities, the leagues have now transformed into very strong economic factors not to be ignored by any serious nation.

The evidence of this imperative cannot be over-emphasised. A 29.5% at £1 stake bought by Ken Bates from Brian Mears by which he took Chelsea to AIM Stock Exchange in 1996 attracted partnership interests which grew the club to attract Roman Abramovich’s buy with as much as £140m, including Bates’ holding for £30m and 50% of Chelsea village community stake while he also brought additional £80m to clear the club’s debts.

Similarly, a 60% stake in Swansea City was sold for £110m to Steve Kaplan and Jason Levien of an American consortium, 70% of Crystal Palace went for £100 as Aston Villa went for £76m. All these coming into the UK.

Qatar’s Sheikh Mansor brought in £210m for Manchester City and the value of the club has increased about five times to about £900m. The stadium is owned by the Manchester City Council and with its naming as Etihad Stadium, the club pays the council £3m a year while Etihad signed to pay sponsorship to the club for ten years. The council also approved land for the new building of the Etihad Campus and, in return, Etihad Airways signed to create a British hub at the Manchester City Airport. This is strategised to create more jobs and support the realization of the £600m Manchester Airport City project from which financial benefits also accrue to the club.

It is needless to mention the £790m Manchester United takeover by which the Glazers have taken United through the Singaporean and New York Stock Exchange and 80 sponsorship and partnership titles to keep the club’s valued in excess of £2b

These investments help to grow the circle of development as the clubs invest in stadium, facilities and talents, increase the quality, appeal and demand for their games, expand media, convert the mass interest and following to commercial success and sustainable growth, share equity with their community and investors and return to continue to upgrade on facilities, talents and delivery of game experience and satisfaction to both local and domestic fans. It’s a revolving chain.

Besides, income from transfers, the EPL receipts for TV broadcast rights, merchandising, sponsorship, ticketing and other revenue streams continue to grow with external broadcast revenue put at £722m for 2013/24 season. Thus the EPL could devote a whopping £225m for solidarity support for other junior leagues and community development and further £340m for youth teams, all to maintain the strong market position.

Ernest & Young, in a 2014 study, revealed that the EPL, with a value of about £7b, delivered about £2.4b in taxes to the UK economy and provided about 103,000 full time jobs in the 2013/14 season and additional engagement of 546,000 youths in sundry projects and programmes. EPL’s gross value added to the UK GDP is about £3.4b

These derivatives typically underscores the kind of relationship and benefits between the government, communities, clubs and investors in a professional football league setting as is obtainable in varying degrees in the different leagues in Europe.

Interestingly, the Asians know that their region represents a huge one-third of the EPL market even as the English seem to have conquered Africa and stretching towards the Americas.

Having studied these dimensions of the global football economy, the Chinese decided that their Super League must go fully professional in January 2017, the Chinese League One (CL1), the equivalent of Nigeria’s National League, in March, while the CL2 is billed to join the system in 2019.

The reform entails the establishment of new regulations and structures aimed at promoting “high quality and high-level competition, introducing advanced managerial concepts to the market, enforcing minimum standards of professionalism, encouraging the influx of more high profile foreign coaches and players, and gradually establishing the European system for players registration and transfers.” In summary, the reform is to restructure the Chinese football leagues as private and investible companies for commercial success.

Saudi Arabia has also responded with an approval by the government and appointment of a top notch investment agency, Jadwa, to privatize many of its 14 mostly government-owned clubs.

The reform being driven by Deputy Crown Prince, Mohammed bin Salman, and overseen by the Saudi Council of Economic and Development Affairs, aims at turning the government-owned clubs into private companies as part of strategic economic re-tooling “to reduce reliance of various sectors of its social economy on government oil revenue, ease the financial burden on the government and diversify the economy” from just earnings from petroleum.

They are targeting to create 40,000 new jobs and are aiming at individual Saudi billionaires and ultimately foreign direct investments from global football investment and brands portfolio. To achieve this, the Economic and Development Council has assured it will provide loans and other support to the clubs to stand on their own.

The lesson here is in seeing that as economically well off China and Arabia acknowledge and are responding to the imperative of repositioning their clubs to tap into the global offerings of football.

The situation in Nigeria is so different as most of the 20 Nigeria Professional Football League (NPFL) clubs are owned and financed by state governments who rely on federal revenue allocations that accrue from oil export.

Virtually, all the states have a yawning deficit in infrastructure with the federal allocation unable to support the competing development needs. The glut in oil price worsens the situation leaving them unable to pay wage bills nor embark on capital developments to revamp critical sectors.

Comparatively, with a GDP of about $776 billion, among the world’s top ten, the Saudis who have decided to remove football from the bill of the state is far richer than Nigeria. They host 18% of the world’s oil reserve, ranking second with about 268 billion barrels, as against Nigeria’s 40 billion which places it sixth.

They have the world’s highest production capacity, averaging about 9 million barrels per day as against Nigeria’s 2.7 million at best. They top the world’s oil export index with about $133billion per annum while Nigeria grosses just about $40 billion at the peak of production.

It is therefore curious that Nigerian state governments have insisted on funding professional football, contrary to the examples of professionalism and success in the business.

While the EPL are mostly private owned, there is an option in the Bundesliga model of the 50+1 rule in which majority shares in the clubs are owned by the fans and the communities. This assures adequate and steady funding, match day attendance and sustainable management of the clubs as community assets. This model still leaves about 49% space for local and foreign private investors.

The EPL system also leaves room for the involvement of the community and the fans with several Supporters Trust Societies in participation with just about £10 contribution per member, per season.

The League Management Company of Nigeria (LMC) has kept hammering on the need to reverse the arrested development of the Nigerian league by restructuring ownership of clubs to open space for community, private and foreign involvement to help unleash its potentials as possibly the biggest and most commercially viable league in Africa.

It has approached the Stock Exchange and appointed NASD to support the process. It has approved about eight clubs to start the pilot scheme and recently advertised for financial advisors to help the clubs.

Beyond the pretensions of the various state governments in merely registering the clubs at the CAC, the potentials of the Nigerian league cannot be attained if the federal government and the states, and indeed the National Assembly, do not come to terms with the global revolution in football and the need for Nigeria to position itself correctly. Now is time to act.
Edoreh is the chairman of the Lagos Chapter of the Sports Writers Association of Nigeria (SWAN)
Onukogu Kanayochuqu Jubal,
Ag Sports Editor,
LEADERSHIP Newspapers Group
Num quam conficimus perfectas, sed semper melius (never perfect, but always better)
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