Can Kuwaiti cash revive football's fallen giant?
July 13, 2012 -- Updated 1259 GMT (2059 HKT)
Nottingham Forest has become the
latest English club to be bought by overseas investors following a
takeover by Kuwait's Al-Hasawi family.
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New owners
STORY HIGHLIGHTS
- Kuwaiti family buys former European Cup winner Nottingham Forest
- English club has been out of the elite division for more than a decade
- Experts say there is great value in buying a team with such a rich history
- Al-Hasawi family said to have more soccer knowledge than some failed investors
When it was announced
this week that a Kuwaiti family had agreed to take over Nottingham
Forest, two-time winner of the European Cup, the big question became: Is
this another Manchester City or Chelsea -- or more evidence of
football's "prune juice" theory?
For every Sheikh Mansour
and Roman Abramovich, there is a Sulaiman al-Fahim or Venky's to prove
that money pumped into one end of a club generally comes straight out
the other.
Indeed, Forest -- last a
member of England's top division as long ago as 1999 -- reportedly
required more than $100 million of investment from Nigel Doughty during
his 13-year spell as owner.
That might not seem like a
lot for a Premier League team, but for one that last season only
narrowly avoided a return to the third tier, it's a significant amount.
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However, the Al-Hasawi
family could potentially achieve a much greater return on their
investment at Forest than, say, the series of money men who have
followed in Al Fahim's unsuccessful attempt to make capital out of
former EPL side Portsmouth.
"Financial interest from
the Middle East has fallen into two camps: the genuine and the
fantasists," Middle Eastern football expert James Montague told CNN.
"You have on one hand the
likes of Sheikh Mansour who bought Manchester City, put his money where
his mouth is and within four years has transformed the club from
also-rans into title winners. They are now feared across Europe.
"On the other you have a
string of failed takeovers from those hoping Middle Eastern money could
be some kind of panacea. Or in the case of Portsmouth were taken over
by the UAE's Sulaiman al Fahim and eventually became the first Premier
League club to go into administration.
"This takeover appears
to fall in to the former category, largely because they have a
successful track record in domestic football. Remember, Manchester City
wasn't the first club Sheikh Mansour bankrolled. His first love is the
Abu Dhabi-based club Al Jazira. Likewise the Hasawi family have turned
Kuwaiti club Qadisa into a local regional powerhouse."
While Portsmouth's only
English titles date back to 1949-50, Forest won the old first division
championship relatively recently in 1978 and then shocked the football
world by lifting Europe's top club trophy in the following two seasons.
"It makes a great deal of sense for an investor to buy into a club of Forest's stature," says Simon Chadwick, professor of sport business strategy and marketing at England's Coventry University.
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"There is some equity in
the brand amongst fans and potential fans that dates back to their
successes in the late '70s and early '80s. This brand equity can offer
things to customers and investors that other organizations can't."
Forest's near neighbor
Leicester City, another club to have lost top-flight status in recent
years, is now owned by a Thai group -- but Chadwick says there is a big
difference in their earning potential.
"Forest's financial
position, while not being especially strong, is more stable than it has
been over the past five years or so," he said.
"For people like the
Al-Hasawi family, it depends on what their view of the club is. If they
see it as a revenue-generating asset, clearly it's going to take a great
deal of hard work to build those revenue streams.
"It's there where
Forest's history and equity of the brand can have an impact. Forest can
deliver a level of revenue that their closest geographic rivals
Leicester City can't. Nottingham has a significant population so in
terms of being able to fill a stadium, in terms of latent fan base, it's
very significant."
Foreign investors once
flocked to the lucrative but highly expensive Premier League --
Manchester United was reportedly valued at £1 billion when the Qatari
royal family was linked with the club -- but the second-tier
Championship is now proving to be more value for money.
"Sheikh Mansour saw that you needed to find undervalued clubs with history and prestige," said Montague, author of "When Friday Comes: Football in the War Zone."
"City fit the bill, and
in a way Forest has even more potential. We drool at clubs like
Barcelona, Manchester United and Inter Milan winning the Champions
League, but Forest won back-to-back European Cups just over 30 years ago
and had one of the most iconic managers -- Brian Clough -- in charge.
"A whole industry has
boomed over Clough -- biographies, novels, films. For the reported £20
million ($31 million), the Hasawi family are getting former European
champions with Hollywood-level exposure for a snip."
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Earlier this year, a
Russian group agreed to buy Reading months before the club's promotion
to the top flight, while Italians have bought Watford, Malaysians
control Cardiff, Hong Kong's Carson Yeung owns Birmingham, a North
American group has Derby County and an Egypt-born UK businessman has
taken over Hull.
"It makes the competition for players more intense, the competition for spectators more intense," Chadwick told CNN.
"Whereas maybe five or
10 years ago the involvement of a rich investor might have been seen as
the right ingredient for success, I think now such is the level of
interest in English football and such is the level of investment, it's
now much more about managerial competence and skill and knowledge of the
industry and networking."
Doughty brought in
former England manager Steve McClaren at the start of last season with
disastrous results, and the current FC Twente coach's short reign
resulted in the Forest benefactor -- considered one of the most powerful men in UK business -- standing down as chairman.
Doughty put the club up
for sale, but the Al-Hasawis dealt with the executors of his estate
following the investment banker's death at the age of 54 in February.
They issued a statement
stating their goal to "bring the Reds back to the top of the table" but
acknowledged "challenging times ahead" -- and have already sacked
manager Steve Cotterill just nine months into his three-and-a-half-year
contract.
"If the family is
looking at this on a medium to longer term basis, they'll look to
develop a scouting network and sign players for relatively small amounts
of money," Chadwick said.
"They will have to
manage the club in a very shrewd way to make sure they don't get back
into debt in the same way. One would hope that Forest as a club have
learned their lessons.
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"When they were
relegated they tried to spend their way out of trouble. They dropped
further and further down the league structure, while at the same time
building up their debts."
If Forest fans are
getting overexcited about their future, they don't have to look very far
for proof that such a takeover can go horribly wrong.
In 2009, city rivals
Notts County announced that football's oldest professional club --
languishing in the bottom division and in danger of collapsing -- had
been bought by a group called Munto Finance, purportedly financed by
Middle East money.
In came former England
manager Sven Goran Eriksson and international star Sol Campbell on
lucrative long-term deals, but they had both gone before the end of that
season as Munto's promises to wipe out crippling debts proved empty.
Still struggling to survive, the club was sold for a nominal fee of £1
just months after the takeover.
"There will always be
this fear. The 'fit and proper person test' applied to new owners is not
especially robust or rigorous, so we can never be completely sure about
what new owners' intentions or resources are," Chadwick said.
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"Until we get into this period of ownership, it won't be entirely clear what they are able to do."
He cited the example of
Blackburn Rovers, who suffered relegation from the EPL after only one
season under the ownership of Indian chicken magnates Venky's.
"The experience since
they took over is a stark illustration of how inexperience can cause
problems. No matter your intentions or how much money you've got,
experience of the industry is very important," Chadwick said.
"Do they know what
they're letting themselves in for? Running a football club is very
different from running other forms of business.
"What do they see as
being the strategic position at Forest? If they are looking to win the
Premier League and get in the Champions League, they are going to have
to invest a significant amount of money.
"But if their definition
of glory days is to get back into the Premier League then it will
require a more modest sum. Stoke. have proved you can establish yourself
as a midtable team. It's still very expensive, but not as expensive as
what City have spent to win the title."
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