Football rich list, Liverpool's new kit deal, Stan Kroenke at Arsenal

With the Premiership Championship effectively in the grasp, Manchester United have topped the Forbes list of the world's richest clubs for the last seven years and the latest survey shows them once again in top position.  The club is estimated to be worth £1.12bn.  

It is interesting that the club has once again won the title and also got to the Champions League final notwithstanding the fact that the Glazers are still in charge.   Nevertheless, they have thought it necessary to hire a PR company to spruce up their image.

Real Madrid are their nearest challengers with a valuation of £900m.   Arsenal are ranked third at £700m, while Barcelona have dropped to fifth place, behind Bayern Munich.  Chelsea (£400m) rank behind AC Milan in seventh place and Liverpool (£332m) are in ninth place behind Juventus.   The other two English clubs with top twenty rankings are Tottenham Hostpur (eleventh) and Manchester City (fifteenth).

David Beckham continues to lead the list of highest earning players thanks to his recent endorsement deals with Pepsi and Electronic Arts.   His earnings were estimated at £24m last year, ahead of Cristiano Ronaldo (£23m) and Lionel Messi (£19m).  Fourth and fifth place were taken by Kaká and Ronaldinho.

FC Barcelona are the highest paying sports club in the world according to a survey conducted by the website sportingintelligence.com.   Their first team players earned an average of £95,081 a week with rivals Real Madrid in second place.   The New York Yankees came third.

In the Premier League Chelsea had the highest average weekly wage at £72,635 a player, although that put them just sixth in the global rankings behind two NBA teams.    Manchester City broke into the top ten for the first time, paying £70,676 a week.   That put well above United in sixteenth, with an average first team wage of £61,300.   The other two Premiership teams in the top 30 were Liverpool and Arsenal in 20th and 22nd place respectively.

Liverpool FC manager Kenny Dalglish has urged that money be made available for summer spending after the club secured the biggest kit deal in English football history.   The £25m-a-year contract with Boston-based Warrior Sports more than doubles Liverpool's present agreement with Adidas and demonstrates the value of the New England contacts of the new owners.

Adidas which launched a new away kit last week as part of a £12 milliopn a year contract with the club had the chance to match the American company's offer.  However, they were not prepared to meet the price.   It's a big blow to Adidas as only Real Madrid sell more branded shirts than Liverpool.

Warrior is a subisdiary of New Balance, a company best known for its running shoes.   Liverpool's owner, Fenway Sports Group, have become increasingly close in recent months to Jim Davis, the chairman of New Balance.   It has entered into a multi-year partnership with the Boston Red Sox including a kit deal and a $1m fee for an illuminated logo inside Fenway Park, the home of the Red Sox.

Warrior has been best known up to now for its association with the game of lacrosse which has Native American origins.  It is little known in Britain, but is played at top girls' schools like North London Collegiate and is popular at the better universities.

Whatever the link up does for lacrosse, it has solved the short-term cash flow problems at Liverpool Football Club caused by a likely failure to qualify for the Champions League

Why do so many Americans want to buy English football clubs?   Some of them end up being reviled and the financial returns, even allowing for the possibility of capital appreciation, are very risky and uncertain.

An interesting insight is given by Millwall chairman John Berylson, a Harvard Business School graduate, in an interview in Four Four Two.   He argues that it's a much a push as a pull factor.  He points out, 'US sports are tightly controlled fiscally.  The only really way to make money on a NFL team is to sell it, which means getting off the train.  It's terminal value and you can't get back on that train so easily.'

In contrast in England, 'Here they get a little more of the pie.  Here you can find a failing team and do a Milan Mandaric, turn it around and sell it.   You can't do that in US sports because there aren't so many failing teams.'

One of the biggest stories this month has been what looks likely to be the takeover of Arsenal by Stan Kroenke.   The Lombard column in today's Financial Times asks what Stan Kroenke sees in the UK football business.  The column continues, 'The industry is dominated by its customers (the fans) whose forceful demand for a rare product (trophy winning team) push shareholders into paying astronomical sums to their staff (the players).  The net result is that the customers are rarely happy, shareholders rarely make any money and the staff run off with the takings.  Good luck, Mr Kroenke.'

What perhaps the FT overlooked was that Arsenal has three commercial property sites near its ground which have yet to be developed. ‘Silent Stan’ made his money in real estate.  He is at heart a basketball fan who likes owning sports franchises, in particular for the long-term value of their real estate assets.  He spends most of his time on his ranches, doesn't appear at the Emirates that often and his initial grasp of the rules of football was sketchy.

He will keep in place the current board, although many Arsenal fans see them as ageing and old-fashioned and wouldn't mind a clearout.   Some reports suggest that he thinks that Arsene Wenger has too big a say at the club.

Arsenal made pre-tax profits of £44.8m last year, but a quarter of that came from the Highbury re-development.  The wage bill has grown faster than expected and is now £110.7m.   Wenger's philosophy has been one of developing players and it will be interesting to see how much money will be made available for new signings in the summer.

Lower down the leagues, clubs continue to encounter financial problems.   Conference club Rushden & Diamonds was effectively created by footwear magnate Max Griggs.   One commentator likened it to a giant Meccano set plonked down in the Northamptonshire countryside.   But without its benefactor it is difficult for the club to sustain itself and creditors have applied for a winding-up order, although a former chairman may step in with a rescue plan.

The summer is likely to see some big financial stories break and we will be covering them here and at www.footballeconomy.com