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SPORTS For the brand


and the lifestyle - not the money


When Russian oil tycoon Roman Abramovich bought the Chelsea Football Club for a reported £150 million in June 2003, the club was bankrupt. While Abramovich’s involvement has brought on-field success, resulting in Chelsea winning every trophy they have contested except the UFEA Champions League, it has come at a cost above £500 million just on player transfer fees alone. This doesn’t take into consideration the amount of money paid on sacking managers and the multi-million pound losses the club suffers every year.


E


nglish media report that the total bill for his involvement with the Chelsea Football Club is now nearing £1 billion and starting to drain


his vast empire, estimated to be worth A$13.4 billion, according to the 2011 Forbes rich list. So why do rich business people buy sporting teams?


There are examples in almost every continent of rich individuals and wealthy corporate organizations led by strong individuals splashing out hundreds of millions of dollars to follow their passion in a more intimate way. “For a business, the decision can be made to align


themselves in the marketplace,” says Dr Lan Snell of Charles Sturt University’s school of marketing. “It displays a form of community involvement, and


hence will help leverage the brand by identifying with a sports club that should be a good fit. Ultimately, it is about positioning the brand as a good corporate citizen.” But while that theory applies


to a brand, and while Roman Abramovich is losing vast sums of money on his beloved Chelsea, it is not always the case that individuals will end up in the red. In America, owners can


simply move states if they think that state isn’t profitable enough for their sports team. It happens a lot in the NFL and NBA.


122 FAMILY OFFICE: ASIA TOMORROW Starbucks mogul Howard Schultz bought the NBA


Seattle SuperSonics basketball franchise in 2001 for US$200 million. During the next five years of his ownership, the team lost $60 million. But Schultz was able to sell the franchise for $350 million in 2006, meaning he made a profit of $90 million on top of the fame, prestige and free tickets he was able to secure. Austan Goolsbee of the University of Chicago


Graduate School of Business believes that the value of sporting teams keeps climbing – “because ever-richer guys are bidding against one another, there has been persistent inflation in team values”. Different codes and different countries of the world


view private sports ownership differently. In Australia, the Australian Football League, the most popular and successful of all the codes, which recently negotiated the third-highest TV, radio and internet rights deal in the world of $1.253 billion over five years, contemplated it in the late 1980s and early 1990s before deciding that club-based membership was better. In the two rugby codes (union and league), football


and now the newly formed Twenty20 cricket franchises, private ownership is welcomed. “One strong feeling I had from my time at the Swans


was that AFL people don’t feel the same attachment to a privately owned club,” says Dr Geoffrey Edelsten, once private owner of the AFL side the Sydney Swans. ‘‘Members feel the club belongs to them. But when


there is a private owner, things change, and people have a different attachment to the club. I do believe there is a difference between the codes. Private ownership


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