Funny business

Simon Evans explains why the Champions League is the place to make money

There was a time when English fans dreamed of foreign investors, mystery millionaire Arab businessmen or an American caught by the soccer bug, pumping millions into their club. Today Walker, Hall, Harding, Gibson et al have removed the need for the foreign fantasy. But over here in Europe’s poorer half, there are few local heroes capable of turning a club’s fortunes around and delivering the dream and it is here that the romantic ideal of the outsider with his pot of cash is thriving – and believe it or not it is Englishmen they are dreaming of.

Once football was part of the unwritten contract between the people and the Party State. Accept club name changes and the interference from our ministries and we will deliver you good quality league football and a national team you can be proud of. So the local team became Dinamo and did quite well.

Footballers were never rich in the western sense, but enjoyed a status unequalled by few outside of the Central Committee. No transfer market, no sponsorship and no agents. One of the few aspects of the business life of football in the communist East that mirrored that of the West was that on retirement players were given a pub to run.

But the change of system destroyed this cosy deal. The club was no longer Dinamo, was no longer ensured financing from the Interior Ministry or the Army and was told to stand on its own two feet. But without millionaires to bankroll them the clubs turned to whoever could deliver short-term cash. And at the risk of offending the few, decent legitimate post-communist businessmen, the majority of people with money in Eastern Europe in the early nineties,were, to put it mildly, a little bit dodgy.

Most of those who put their money into East European football know that they will never see a return on their “investment”. Tickets are so cheap that revenue from the gate is almost irrelevant. TV revenue, where it exists is still tiny and is often siphoned off before it gets to clubs, and few multinationals have shown any interest in sponsoring clubs that are struggling to survive. As one Hungarian advertising rep put it “Why would we want an international class product to be associated with a pile of shit.” A bit harsh, perhaps, but you get the point.

There are some local capitalists who have made a decent go of building a serious football club in the mid nineties. In Slovakia, Julis Rezes head of the VSZ steelworks has not only built FC Kosice into the nation’s number one side but had the cheek and the cash to buy Sparta Prague and appoint a relative as President. In Hungary, millionaire retailer Gabor Varszegi bought then second division MTK Budapest three years ago and saw them become First Division champions last season. In Romania, a consortium of seven banks have transformed National Bucharest (formerly Progresul) into a serious challenger to the traditional might of Steaua and Dinamo. Ask any of these three clubs owners what makes them think their investment is worthwhile and you will get a two word answer: “Champions League”.

The pot of gold handed out by UEFA to qualifiers for the Champions League is having an effect in Western Europe, where it further strengthens the financial muscle of the big clubs – in Eastern Europe it can totally transform a club. Within one season a team that makes it into the league stage and picks up a few points (and in the Champions League points really do mean prizes) can become by far the wealthiest club in the country. The Rezes family may have spent a small fortune knocking Sparta and Kosice into shape but this season they have two sides coining in the Swiss Francs.

But Sparta will not have it their own way for long. In October English National Investments (ENIC) bought majority ownership in old rivals Slavia Prague. They know full well that they will lose money for a good while in the Czech domestic scene, but as Managing Director Dan Levy put it “A lot depends on the development of a European Super League.” Even if Slavia don’t make it into such a new competition, Levy is convinced “there will be a filter-down effect”.

And even if there never is a European Super League, ENIC, which also owns AEK Athens and Vicenza as well as having a shareholding in Glasgow Rangers, can always look to the existing Champions League to provide a return, while the TV rights and merchandise markets in the Czech Republic catch up with those in the West.

It was a cute bit of business and one that was not totally unexpected. The East European sports press has for the last year been occupied with rumours of foreign takeovers. The attractions are obvious. Although no information is available on the exact cost of buying an East European club, it would be fair to say that for the price of Stan Collymore you could own a club with a good chance of getting a place in the Champions League. What is the point of investing in Southend United, when you could own Steaua Bucharest?

For those already owning clubs, Eastern Europe could prove to be even more tempting. National FAs currently rule out cross-ownership but UEFA has yet to make a stand on cross-border dual ownership. Hungarian club Ujpest are currently in talks with French team Metz and although both sides will only call the imminent deal “mutual co-operation” there is an awful lot of nodding and winking going on. If a Slovak steel maker can have two teams in the Champions League, what is to stop Martin Edwards or Alan Sugar?

What might stop them is the tangled mess of ownership in the region. Few clubs own their own grounds, some players have their contracts not with their club but with private companies or the murky ‘managers’ who lurk in the wings of most major clubs in the region. And in many cases, such as Ferencvaros, there really is no answer to the question “Who owns the club?” never mind the equally relevant “Where’s all that Champions League cash gone?”. The clubs exist in a post-communist limbo belonging neither to the state nor a private investor but a messy mix of both. And ask about accounts and you’ll receive either a blank stare or a belly laugh. No wonder it took ENIC nine months to complete the purchase of Slavia.

Tricky and risky business it might be but the English take-over of Slavia has not only caught the imagination of Prague fans – across the region clubs are seeking out foreign capital. The long suffering fans of Eastern Europe are dreaming not of Hong Kong bankers or Arab billionaires but of Englishmen in pinstripe suits. The football imperialists have arrived.

From WSC 130 December 1997. What was happening this month