Asia Times - News and analysis from throughout Southeast Asia

Southeast Asia

Thailand's Thaksin wants to play political football
By Gary LaMoshi

HONG KONG - Thai Prime Minister Thaksin Shinawatra's plan to pay US$115 million for a 30 percent stake in English football club Liverpool has aroused a variety of strong reactions. While Thai fans mobbed shops to purchase Liverpool's colors, Britain's sports minister and supporters of the famous club decried weakening the side's roots in the community. Opposition politicians in Thailand criticized the plan as an unnecessary expense, and not a very well considered one, given the various ownership and financing plans coming out of the Prime Minister's Office. They also suspect Thaksin is trying to deflect attention from violence in the south last month (Thailand makes its mark in blood, April 30).

The Liverpool deal appears to have stalled over what $115 million will buy Thailand. Reportedly, the sides are disputing how many seats on the board of directors - Thailand wants two of eight seats, but is being offered one - and what marketing rights Thailand would receive. There is also reportedly some dispute over the issue of shareholders' rights.

Thaksin plans to set up a company to manage the investment, and raise funds to finance the purchase through a one-off state lottery.

Thaksin's office claims that several other English Premier League (EPL) clubs are ready to listen if Liverpool whistles the deal dead.

Like watching quality soccer, buying a soccer club elicits powerful emotions and excitement. But it's important to get past the passion and ask the right questions, particularly when you're a business mogul turned political leader like Thaksin: Is it a good deal? Will it make money?

As a sportswriter and a city planner, this correspondent spent more than a decade analyzing public financing of stadiums in the United States, in essence the same sort of government partnership with a sports franchise that Thaksin proposes. I've yet to see a case that did more than use public money to benefit millionaire owners and players.

ManU serious?
Dial up the online stock-market information for Manchester United, a flagship EPL club, whose shares trade in London, and you find this proud proclamation: Manchester United "is the only stock-exchange-listed club to make a profit". Making a profit from operating a sports franchise is a difficult task. Winning brings incremental revenue, but that may be outstripped by the incremental costs of building and maintaining a winning squad. Liverpool says it needs new investment to remain competitive with the likes of Chelsea, Manchester United and Arsenal. Beware, though, teams can also spend a lot of money and wind up without winning anything. (See Real Madrid or Man United's baseball counterparts, the New York Yankees, beaten the past two seasons by teams with half their payroll.)

ManU have a stock-market capitalization of $1 billion, or roughly three times the value the Thai bid puts on Liverpool. Man United got that valuation, stays in the black and even pays a 1 percent dividend to shareholders in large part through a range of off-pitch activities, selling everything from Old Trafford wedding ceremonies featuring club colors to financial services under the Man United brand.

Thaksin has his own off-pitch plans to make Liverpool pay for Thailand. He touts links to Liverpool as a good fit with his "one village, one product" economic-development program. Local enterprises can make Liverpool strip and related logo items. Liverpool's relationship with Thailand would boost sales domestically and in the region. Thaksin's plan to acquire Asia marketing rights as part of the bargain with Liverpool would mean bigger benefits from those sales.

Thai pride
Building a relationship with Liverpool would also build up Thai soccer, boosters say. Golf boomed among fiercely proud Thais when one of their own, Tiger Woods (whose mother is Thai), emerged as the world's best player. Tennis has also gained in popularity since Paradorn Srichaphan cracked the top 20 on the men's tour. Failure to reach soccer's World Cup quadrennial tournament has been a source of national disappointment for ardent Thai soccer fans.

The shame of Thaksin's proposal is that Thailand could make more money from selling EPL merchandise and improving the standard of Thai soccer without buying Liverpool or any other EPL club. No need to buy a particular cow, especially one that demands $115 million of public money, in order to get the milk. There are better and cheaper ways to build soccer relationships that can benefit Thailand.

It may be true that linking Thailand to a particular club is important for building enthusiasm. Rooting for a favorite team is what converts a rational appreciation of a sport into an emotional attachment that unlocks wallets and sparks commitment, producing not just greater sales, but, perhaps some day, a Thai Pele. Thailand could make that kind of connection for significantly less than $115 million.

If $10 million funds a pre-season tour by an EPL club, in discounted present value terms, a $110 million trust fund could finance biennial visits forever, assuming that no visit ever made a dime for the hosts. The tour could include matches with local clubs, clinics, and perhaps a showcase match with another European club simultaneously touring Asia. Eventually, regular season games might also be held in Asia: US Major League Baseball has twice staged its season opening games in Japan. (Don't bet against US teams playing their 2009 opener in Beijing's Olympic baseball stadium.)

Government's business?
Thaksin preaches the gospel of bringing the discipline of business to the public sector. A cornerstone of that policy is keeping government out of tasks that it can't do as well as the private sector. There's no question that government doesn't bring those sorts of synergies to soccer-club ownership that private businesses might. For example, a media company can use the team as programing, a concept CNN founder Ted Turner pioneered 30 years ago, or a travel company can arrange tours for fans.

Companies that can leverage a sports franchise into further business opportunities - or think they can - will pay more for them. That rising tide raises the price of all franchises. But the major profits from sports franchises haven't come from those leveraged and linked operations; they've come from selling the franchise to someone else with another leveraging scheme. Some call this process the bigger-fool theory: pay through the nose, sell even higher to an even bigger fool. It's possible that Liverpool's biggest fool may have come to the door and is trying to fight his way in, against all logic.

But see the big picture, boosters always urge, look at the intangibles of national pride and prestige. If you accept that theory, then also consider the intangibles of $115 million to support small businesses or students instead of Michael Owen, the star Liverpool forward.

The real intangibles accrue solely to the individual owner; fans get theirs by simply investing time to watch and having the heart to care, and maybe spending a few dollars on a replica jersey. If Thaksin wants those benefits, let him spend his own money for them. The Liverpool proposal is another example of Thaksin failing to distinguish his personal preferences from the national interest, or, in this case, even his own political interest. Thailand shining with the phony trophy of an English soccer team is no more likely to win votes than "India Shining" was with three-quarters of a billion poor left in the dark (see Win-win: Manmohan Singh gets the nod, May 20).

(Copyright 2004 Asia Times Online Co, Ltd. All rights reserved. Please contact content@atimes.com for information on our sales and syndication policies.)

May 22, 2004

No material from Asia Times Online may be republished in any form without written permission.

Privacy and Legal Policies