ALEX BRUMMER: The ESL coup has failed but the economics remain the same


Failed takeovers and merger attempts are not uncommon in global finance. 

In Britain, successive efforts to take control of the London Stock Exchange Group, Pfizer’s 2014 effort to buy Astrazeneca and Airbus merger plans with BAE were all repulsed.

The collapse of the European Super League (ESL), an attempt by big clubs to supplant the game’s existing powers, is not that unusual.

Kicked out: The collapse of the European Super League, an attempt by big clubs to supplant the game¿s existing powers, is not that unusual

Kicked out: The collapse of the European Super League, an attempt by big clubs to supplant the game’s existing powers, is not that unusual

What is different is the furious speed of the retreat. Football is different because of the close relationship with fans. It proved an easy hit for politicians in a way that a private equity takeover of G4S has little resonance.

A surprising aspect is the involvement of blue-blooded JP Morgan. One can imagine private equity backing a deal with limited diligence. 

But boss Jamie Dimon is seen as an exemplar of higher standards and cannot much like the negative publicity of a deal backed by £2.8billion of the bank’s money.

The ESL was devised by Real Madrid boss Florentino Perez and Manchester United vice-chairman Ed Woodward, who has resigned. 

The City assumption is that JP Morgan’s connection came through US clients, possibly Liverpool owner John Henry or the Glazer family at United.

It is odd that these owners of American sports franchises didn’t recognise the strength of fan and political commitment to clubs rooted in community.

They may have been inured by the American experience of closed leagues where the owners have been known to move weak franchises to another city to attract bigger audiences. It is also surprising that the schemers failed to unveil a broadcast deal.

The ESL coup may have failed but the economics remain the same. The US model of a semi-closed league offers a more reliable stream of income than competitions such as the Champions League or, for that matter, the Premier League. 

The more stable blueprint hands the advantage to owners’ organisations which are able, among other things, to cap wages.

Clubs hoped to limit revenues spent on player costs to 55 per cent of income rather than the 76 per cent at Manchester United.

It is hard not to think that when emotions have cooled, the football authorities – FIFA, UEFA and the Premier League – will seek to calm the Wild West of transfer fees and player wages. 

In spite of all the faux outrage, closed tournaments are not unknown in Europe. The Six Nations rugby union operates precisely that model.

As for JP Morgan, it has not been the best of times. It was among the top advisers on the Deliveroo float, which gobbled up £2billion of investor money in minutes.

That’s not a super look.

Steel nerves

Thanks to David Cameron, the Greensill name is in the public domain. In towns such as Rotherham generations of steel production and jobs are on the line.

When the empire of financier Lex Greensill disintegrated it jeopardised the future of his dominant client, Sanjeev Gupta’s GFG Alliance, which employs 50,000 people, including 5,000 in the UK, through Liberty Steel and other assets. 

Gupta’s request to Business Secretary Kwasi Kwarteng for a £170million initial bailout was rejected.

This is not because Kwarteng is unsympathetic to the plight of steel in Britain. Indeed, the low carbon emitting electric arc furnaces at some Liberty plants fit in with the Government’s green agenda. 

What concerns Kwarteng is that when the Government supported steel making at Scunthorpe it ended up with a £700million bill before the plant was saved by China’s Jingye.

Kwarteng is monitoring the unwinding of Gupta’s empire daily, anxious that no gains from taxpayer funding should accrue to Gupta. 

He also wants to ensure the time the Official Receiver, or another arm of government, is responsible for the enterprise is kept to a minimum.

But he seems determined that a greenish strategic asset is not lost to the nation.

Happy streaming

The lockdown comfort blanket, Netflix, is down but not out.

The tumble in its stock following disappointing new subscriber numbers hurts. But, given shares that were selling on 130 times earnings two years ago have settled back to a more realistic number of 40 times, the valuation is looking more sustainable.

Time to binge-watch the latest series of cult Israeli drama Shtisel.

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