Lim, Neville, and How to Make Money in Football

Making money from football is relatively easy, under the right circumstances. Being a brilliant footballer is probably the very quickest way to earn millions of pounds over a year, sometimes over a couple of months. Elite managers enjoy a similar deal, if they’re prepared to grin and bear it through a yearly managerial merry-go-round.

Agents too can make a pretty penny if they have the right connections to help his clients maximise their talents with the wealthiest clubs. Even if the player “fails” at their new club, the pair of agent and footballer can in some cases still walk away very rich people. If an agent has a few high profile players, then there’s a good chance he’ll be turning over even more than some of his best clients do.

Merely representing players can only get you so far, though; the real money is in owning them. While FIFA has technically outlawed third party ownership of footballers, there are a few ways around this. In South America, some players are parked at minor clubs, and later go on loan for large fees to European clubs. Agents might have an economic interest in the minor clubs, rather than directly in the player. Third party ownership might now need to be less transparent, but if you want to practise it, you can.

An example would be Rentistas, a ghost club in Uruguay who had Filipe Luis and Hulk on their books, though the sides never had use of them. As Rory Smith’s piece in the Times explains:

The technique, boiled down, is quite simple and there is no suggestion of any wrongdoing on the part of any players involved. Agents purchase a player’s rights from the club where he has developed and then place him with another team. “The most common scheme is to pay [the bridge club] a ‘parking fee’ of between $5,000 and $20,000 [about £3,200 to £12,800],” says Ariel Reck, a Buenos Aires lawyer specialising in transfer deals.

“The agent or fund is essentially renting the services of the club for a specific transfer. Then, when the player is sold, the money is paid to the bridge club. They hold a small percentage of it as another fee and transfer the rest to the fund, usually to an account in a tax paradise

When Jose Mourinho repeatedly asked for Hugo Almeida while at Real Madrid and took Radamel Falcao to Chelsea, or when Alex Ferguson allegedly favoured certain agents, like his son Jason and the Elite agency, one wonders at whether some are getting rich by taking the cut of commission fees they earn from transfers, either openly or surreptitiously.

There is one story of a former Premier League manager who would, in front of his chairman, agree a fee with a club, player and agent. Then, with the deal concluded, the manager and agent would have a little chat, and the manager would rush out to his manager. “No big problem,” he’d say, “but something came up and it’ll be £200,000 more to the player.” The money would be provided, and with only the knowledge of the manager and agent, would be split between them.

It’s harder however to make money by running a successful football club. You can certainly buy a club and leech money out of it, just as the Glazers did by buying it with borrowed money, and placing the debt on the club. They then sold shares in the club, and took the proceeds for themselves.

Barcelona and Real Madrid, of course, are helped by the vast amounts of television money that they claim in huge disproportion to the rest of the league, though this may end soon. The two clubs have come around to the idea that their cartel ultimately dilutes La Liga’s quality, but there has yet to be any meaningful action. One of the clubs that suffers, despite historically being one of the strongest also-rans in Spain, is Valencia. They were, until recently, in serious financial trouble. After they defaulted on a loan in January 2013, they came under the control of the regional government.

Then in 2014 Peter Lim took over for an undisclosed sum, and financial analysts were cautiously optimistic. After all, Billionaire owners have turned similar clubs around in recent years. Since he purchased the club in 2003, Roman Abramovich has made Chelsea into a far stronger team, but often lose money. Manchester City and Paris Saint-Germain are in a similar position (more recently City reported a profit,). Arsenal’s Stan Kroenke has seen turnover increase while Arsenal have spun their wheels near the top of the table. John Henry’s Fenway Sports Group owns Liverpool, who are now a parochial afterthought outside of England. Billionaires often own clubs, but it remains to be seen if they ever actually make the owners rich with payouts. The value is in growing the asset — they are often cash rich, and the land they are on is often valuable. For PSG and Manchester City, it gives their owners a bit of political cover in the face of accusations of human rights abuse. For Abramovich, as assiduously as he has dealt with Vladimir Putin, it doesn’t hurt his safety to be a prominent member of British culture. What this might prove, is that investment for on-pitch success is not directly linked to the value of the club.

Lim has a history of business success, having owned a franchise of Manchester United cafes, and making plenty of money in palm oil. Fair enough. It’s not clear whether it’s possible to transplant that expertise into making money from a mid-tableSpanish football team.

Lim’s investment in football is not limited to Valencia. He owns Cristiano Ronaldo’s image rights, a far more sensible way to earn cash from football. He also owns 50% of Salford City, with Phil Neville, Gary Neville, Nicky Butt, Paul Scholes, and Ryan Giggs splitting the other half evenly. Were he to one day turn the Class of 92’s pet project into a proper Premier League side, then there is a chance that brand could be exploited for profit, though clearly this is a long term possibility, and no certainty. Obviously, that is probably at least a decade away, and there remains the possibility that the club, and Valencia, are both dry runs for a joint takeover of United. Don’t forget that during the aborted takeover of United by Rupert Murdoch, then manager Alex Ferguson considered whether he could finance his own takeover. You might argue he did it when he publicly welcomed the Glazers into the club, yet nevertheless, he retains strong links with the Class of 92, and Lim’s associate Jorge Mendes. As he has been sidelined in the decision making over the next United boss, he might be happy to support a new regime that brings him front and centre, and gives him back his control. After all, he wants Giggs to be given the job ahead of Jose Mourinho.

Mendes’ business model (read here his extensive business interests in football) is perhaps the way in which Lim had envisioned generating some money from Valencia. The two of them were involved the third party ownership business, and some of Lim’s own players moved from Benfica to Valencia. After all, it can’t hurt to put promising players on display in the second most popular league in the world. With Mendes’s help, it wouldn’t be hard to grease in cutting deals with the Premier League for players. Eliaquim Mangala, after all, cost more than £40 million when he moved from Porto to Manchester City.

As this blog summarises, Valencia and Lim appear to have outsourced their transfer policy to Mendes, with large potential drawbacks and, some theoretical advantages. Given that their past business dealings have been mutually advantageous, there is at least the appearance of a potential conflict of interest. Valencia fans will be increasingly sceptical as long as the team suffers on the pitch. It appears that fans and club legends are not impressed with how Mendes has started to influence Valencia, as many believe he has been crucial in both appointing managers and buying players.

Were Valencia successful, this would all be fine. But they aren’t. Gary Neville could well be an excellent manager; he’s one of the best pundits around.but so far things at Valencia have been a miserable, effing slog. With Phil Neville previously at the club as an assistant manager, though, and the questionable talents of Nuno before Gary, it’s fair to wonder whether Lim really has his heart set on achieving lasting success with Valencia. Phil was a joke at Manchester United, having garnered the nickname, ‘F**k Off Phil,’ given the contempt the players held him in. Gary has no serious managerial experience, save for his stint as an assistant to the clownish, grey Roy Hodgson in an England side that disappointed, disappoints, and will disappoint. It would not be unfair to speculate, with Lim and the Nevilles sharing an interest in Salford FC, whether they are the right managers for the club. They might have agreed that limited ambitions for Valencia is to their overall advantage. Your usual manager’s attitude would be to strengthen the team as much as possible.

Neville is struggling, and there were only minor additions to the Valencia squad in the winter transfer window. Denis Cheryshev and Guilherme Siqueira joined, but only on loan. Like Mike Ashley at Newcastle, perhaps both owners recognise that there is a minimum requirement in the league table, at least, even if the only aim is to make money. However, after Real and Atletico Madrid have been given their own transfer bans, it is believed that Valencia and Villarreal are next in line for lengthy embargos. Two years where they would be unable to register players.

This means that Lim, who may run Valencia more as a business concern with Mendes, rather than as a football club for its own ends, could see their business plan ruined. Valencia went into the hands of the regional government in 2013 saddled by debt after a spell being run on barebones management and investment. It was then taken over by Lim, and given an injection of Mendes clients. Under Nuno, then Neville, the slide down the table is yet to be arrested, and the job may be made impossible, for at least two more years. It was posited by Standard and Poor’s analysts that billionaire owners often improve a club’s standing. It was also pointed out that owning a football club isn’t an obvious or easy way to make money. It is not the first time that Standard and Poor’s have been wrong.