A question of sport

Dubai Investment Capital’s potential multi-million dollar foray into football leaves several questions unanswered. The news that Dubai International Capital (DIC) has confirmed that it has entered into a period of “exclusive negotiations” with Liverpool Football Club & Athletic Grounds plc regarding a “possible” US$900m investment in the club comes as no great surprise to me or many people I know, especially with DIC’s trio of UK mega-deals at the tail end of 2005 and throughout 2006.

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By  James Bennett Published  December 10, 2006

|~||~||~|Dubai Investment Capital’s potential multi-million dollar foray into football leaves several questions unanswered. The news that Dubai International Capital (DIC) has confirmed that it has entered into a period of “exclusive negotiations” with Liverpool Football Club & Athletic Grounds plc regarding a “possible” US$900m investment in the club comes as no great surprise to me or many people I know, especially with DIC’s trio of UK mega-deals at the tail end of 2005 and throughout 2006. Dubai Holding’s investment arm has forked out a combined US$2.15bn for London’s Tussauds Group (US$800m), Doncasters precision engineering (US$700m) and Travelodge Hotels (US$650m). Previous to that came its US$1bn investment in DaimlerChrysler, and anchor investments of US$272m in JD Capital investment in Jordan and US$150m in Ishraq, a company formed to develop and manage 22 Express Holiday Inn hotels in the Middle East. Naturally the endless resources help but its latest purchase, if the due diligence process goes as smoothly as promised, poses more questions than the rest of its recent purchases put together. First off, DIC has always invested in businesses and while Liverpool FC is a business like any other, it is also a unique specimen with a die-hard fan base and weighty heritage, let alone trophy cabinet. Not only that, football is, as they say, a funny old game, where the passion for a team is often confused with the running of a supposedly money-making outfit. One thing for DIC to constantly remind itself is that the history of successful, profit-making clubs is few and far between with exit strategies easily overtaking entry. Some words of comfort for fans, however, have come from Sameer Al Ansari, CEO of DIC, who has assured all interested parties that DIC's “considerable resources” and the fact that the business is a “supporter of the game and of the club” will mean a secure future if terms are agreed. This investment, however, will be like no other DIC has signed and getting both of these elements right first time around is going to be a tough call. The biggest challenge will be keeping a careful eye on more than just the club’s balance sheet. Then comes the serious question of involvement. How much it is prepared to take and how far is it prepared to go in changing the way the club is run? DIC is, after all, an investment firm, which in essence, means that the business’s main priority is to pursue, acquire and invest in companies where it is 101% sure it can turn a profit further down the road. So what does that mean for Liverpool, one of the oldest and most widely supported clubs in the game? Will DIC strip it of its assets or hold onto it and try to gain as much profit as possible? Will it float the business once it sees a marked improvement on and off the pitch, or will it simply acquire its stake and take more of a back-seat investment role instead overseeing more strategic decisions such as the financing of a new stadium and provide an adequately-sized kitty for the current (or rather future ‘big name’ manager to take charge) coach to spend in the transfer window? My view is almost certainly the latter with the element of prestige playing a key role in its investment decision. But either way, its objectives as a private investor are under the spotlight for the first time and if it really is in it for profit-making reasons, it could potentially be at odds with the idea of running a football team. The next week will give us a clearer picture of its intentions and long-term plans.||**||A new beginning|~||~||~|This is my first issue of Arabian Business and I must say it is a privilege to have been given the role of editing such a prestigious title, particularly as it is our biggest ever at 96 pages. And with my appointment will come some very positive and very relevant changes. Over the coming months we will include some new sections, making the title easier to read and easier for you to locate the regional news and information that matters to you; the look and feel of the publication will become clearer and easier on the eye; and we will give you even more breaking business news from around the Arab world that affects you and your everyday business lives. Luckily, some things won’t change. We will still be speaking to the most important people in the regional business world and giving you access to some of the biggest names in corporate Arabia as well as international chief executives that are increasingly viewing the region as a hot bed of investment potential; we will still be analysing the hot topics of the week and our writers; and guest writers will still be commenting in their usual inimitable style on the latest market trends and eye catching stories over the past seven days. Things change fast in the Middle Eastern business community, but fortunately we will always be there to research, observe, dissect, analyse, comment and report on the best in Arabian business.||**||

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