Monday, January 15, 2007

Do or Dubai for Liverpool

Rick Parry, the chief executive of Liverpool FC, has revealed that his club are on the verge of completing a takeover deal by Dubai investors. Parry told the BBC Sunday morning radio program Sportsweek, “A huge amount of work has been going on from both parts. I imagine we'll have something concrete to say relatively soon on that.” The Liverpool board has accepted a $450 million bid and the process is now going through due financial diligence. The new owners of England’s most successful football club will be Dubai International Capital (DIC), owned by the Government of Dubai.

DIC was established in 2004 as the international investment arm of Dubai Holding. Dubai Holding belongs to Dubai’s ruler Sheikh Mohammed bin Rashid Al Maktoum and is an umbrella company created to consolidate Dubai’s large scale infrastructure and investment projects. DIC owns several international brands including the former British budget chain Travelodge, the Tussauds Group and the London Eye. It is also the third largest shareholder in Daimler Chrysler with 2% of the company.

These investments fit in with Al-Maktoum’s plans to turn Dubai into one of the world’s great financial centres. In just 30 years, Dubai has morphed from a sleepy port with a population of a few thousand people into a thriving business hub, with a population of three million and a diversified economy that is the envy of the Gulf states. Dubai is obsessed with its status. It has two towers under construction which will vie for the largest building in the world when complete. One of these is the Burj Tower scheduled for completion in 2008 with an estimated height of 800m (almost 300m taller than the current tallest Taipei 101). The city is also home to the three largest man-made islands in the world, visible from outer space. With its oil reserves dwindling, Dubai is basing its future economy on real estate, aerospace, technology and tourism.

Tourism will be the key. Dubai attracted 30 million travellers in 2006, up from 13.5 million five years ago. It is building new airport facilities capable of handling more than 200 million passengers by 2015. Dubai is spending $30 billion on planes capable of flying halfway around the world which will make the city no more than 15 hours from key cities globally. Though only founded in 1986, Emirates Airlines low-cost model, widebody fleet, and central location has seen it emerge as a major threat to the established European carriers.

The country's leader Sheik Mohammed bin Rashid Al Maktoum is not listed in the Forbes rich list because it is impossible to work what belongs to him and what belongs to the Government of Dubai. He has a fortune estimated to be worth $14 billion of “family money” and another $13 billion of personal wealth. A combined value of almost $28 billion would put him in the top five richest people in the world.

Al Maktoum is 57 years old. He is the Vice-President and Prime Minister of the United Arab Emirates as well as being ruler of Dubai. His elder brother Maktoum bin Rashid Al Maktoum ruled the emirate until January 2006. He died of a heart attack when on holiday in Queensland’s Gold Coast. Brisbane airport was put on alert so his entourage of 33 family members and 300 bags could rush back to Dubai so the Sheikh's body could be buried at home within 24 hours.

Sheik Mohammed was immediately promoted to prime minister after his brother’s death. The sheik was educated in Britain at the Sandhurst Military Academy and retains a love for British traditions. Liverpool is not his first sporting investment. He is most renowned for his love of horse racing and his family own 3,000 horses worldwide mostly in Britain at the Godolphin stable. The family also owned the horse Jeune which won the Melbourne cup in 1994.

Liverpool is another thoroughbred and a blue chip football brand. They have won more leagues, European Cups, UEFA Cups and League Cups than any other English team. The enduring bond between the club and its supporters were forged on the field but also in the moral ambiguities of the Heysel and Hillsborough disasters. The Sun's treatment of Hillsborough gave Liverpool fans a finely tuned sense of victimhood based on their own guilt about Heysel. And that is matched by lack of ultimate success on the field. Despite their shock Champions League triumph in 2005, they have not won the English league since 1990. Liverpool's resources are dwarfed by Manchester United’s massive fan base and the wealth available to Chelsea through its Russian benefactor Roman Abramovich. Al-Maktoum will change all that. He will provide the finance for a new 60,000 seater stadium near Anfield and provide the funds for a squad capable of challenging United and Chelsea. The fans will overcome the feeling that an asset has been sold overseas. And Al-Maktoum will find Liverpool are a perfect fit for DIC’s expanding Best of British portfolio.

1 comment:

nebuchadnezzar said...

DIC pulled out of the deal on 31 January after it was revealed that Liverpool received a rival bid believed to be worth approximately £8 million more with American junk bond wheeler-dealer George Gillett.