By Aimee Donnellan
LONDON (Reuters Breakingviews) - A bid for Wembley stadium is an open goal for Britain’s top football body. Pakistani-American billionaire Shahid Khan has offered a staggering 600 million pounds for the UK’s national stadium. Given that he is leaving behind its lucrative catering arm and naming rights, the UK Football Association should put the deal in the back of the net.
Selling off a national treasure to a foreign buyer can be tricky, as the FA will find out when its 10-member board votes on an offer to buy Wembley later on Thursday. Two board members are reluctant to part with the 90,000-seat arena known as the home of English football, according to a source close to the situation.
Yet the offer from the owner of Fulham FC, a British soccer club, and the Jacksonville Jaguars of the U.S. National Football League looks hard to turn down. The FA will hold onto the hospitality business which accounted for more than half of Wembley’s revenue of 104 million pounds in the year to July 2017. The body can also veto any sponsor and buy back the stadium for as little as 100 million pounds if it is downgraded as a host venue by European football’s governing body.
The benefits for Khan are hard to discern. The business that he is buying brought in 45 million pounds of revenue in the last financial year and is loss-making. The tycoon plans to host NFL games in the stadium, among other attractions. Yet even if revenue grows by 10 percent a year and the business makes an operating margin of 15 percent, the return on his investment after 10 years will be just 2 percent, Breakingviews calculates.
Khan’s motivations are more likely to be about securing a trophy asset. The FA, meanwhile, could plough the proceeds into grassroots football and developing the women’s game. The offer should be hard to miss.
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CONTEXT NEWS
- The board of Britain’s Football Association (FA) will on Sept. 27 vote on the terms of a 600 million pound sale of Wembley Stadium.
- The FA on Sept. 26 agreed the terms of the sale to Shahid Khan, the owner of Fulham Football Club and the Jacksonville Jaguars, a U.S. National Football League team.
- FA Chief Executive Martin Glenn and Chairman Greg Clarke are seeking unanimity from the board for the sale but a minority, representing the amateur game, have yet to indicate their support, the Financial Times reported on Sept. 26.
- If the board backs the deal it will be presented to a meeting of the FA’s 127-member council in October.
- The deal would allow the FA to veto any sponsor and prohibit gambling companies, defence contractors, payday loan firms and groups linked to pornography from being involved with the stadium, the FT reported. Also, no sponsor can gain “title” rights such as renaming the stadium or adding a corporate brand alongside that of Wembley.
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(Editing by Peter Thal Larsen and Bob Cervi)