:00:00. > :00:17.Welcome to HARDtalk, I am Stephen Sackur. No other sport can match the
:00:18. > :00:21.global popularity of football. I'm not just thinking about the vast
:00:22. > :00:25.audience that will tune in to the World Cup in Brazil later this
:00:26. > :00:29.month. The English Premier league has become one of the most lucrative
:00:30. > :00:36.entertainment brand on the planet. But the fear is, the games riches
:00:37. > :00:40.inflating a bubble that is bound to burst. My guest today is Christian
:00:41. > :00:47.Purslow, a former managing director of Liverpool FC. Is there a money
:00:48. > :01:12.sickness at the heart of full ball? `` football.
:01:13. > :01:20.Christian Purslow, welcome to HARDtalk. Yellow map thank you. You
:01:21. > :01:26.had established a strong reputation as a businessman. A pretty ruthless
:01:27. > :01:32.venture capitalist style of businessmen and yet, you decided in
:01:33. > :01:38.2009 to venture into the crazy business world of football. Why?
:01:39. > :01:41.Well, I think it's precisely because of business background I had which
:01:42. > :01:47.as you say was in the financial world. For nearly 30 years I had
:01:48. > :01:51.been in the financial world, buying and selling companies as a private
:01:52. > :01:57.equity venture capitalist executive and Liverpool was indeed a failed
:01:58. > :02:03.venture capital deal by 2009. It was a club that had been bought with
:02:04. > :02:06.large amounts of borrowed money in so`called leveraged buyout. It was
:02:07. > :02:11.in great financial distress because the owners were unable to meet the
:02:12. > :02:13.terms of those borrowings. So I think it's there to say that
:02:14. > :02:20.although I love to believe it was because I am and was a Liverpool
:02:21. > :02:23.fan, I had been shareholder, a small shareholder for many years and only
:02:24. > :02:28.the club. I think it's fair to say the reason I was asked to step in as
:02:29. > :02:34.an interim CEO and try and sort bubble out was precisely because it
:02:35. > :02:37.was absolutely familiar territory for me. I can see that is why they
:02:38. > :02:41.wanted you could you brought business expertise to the table. I
:02:42. > :02:44.am struggling to see why you wanted to be involved with them because
:02:45. > :02:49.never mind being fan, you had a track record of being and
:02:50. > :02:54.unsentimental businessmen. The only reason you would have been attracted
:02:55. > :03:00.to Liverpool would be sentiment. Your absolutely right. A lot of
:03:01. > :03:05.people thought it was a tough assignment. Liverpool had become not
:03:06. > :03:10.really a football story, it had become a boardroom story. The owners
:03:11. > :03:14.were disagreeing, themselves, they were publicly criticising my
:03:15. > :03:19.predecessor, there were publicly criticising the manager and it was a
:03:20. > :03:23.terrible mess. That happens when any business is in financial distress.
:03:24. > :03:28.These were Americans and they had come into Liverpool frankly knowing
:03:29. > :03:31.very little about football it seemed to Liverpool fan in the city and
:03:32. > :03:39.around the world that this was a symptom of something deeply rotten
:03:40. > :03:42.in the professional game that such a story `` stories and celebrity club
:03:43. > :03:45.could be taken over by guys who knew nothing about the sport and appeared
:03:46. > :03:51.to understand little about how to run it as a business. They were the
:03:52. > :03:55.first Americans to buy a famous massive in wishful club in a
:03:56. > :04:01.leveraged buyout. The Glazer 's had bought Manchester United a couple of
:04:02. > :04:06.years previously. I would tend to stay `` is a that the takeover of
:04:07. > :04:09.Liverpool was actually a microcosm of a much broader problem, are much
:04:10. > :04:16.water set of circumstances that culminated in the credit crunch. And
:04:17. > :04:19.that was that really, with no relevant previous experience
:04:20. > :04:24.operating in any market in a new geography, a new sport two people
:04:25. > :04:28.were able to borrow 100% of the purchase price for a business
:04:29. > :04:34.and... What might close to ?200 million. ?220 million with no money
:04:35. > :04:40.down. The idea being that all the interest that debt would be serviced
:04:41. > :04:45.from the cash revenues inside the club. That is what a leveraged
:04:46. > :04:50.buyout is. Anyone can see now with the benefit of hindsight, that model
:04:51. > :04:54.depends on one thing being true and that is that the value of the club
:04:55. > :05:07.rises such that the owners can sell rosy in the garden. But it is not as
:05:08. > :05:10.simple as that. Is a sport and in the end, the business model could
:05:11. > :05:19.only have worked if it will have every trophy every year popular you
:05:20. > :05:22.are entirely right and let me say, I think that leveraged buyout of
:05:23. > :05:28.football clubs are wrong at two levels. The old`fashioned, I think
:05:29. > :05:33.they are wrong at a moral level. I do not believe the revenues that
:05:34. > :05:37.flow into a club from fans through buying shirts or even through their
:05:38. > :05:43.TVs and scratches, I do believe if asked, any fan would want that money
:05:44. > :05:47.to be used to finance money used, borrowed money, used to buy that
:05:48. > :05:52.club. Christian Purslow, you then are telling me that you engaged in
:05:53. > :05:56.what you at the time must have regarded as morally reprehensible
:05:57. > :06:02.enterprise. You took the money of Hicks and Gillett to run this
:06:03. > :06:06.business. Now you are telling me it is morally reprehensible. At a very
:06:07. > :06:10.little money for running Liverpool. I did not do it for the money, I did
:06:11. > :06:13.it because they were in a financial mess and I care deeply. As you said
:06:14. > :06:17.at the start of the conversation, it was a tough assignment to step in
:06:18. > :06:22.there. We are talking the middle of a nuclear winter in the financial
:06:23. > :06:26.world. If we were to pull`out today, the number of companies being taken
:06:27. > :06:31.over, raising money in 2009, not many were happening. But the job was
:06:32. > :06:36.to get that club back to where it was when it was first taken over. To
:06:37. > :06:40.remove it off huge amounts of debt under which it was drowning. I knew
:06:41. > :06:43.I could do that because I had relevant experience. Does not go
:06:44. > :06:48.into orbit detail because it is complicated. In essence, it is
:06:49. > :06:50.perhaps wise to remember as we sit today with Liverpool finishing
:06:51. > :06:56.second in the Premier League and clearly enjoying some great excess
:06:57. > :06:59.on the field. It is sometimes wise to remember that just four years
:07:00. > :07:02.ago, the club was in such dire straits that many people thought it
:07:03. > :07:08.was going to go under, going to go bust. How close to going bust did it
:07:09. > :07:14.come? We sold the club 24 hours before those of very ?300 million
:07:15. > :07:19.were due and payable. If we had sold the club and had repaid the debt,
:07:20. > :07:22.the club would have had to go into administration. This went right down
:07:23. > :07:27.to the wire. Did you think at the time it was going to go into
:07:28. > :07:31.administration, to be declared insolvent? No. I was absolutely
:07:32. > :07:37.thrilled to have not one but two companies that were willing to buy
:07:38. > :07:39.the club. After an extensive sale process searching left and right
:07:40. > :07:44.around the world. Obviously, the critical issue was to get one of
:07:45. > :07:50.those clubs to complete on the takeover. You were the architect of
:07:51. > :07:54.this, at least one of the three main architect of the accusation is that
:07:55. > :07:57.you are so desperate to sell Liverpool to somebody and wipe out
:07:58. > :08:03.some of the debt, or write all of the debt, the desperation was such
:08:04. > :08:07.that you essentially gave the club away at a ridiculous price. Given
:08:08. > :08:11.the brand and history, you could have got much more for Liverpool
:08:12. > :08:18.than he did. Is that your opinion? If the opinion of Hicks and Gillett.
:08:19. > :08:21.They took it to court because there were so furious. They would say
:08:22. > :08:25.that. I am delighted to say that those arguments have been
:08:26. > :08:33.ventilated. All I will say, I will quote my learned friend who said you
:08:34. > :08:38.would have to be on planet Zog that an experienced financier is here to
:08:39. > :08:43.sell the club. Over the next 18 months, that is what we did. 150
:08:44. > :08:46.people kick the tyres of Liverpool and at the end of the day, the two
:08:47. > :08:51.remaining it is turned up and we sold the club to the highest bid so
:08:52. > :08:56.I am very proud of that. By the way, it was over 11 times profit which
:08:57. > :08:59.was a very high price. You can make the argument. The fact is Hicks and
:09:00. > :09:05.Gillett did sue you and the other two key layers in the sale, there
:09:06. > :09:07.was ultimately a legal settlement. I don't know whether you can tell me
:09:08. > :09:13.now because the dust has settled, did you have to take Hicks and
:09:14. > :09:18.Gillett money? Of course not. They withdrew all allegations and claims
:09:19. > :09:22.and that on the record. All right. Let's laud the picture from
:09:23. > :09:26.Liverpool FC and let's go back to your point about this being
:09:27. > :09:31.systematic of something wider in the game. You said Manchester United,
:09:32. > :09:36.perhaps the most famous leveraged buyout, are you suggesting that
:09:37. > :09:40.because of what happened to Liverpool, something akin to that is
:09:41. > :09:45.still possible at Manchester United? No, I'm not actually.
:09:46. > :09:50.Because, as we discussed, the nature of leveraged buyout is that they are
:09:51. > :09:54.very high risk. You are Ms King operating risks are the risk of
:09:55. > :09:58.succeeding with your business with the financial risk of borrowing
:09:59. > :10:02.money and having interest. The operations of Manchester United have
:10:03. > :10:05.been so successful the profits of that club have grown so
:10:06. > :10:10.substantially, for lots of reasons. The principal one being the dramatic
:10:11. > :10:15.rise in the value of television. It would be fair to say that the
:10:16. > :10:21.financial cost of that leveraged buyout are very well covered by the
:10:22. > :10:27.operating profit. They rolled the dice and they won. Liverpool rolled
:10:28. > :10:32.the dice and for a while, they lost. Exactly right. I consider it again
:10:33. > :10:38.to rolling dice. That is the risk. They got away with it. Here is what
:10:39. > :10:41.strikes me. We wanted you to talk about football and business.
:10:42. > :10:45.Frankly, there's an awful lot of business and not much football. Is
:10:46. > :10:50.there not a problem in the sport, professional elite sport today that
:10:51. > :10:54.in the end, there isn't anything like a level playing field. For the
:10:55. > :10:59.footballers themselves. We can predict who are going to be the
:11:00. > :11:03.successful clubs across Europe, maybe across the world just by
:11:04. > :11:07.looking at their financial resources. And in the end, for a
:11:08. > :11:14.sport, that makes it boring, predictable and maybe, long`term
:11:15. > :11:18.unsustainable. Well, it's a very fair and good question. I must say
:11:19. > :11:23.that I think we have to make comparisons across geographies. I
:11:24. > :11:24.don't think words like boring and unpredictable would be applied to
:11:25. > :11:28.the Premier League. Indeed, unpredictable would be applied to
:11:29. > :11:35.Sorry to interrupt but we do know that friendly, the richest clubs
:11:36. > :11:38.backed by the most sought of egregiously rich owners, I'm
:11:39. > :11:42.thinking Manchester City, Chelsea and banks to their success,
:11:43. > :11:47.Manchester United. We know those teams are always going to be at the
:11:48. > :11:52.top or very close to the top of the Premier League. I think the nature
:11:53. > :11:55.of recessional soccer in Europe has always been that there are very
:11:56. > :12:00.strong teams, they are lesser size teams and there are smaller teams.
:12:01. > :12:07.If you look over 100 years in each of the key geographies in Europe,
:12:08. > :12:11.you will see three, sometimes to, in the EPL today, four, five or six
:12:12. > :12:15.teams who are competing to win the league. Critically, I think the
:12:16. > :12:20.magic of the Premier League is on any given Saturday, any of those
:12:21. > :12:23.teams can lose to anybody. It's not me saying that. The value of the
:12:24. > :12:30.television rights around the world suggest that it is compelling for
:12:31. > :12:33.the fans. For now. From now. There is a genuine issue in other
:12:34. > :12:38.geographies in Europe. Spain, for example which until this year has
:12:39. > :12:43.been essentially a two horse race. Germany which is now more less one
:12:44. > :12:47.was race. Bayern Munich one this year by over 20 points. And then
:12:48. > :12:50.bought the best player of the team that came second. Those leaders will
:12:51. > :12:56.have an issue with the competitiveness. I don't see that in
:12:57. > :12:59.England. Do you... Reflecting on your own experience with Americans
:13:00. > :13:03.at Liverpool and talking about the Glazer 's as well and Abramowitz at
:13:04. > :13:11.Chelsea and... You make that a different model. How do you acquire
:13:12. > :13:16.a club to the identity of the club itself. And the relationship between
:13:17. > :13:19.the owners and the fans. I think 11 out of the 20 Premier league clubs
:13:20. > :13:27.in his last season were foreign owned. Does that matter? It does not
:13:28. > :13:32.matter to me. As I see it, football has definitely become a very global
:13:33. > :13:37.industry. There is no question about it. Is nothing more than a
:13:38. > :13:41.commodity. The fans may care and cry if their team loses on a Saturday
:13:42. > :13:46.afternoon before the owners, it is nothing more than a commodity. I
:13:47. > :13:50.would beg to differ, I think it is a valued possession which a number of
:13:51. > :13:55.people owed for purely business reasons were stopped I think that
:13:56. > :14:06.the thrust of what you are describing.
:14:07. > :14:11.You are absolutely right and that is indisputable. Some people are
:14:12. > :14:16.uncomfortable with that but your question was, two I have any concern
:14:17. > :14:21.about foreign owners. I have no more concerned about them and I do for
:14:22. > :14:30.and players, foreign managers... The game is global. And England is a
:14:31. > :14:34.pretty rare thing in our country today, I say this as an
:14:35. > :14:41.international businessman, we do not have many local economy leaders in
:14:42. > :14:45.England, defined as leading competitors within a global industry
:14:46. > :14:48.and the English Premier League is the leading league within
:14:49. > :14:53.professional football today and I think that is good for the sport and
:14:54. > :14:58.our country. And a lot of people coming to England with a lot of
:14:59. > :15:05.money and huge promises, wanting to buy into this entertainment brand,
:15:06. > :15:13.obviously we have talked about the Glazers and we should remember that
:15:14. > :15:17.Malcolm Glazer has just died, but the family is still there. Clubs
:15:18. > :15:26.have been taken over by foreigners who have been, how can I put this?
:15:27. > :15:29.Shady at best. Tests are supposed to be carried out to ensure that the
:15:30. > :15:37.owners are suitable and responsible but it doesn't work in many cases.
:15:38. > :15:43.Would you agree with that? I think the direction of travel on those
:15:44. > :15:50.issues is promising, meaning on two levels, the financial fair play
:15:51. > :15:58.regulations in UEFA and subsequent initiative in English football in
:15:59. > :16:01.the Premier League, those rules have at their heart, a notion that is
:16:02. > :16:06.completely mainstream in the financial world that I come from and
:16:07. > :16:12.that is the notion of disclosure. But before a club is to be acquired,
:16:13. > :16:18.the potential buyers must disclose the financial plans, the sources of
:16:19. > :16:22.their funding and where the money comes from and prove that it will be
:16:23. > :16:28.sustainable. That hasn't been true when many teams were taken over. But
:16:29. > :16:33.I am also talking about personal integrity. Manchester City is owned
:16:34. > :16:37.by someone who is languishing in prison after being convicted in Hong
:16:38. > :16:46.Kong of serious financial offences. That shouldn't happen. Take Leeds
:16:47. > :16:50.United. It has been taken over by an Italian businessman who, it turns
:16:51. > :16:55.out, has just been convicted of illegally importing a yacht into
:16:56. > :17:00.Italy and faces other financial charges going forward. It shouldn't
:17:01. > :17:08.happen, should it? I thought it was a very bad day for football when the
:17:09. > :17:17.very owners test that you just referred to was applied to be
:17:18. > :17:22.potential takeover of Leeds... The lawyers took over and as I said, the
:17:23. > :17:26.Italian was convicted of illegally importing a dog which many people
:17:27. > :17:31.would say, would raise questions about his suitability as a football
:17:32. > :17:35.club owner, his suitability and he took over the club. I am not
:17:36. > :17:43.familiar with the details but I am familiar with the regulations that
:17:44. > :17:47.have been the stop in this area. When it is turned down without being
:17:48. > :17:50.challenged, I think that is bad for football, I agree with you. Let's
:17:51. > :17:56.talk about financial fair play because you were instrumental in
:17:57. > :18:00.drawing up the rules. Clubs are no longer able to buy their way to
:18:01. > :18:03.success with unlimited money but are supposed to show that they have a
:18:04. > :18:09.business model which either breaks even and doesn't lose too much
:18:10. > :18:13.money, or they have to adapt their salaries accordingly and if they
:18:14. > :18:19.break the rules, they will have Manchester City already have been,
:18:20. > :18:25.he punished. Is that going to change European elite football? I think so
:18:26. > :18:30.and I can already is. I think the direction will travel in terms of
:18:31. > :18:37.what those rules are doing. The behaviour is already modifying. This
:18:38. > :18:41.your total transfer spending was down. You look at Manchester City.
:18:42. > :18:46.Their first period of transfer, they were spending two or ?300 million
:18:47. > :18:54.and this year they are only spending ?50 million. Arsenio Bangor said the
:18:55. > :18:57.only way to break these rules is to throw them out of the Champions
:18:58. > :19:01.League but that is not going to happen because there are too many
:19:02. > :19:08.vested interests and you want to take all of the big teams to the big
:19:09. > :19:14.games. UEFA has a willingness to support the sanctions but let's note
:19:15. > :19:20.homey two of the principal targets of these regulations, you refer to
:19:21. > :19:25.this oligarch model, Paris St Germain and Manchester City from Abu
:19:26. > :19:34.Dhabi, all funded by equity, not borrowed money, not get, just giving
:19:35. > :19:40.money away. No Manchester City is in New York and Melbourne... What that
:19:41. > :19:45.is what I'm saying about it not being fair. If fans want a sport
:19:46. > :19:50.they can believe in as legitimate come petition, if you are allowed to
:19:51. > :19:55.splurge in unimaginable ways... But you are not and that is the point of
:19:56. > :20:01.your question. You are not allowed to run losses greater than 50
:20:02. > :20:07.million euros. I think that will do two things, it will stabilise
:20:08. > :20:10.football, it will take out that terrible inflation at the top of the
:20:11. > :20:15.market for players wages and transfer spending, but it will not
:20:16. > :20:20.make a level playing field. I must say, as you talk, you must be an
:20:21. > :20:24.extraordinary optimist because I think of how football is today and
:20:25. > :20:29.you say that fixes are in the works and I look at it as an industry that
:20:30. > :20:34.is spiralling out of control. As an insider who has seen the game
:20:35. > :20:39.absolutely from the inside, are you prepared to say to me that greed
:20:40. > :20:43.drives so much of elite football? Greed is very prevalent in football
:20:44. > :20:47.and I say that having been in the city of London and in many respects
:20:48. > :20:54.you see not dissimilar behavioural patterns. I am not idealistic about
:20:55. > :20:59.that at all. It seems to me that we could have, in England if we wanted
:21:00. > :21:02.to, learns lessons from Germany where they have imposed real
:21:03. > :21:08.regulations on foot all. Clubs have to give a stake to the fans for
:21:09. > :21:11.example, they have to put a cap on ticket prices so that ordinary
:21:12. > :21:16.people can afford to watch and they also borrow foreign owners. Germany
:21:17. > :21:20.has done things differently but in England, such as the greed that we
:21:21. > :21:25.are not prepared to go there. It is very difficult to convert from a
:21:26. > :21:33.capitalist model... Germany is a capitalist country. Yes, at English
:21:34. > :21:41.football was a capitalist model from the day that it was bought. I don't
:21:42. > :21:45.need to tell you... I would love Liverpool to have been bought by a
:21:46. > :21:49.fan but the cost was way beyond multiple hats all around the world
:21:50. > :21:54.even tried, let me tell you. That transition is impossible but the
:21:55. > :22:00.lessons are important and the lesson is that having fan ownership... What
:22:01. > :22:04.does it translate to? It means that fans have a voice and I think
:22:05. > :22:13.English clubs could learn from that. German clubs use their less affluent
:22:14. > :22:17.fan base to take up certain parts in the stadium and England could do
:22:18. > :22:22.that. It seems to me that the German game has a certain sense of moral
:22:23. > :22:26.responsibility within it, compared to the English game. I want to end
:22:27. > :22:30.with this thought about morality because we have talked an awful lot
:22:31. > :22:34.about big money and the money today, for example pretty much 100 million
:22:35. > :22:39.euros for an elite player like Gareth Bale or Wayne Rooney to be
:22:40. > :22:49.sold or to re`sign a contract, for ?300 a week `` ?300,000 a week, I
:22:50. > :22:58.can barely get my head around it. Is that morally acceptable? The only
:22:59. > :23:03.way I could justify it, and I am not a champion of these matters, but I
:23:04. > :23:07.would leave you with this thought. We have talked about the explosion
:23:08. > :23:09.of wealth in football generally which is essentially driven by
:23:10. > :23:15.international audiences loving the sport. It is not that different to
:23:16. > :23:20.international audiences loving Hollywood movies or loving
:23:21. > :23:27.incredibly talented musicians. If you had a choice as to where that
:23:28. > :23:33.money would go, to a carpet offshore owner, to some suit executive were
:23:34. > :23:38.running a football club or to the town on the pitch that knows
:23:39. > :23:44.audiences are tuning in, that is where I would want to see it go.
:23:45. > :23:49.Christian Purslow we have to end it there. Thank you for being on
:23:50. > :24:15.HARDtalk. On Sunday, eastern parts of the UK
:24:16. > :24:19.will have had a fine and warm day but there are changes out in the
:24:20. > :24:22.west and that is a sign of things to come. The week ahead will be
:24:23. > :24:23.changeable with some rain, some