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SBD Global/August 29, 2013/FinancePrint All
Football’s new record transfer "is close to completion following a summer of tortuous debate and wrangling after Tottenham Hotspur finally admitted it was in 'the final stages' of transferring" Welsh player Gareth Bale to Real Madrid, according to Roger Blitz of the FINANCIAL TIMES. Tottenham said that "the deal was expected to eclipse" the £80M Real paid ManU for Cristiano Ronaldo in '09. It "would reinforce the Spanish club’s willingness to pay what it takes to secure the most sought-after players." It "would be the fifth consecutive occasion that the world transfer record has been broken by Real." Spending by Premier League clubs, which "are reaping the benefits of record-breaking TV rights deals," has already exceeded £460M ($714M) this season, approaching last year’s £490M and closing in also on the record £500M spent in the '08 summer transfer window. Other big-spending clubs over the summer have been Monaco, Man City, Paris St. Germain, Napoli, Chelsea and Barcelona. Clubs from England’s Premier League "have so far been the biggest net spenders collectively in Europe, followed by Spain’s La Liga." Italy’s Serie A clubs "have made the most net profit in the window from transfer deals" (FT, 8/28).
Profits at Chime's sports division slumped 40% in the first half of the year as "the hangover from the London Games took its toll," but the communications group has predicted a bumper '14 fueled by the Brazilian World Cup, according to Mark Sweney of the London GUARDIAN. Chime's performance "was pulled down by its sports and entertainment division," which is chaired by Sebastian Coe, which suffered from the lack of a major sports event. The division, which the company said performed given the same period last year the Olympics fueled a 64% profit surge, reported a 40% fall in operating profit in the first six months to £4.5M ($7B). The sports division made £40M ($62M) in revenue from London Olympics-related business. Overall the sports marketing, advertising and PR group has reported total pre-tax profits of £600,000 ($930,000) in the first half, a year-on-year fall of 73% (GUARDIAN, 8/28). In London, James Titcomb reported Chime expects total sponsorship spending during next year’s World Cup to be roughly £1B ($1.5B) -- a 50% increase on '10’s showcase in South Africa. The company said it has already won eight contracts for Brazil 2014, which "considerably exceeds" business from '10, and expects up to 25% of next year’s profits to come from the World Cup alone. Chime CEO Chris Satterthwaite said, "The fundamental thing is that [football] viewership is growing exponentially. Half of the world watches Premier League football and the World Cup will beat that" (TELEGRAPH, 8/28).
Research and Markets estimates that the U.K. sportswear market grew in value by 5.4% in '12, with sports clothing accounting for approximately 71% of total market value and sports footwear making up the remaining 29%. Participation in sports and activities can directly affect the sportswear market, as increased participation leads to a greater demand for functional sportswear and increased popularity of performance-enhancing goods. Despite government efforts to raise the fitness of the nation through national governing body initiatives and interest generated off the back of the 2012 London Games, the latest figures from Sport England actually show a decrease in sports participation for the beginning of '13. In terms of the global market, Nike and adidas are maintaining their presence as market leaders both globally and within the U.K. market. With increased consolidation and closures of sportswear companies in recent years, there are fewer competitors in the U.K. market in terms of both brands and retailers. It is expected that the sports clothing and footwear industry will continue to grow over the next five years. The trend for sportswear as fashion wear, as well as continued public interest in maintaining a sporting lifestyle for the future, are likely to facilitate an increase in sales for the industry (Research and Markets).
Spanish bank Bankia has demanded that La Liga side Valencia's majority shareholder VCF Foundation and its guarantor, the Valencian government, "complete a payment" of €4.8M ($6.4M) in interest from a loan the VCF Foundation received in '09 for €81M ($108M), according to the EP. The VCF Foundation used that loan to purchase 72.5% of shares in the team. The VCF Foundation has paid €1.3M ($1.7M) of the €4.8M that it owes. Bankia is "demanding that the remaining" €3.5M ($4.7M) be paid in the next two days. Bankia warned that it will "take legal action if the payment is not made" (EP, 8/27). FOOTBALL ESPANA reported that the fee "could not be met by the group and that their shares could once more be at risk of changing hands." Bankia is still "appealing a court ruling barring the local government from acting as a guarantor and taking over management of the club's financial situation." In a statement from VCF Foundation President Aurelio Martinez, it was announced that the "firm intention is to meet their obligations agreed with Bankia and any other creditor." The group added that it plans to "generate their own resources in the coming months to meet their obligations" (FOOTBALL ESPANA, 8/28).