SBD Global/December 16, 2013/Finance

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  • U.K. Retailer Sports Direct Founder Threatens To Build Hostile Adidas Stake

    U.K. retailer Sports Direct's billionaire founder Mike Ashley is "threatening to build a hostile stake in Adidas as a row escalates over the supply of Premier League football kits," according to Oliver Shah of the SUNDAY TIMES. Ashley has indicated that Sports Direct could "start buying shares to exert pressure on the German sportswear manufacturer after it refused his shops access to next season's replica Chelsea strip." The "row between Ashley and Adidas" started after the German company "reviewed the distribution of its products 'based on criteria such as in-store environment and customer service levels.'" Adidas said that Sports Direct continued to be "an important retailer" but that it was "implementing a new distribution strategy across Europe for key products in football and other sports." As of next season, Chelsea's strip will be available "only through the football club" or adidas stores. The kit is one of the "best-selling items in Sports Direct’s 400 stores." Sales of the club's products are worth between £8M-£10M ($13M-$16.3M) a year to the company. As well as the Chelsea strip, Ashley raised the issue of "certain Adidas footwear brands with analysts" Thursday. Adidas supplies Sports Direct with "black Nitrocharge 3.0 boots but denies it access to the more popular blue version worn by top footballers." Insiders indicated that Ashley said that if he "saw the blue shoes on sale in rival JD Sports," he would sell his stake in JD and "buy a stake in Adidas" (SUNDAY TIMES, 12/15).

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  • Community Organization Shows EPL Teams Pay Players Millions; Staffs Paid Legal Minimum

    London community organization Citizens UK's "focus on the wages paid by England's Premier League football clubs exposes a stark truth about what used to be called 'the people's game,'" according to David Conn of THE OBSERVER. Football clubs, "enjoying a commercial boom" that has delivered a '13-16 TV deal of £5.5B, pay top footballers £10M ($16.3M) a year and CEOs £2M ($3.3M) a year. Hundreds of "their staff have have to make do on the minimum wage:" £6.31 ($10.28) an hour for "over-21s," £5.03 ($8.19) for 18-20-year-olds; and £3.72 ($6.06) for under-18s. It is a "damning portrait of football." It is also a "more general indictment of a society in which endemic, grindingly low levels of pay, too little to live on with dignity, are actually set by the government, while vast individual wealth is idolised." Only Man City "has committed to paying its staff a living wage." Citizens UK "welcomes that commitment, and calls on Manchester City to go further, to set an example and commit to ensuring that its subcontracted staff" -- such as those working for the catering companies which serve up "major matchday profits to the football clubs -- are also paid a living wage" (THE OBSERVER, 12/14).

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  • FIFA Considering OK On Limited Third-Party Investments In Footballers

    A person with "direct knowledge of the situation" said that FIFA "supports allowing investors to buy players' transfer rights in some cases," putting football's ruling body "at odds with European officials who want a total ban," according to Tariq Panja of BLOOMBERG. A report by accounting firm KPMG Europe LLP’s Spanish unit showed that "cash-strapped" European clubs have "sold stakes" in as many as 1,100 footballers. In Brazil, the host of next year’s World Cup, "investors have stakes in about 90 percent of top division players." The source, who "asked not to be identified because the talks are ongoing," added that FIFA may propose "limiting clubs to the sale of stakes in three players, with investors restricted to purchases in two countries." UEFA and UEFA President Michel Platini "want a total ban," which already exists in football's "richest competition, England's Premier League." Premier League CEO Richard Scudamore said in March that "selling player-transfer stakes is similar to 'indentured slavery' and that it raised the risk of match-fixing." The "person familiar with the talks" said that a ban could "severely damage several clubs in Portugal, Spain and Latin America because their economic models are based on receiving funding in exchange for transfer rights." Investors' combined stakes in European-based talent are worth as much as $1.5B, or 5.7% of the "regional transfer market's value" (BLOOMBERG, 12/13).

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  • Indian Agency Reveals Cricket Associations Were Granted Irregular Tax Exemptions

    India's Comptroller & Auditor General has "pulled up the Income Tax Department" for irregular exemptions to "four cricket associations engaged in commercial activities on their income from television rights, leaving the exchequer poorer" by Rs. 37.23 crore ($6M), according to the Indian BUSINESS STANDARD. CAG said in its Parliamentary report, "ITD allowed exemption for the income received from TV rights from the Board of Control for Cricket in India in the cases of Saurashtra Cricket Association, Baroda Cricket Association, Kerala Cricket Association and Maharashtra Cricket Association, resulting in soft levy of tax of Rs 37.23 crore." The CAG "observed that these exemptions were given" despite the IT Department in Ahmedabad "not allowing exemption to the Gujarat Cricket Association in similar cases" from the '09-10 assessment year (BUSINESS STANDARD, 12/14).

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