National Post (Canada)
February 1, 2007 Thursday
Foot in the big leagues: Good business or ego boost? Billionaires are
snapping up soccer teams and a Canadian businessman aims to join the
by Duncan Mavin, Financial Post
Canadian businessman Jack Kachkar was at the soccer World Cup in
Germany last summer when his "dream" of acquiring a European soccer
club started to take shape.
Sitting in the stands with his 14-yearold son, he was excited by the
growing worldwide interest in the sport. "I was in Germany at a
number of games and it’s amazing the marketing potential of football,
especially as the whole world plays it," said 43-year-old Mr.
Kachkar, who was born in Syria of Armenian descent, and moved to
Canada aged six.
Just a few months later, Mr. Kachkar — who made his fortune in real
estate and the pharmaceuticals industry — launched a bid to buy
French soccer club Olympique Marseille for about US$150-million.
If he’s successful in his approach for the team, he’ll join a flood
of billionaire businessmen from around the world who have recently
poured cash into soccer. Their goal is partly the lure of a return on
investment in an increasingly commercial sport, and partly the
ego-boost of owning a high-profile sports franchise.
In 2005, U.S. sports tycoon Malcolm Glazer paid US$1.5-billion for
Manchester United. Russian oil-billionaire Roman Abramovich bought
current English champions Chelsea in 2003 for US$233- million. Last
August, Cleveland Browns owner Randy Lerner paid US$120- million for
a 60% share in Aston Villa, while, in November, a consortium of
Icelandic businessmen bought West Ham United for US$161-million.
The owners of Liverpool Football Club also confirmed last Friday that
they have received interest about a possible sale from George
Gillett, the owner of the Montreal Canadiens. A spokesperson for Mr.
Gillett declined to comment.
"These are usually pretty astute business people and they will want
to see a return on their investment," said Glenn Rowe, a professor at
the University of Western Ontario’s Ivey School of Business who
specializes in the business of sport. But, says Mr. Rowe, business
people who invest in big sports franchises are often also often
driven by a childhood ambition to be a sporting superstar, too.
Mr. Kachkar explains his proposed investment as a passion. He played
soccer at high school in Alberta, and was an attacking midfielder. "I
wasn’t a bad player. But the coaches got mad at me because I didn’t
come back to defend," he said in an interview from Paris last week.
But the businessman says buying Marseille is also "a tremendous
commercial opportunity" that will make him owner of one of the best
supported and most successful teams in France.
While most of those buying into soccer have put their cash in
England, Mr. Kachkar stands to become the first foreign owner of
French soccer club. He considered buying an English soccer team and
even met with officials of Newcastle United. But, says Mr. Kachkar,
he will get more bang for his buck by buying a team in France rather
than in the English Premier League.
"As a French team, there’s a good pricing compared to English clubs.
To take a team like [Marseille] and expose it to the world market,
where football has grown so much, is a great business opportunity I
couldn’t pass up on," he said.
Marseille is in fourth place in France’s Ligue 1, and is the only
French team to have won the European Cup, which it captured in 1993.
The club was founded in 1899, though its most successful — and most
colourful — history has been in the past two decades. Marseille’s
glory years came between 1989 and 1993 when it was French league
champion five years in a row. However, the team was later stripped of
the 1993 league title amid a match-fixing scandal and financial
irregularities blamed on then-president Bernard Tapie. He was sent to
jail for his part in the scandal, and the team was forced to start
the 1994 season in the second division of the French league.
Marseille has since clawed its way back to the top tier of French
soccer under the guidance of the current majority shareholder, Robert
Louis-Dreyfus, who is also the chief executive of sportswear
manufacturer Adidas-Salomon AG.
And it was Mr. Louis- Dreyfus who alerted Mr. Kachkar to the
possibility he could acquire ownership of Marseille.
"We feel Olympique Marseille — the team and the brand — has been
under-marketed," Mr. Kachkar said.
These days Mr. Kachkar spends much of his time in the U.S. and the
U.K., as well as France. He has homes in Toronto and Florida, but, he
says, "I still consider Canada my home."
Mr. Kachkar said he will fund the Marseille acquisition from his
personal fortune. He has amassed millions in a career that began at
medical school in Hungary, when he formed a publishing company that
he later sold to his university in Budapest. He used the proceeds to
invest in real estate in eastern Europe and Canada. He is now the
chief executive of Inyx Ltd., a global pharmaceutical business listed
on the Nasdaq in New York. He hopes to close the deal for Marseille
by the end of February.