Everybody knows that owning sports clubs is the ultimate rich man’s folly; it entails throwing reams of cash down a bottomless pit in return for ephemeral emotional satisfaction as represented in random pieces of silverware. Rare are the sports in which team ownership yields positive spin-offs in terms of brand building (Formula One is one prominent exception). Yet, in a perverse way, the reverse can apply — inept ownership of a sports team can dent a corporate reputation.
This is something the Rao family, promoters of the prominent Pune-based poultry conglomerate VH Group (owners of the Venky’s brand), must be discovering after it acquired the storied English football club Blackburn Rovers in 2010. In less than two years, the Venky’s brand name in the UK has become an object of ridicule after the team was relegated from the top-flight English Premier League in the 2011-12 season. Inevitably, the owners have become the butt of numerous corny chicken-related jokes, and Blackburn’s fans have demonstrated outside the stadium in hordes. They have also formed an association to raise cash to buy the club back from its owners.
Contrast this with the hugely popular reception that former Manchester City owner, the disgraced former Thai Prime Minister Thaksin Shinawatra, received when he returned to the stadium as a spectator in April this year. Mr Shinawatra bought the indifferently performing English Premier League club in 2007, but had to sell it a year later following corruption charges in his home country (under the Premier League’s “fit and proper persons” ownership rules).
Now, under Mr Shinawatra, the club’s losses trebled; and, although he splashed out on top-flight players and hired the former England coach Sven-Goran Eriksson, the club didn’t achieve much. Yet Mr Shinawatra remains extremely popular with fans. Why? Because his exciting spending extravaganza injected a sense of purpose into ennui-ridden City. That momentum created the value for City to find moneyed buyers in an Abu Dhabi investment firm. The new owners built on the base Mr Shinawatra laid, splashing out even larger sums on big-money signings — as a result of which, City won the League after 44 years.
Compared to the shadowy City owners, led by the magnificently named Sheikh Mansour bin Zayed Al Nahyan, the VH Group is rather more transparent. It has at least one listed company and a brand name that is well established in its home country. It is considered reasonably successful in India (though with the bulk of its companies unlisted, it is difficult to tell how far this is warranted). It also has a fairly wide international presence on every continent.
The £23 million Blackburn buy was, however, the first major footprint in the UK, which could become an important market for the group’s other businesses. In turn, given the surging football fan base in India, the Venky’s buy-in made sense as a brand-building exercise in its home country too.
Despite the usual reservations about “foreign ownership” among the Blackburn faithful, there was some hope. The 137-year-old club has had an erratic record, swinging between winning the key tournaments like the FA Cup and the English Premier League and being relegated from the top flight.
Like many European football clubs, its roots in the community are deep — in Blackburn’s case with the now languishing steel industry (its owner till recently was a former steel baron). When the VH group acquired it, it enjoyed an upper-middle ranking in the English Premier League, but little beyond that. There was widespread expectation that the Venky brothers would follow in the honourable footsteps of other non-British owners and splurge on players and facilities.
Instead, one of the first actions of the owners was to sack the effective (if notoriously blunt) manager Sam Allardyce and replace him with the mediocre Steve Kean, who has managed to make himself unpopular with fans and players alike. Despite increasingly vocal calls for Kean’s sacking, the owners have stood by him. Then they told fans that they were “confused” about the club’s future. Then they made another truly laughable move by appointing former Malaysian defender Shebby Singh Director of Football.
What will Shebby do? Apparently, one key job is to act as go-between for manager and owners, since the latter have concluded that lack of communication is a major issue in the club’s poor performance. On ESPN-Star Shebby provides the – wholly unintended – comic relief to the genuine punditry of Steve McMahon and Paul Parker. His skills in football management (or, indeed, analysis) are not obvious to anybody. Small wonder, then, that fans are even more determined to wrest the club from its owners.
At a time when the UK is in recession, the fate of a football club is the least of anybody’s problems. The trouble is, the club was acquired by a company called Venky’s London Limited, so the association with the group’s flagship food brand is inescapable. Also, the Premier League remains one of the world’s most-watched sporting tournaments. Therefore, the Blackburn connection is unlikely to enhance the group’s brand equity pretty much anywhere. If anything, it highlights the business risks of allowing personal ambitions to overlap with corporate goals, as some IPL owners may find out soon, too.