SOUTHAMPTON’s Chief Executive Martin Semmens has denied rumours the club is going to be taken over by a group of US investors. This may not be the best time to sell a football club when the industry has been in lockdown and the world is about to tip into recession, but rumours repeatedly emerge that Southampton’s majority owner, Gao Jiosheng, is keen to offload his 80% and he’s even cut his asking price to £ 250 million.

Football Finance expert Kieran Maguire, in his recent paper on club valuations, suggested Southampton are currently worth £ 269 million, a fall of £ 100 million on the price 12 months ago. Clearly a sign of the times.

However, US sports investors, aware that European leagues are not “closed” and also not subject to salary caps, get nervous about football’s ability to turn clubs from heroes to zeroes in one season. There may have been strong interest, but the uncertain financial climate may have turned would-be investors away. For now.

Questions were recently asked about the true nature of Southampton’s ownership, specifically whether China is actually holding a percentage in the Premier League club. This came about because Gao Jiosheng sold a 29.9% stake in Lander Sports, the vehicle used to buy 80% of Southampton, to state-owned Chengdu Assets Supervision. Southampton insisted they are owned by a UK-based entity unconnected to the China-based company.

Saints’ fans must wonder what the future actually holds for their club. They have been up for sale on more than one occasion in the past couple of years and the Coronavirus has created a volatile landscape that could have an existential impact on modern football.

The loss of matchday income will not have hit Southampton as hard as some clubs, it currently brings in around 11% of their total revenues, but the club has a huge reliance on TV money, some 75% of overall income. Who knows if broadcasters will be quite as generous in their next deal?

Southampton have developed a number of players that have been sold on for big money in recent years, notably Sadio Mane and Virgil van Dijk to Liverpool. They have accrued more than £ 250 million on player sales since 2012. However, player trading for 2018-19 was less successful, contributing to the overall loss of £ 34 million, a fairly dramatic turnaround from the £ 28.6 million profit in 2017-18 and the worst results since the club returned to the Premier League. Southampton have struggled to offload some of their unwanted players and they have 24 currently out on loan. The club’s business model undoubtedly provisions for the regular discovery of sought-after players that can bring in a significant profit.

Turnover for 2018-19 (St. Mary’s Football Group, of which SFC is a part) was marginally down on the previous year, but operating costs went up, with the wage-to-income ratio 77% for the group and 58% for the first team squad. When football closed down in March, Southampton were 14th, but for the first time since 2012, average gates at the excellent St. Mary’s were below 30,000 and showed a decline for the third successive season.

If the Bank of England’s calculations are anything to go by, the UK will be in for a period of turmoil in the coming 12 months. Football is going to find this particularly savage as it is a game that relies, to a large degree, on mass gatherings. As in any recession, it is rarely the big guns in any industry that are troubled, but clubs like Southampton – along with much smaller clubs – will surely feel the squeeze. With a majority owner whose business activities are in one of the countries most compromised by the virus, the Saints will be hoping they can benefit from the anticipated rebound. It won’t just be the bounce of the ball that governs Southampton’s immediate future.

@GameofthePeople

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