Tom Hicks & Corinthians
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It seems Tom Hicks leaves a trail of devastation wherever he goes. His disastrous foray into the Brazilian football market as chairman of Hicks, Muse, Tate & Furst left Corinthians, second most popular club in Brazil, in a state of turmoil.
The parallels between what happened to Corinthians and what is currently happening at Liverpool are unsettling to say the least:
* There was the initial blaze of publicity and fanfare when the company bought the club in 1999, with promises of big spending on the best players and the construction of a brand new 45,000 seater stadium in the suburbs of Sao Paulo.
* There was an initial capital investment to tie down existing players and to finance the purchase one or two other additional players.
* The economics behind the Corinthians deal appeared to be based on ridiculously rudimentary logic: “If you add up all the fans of professional baseball, basketball, football and hockey in the United States, that number is lower than the number of Brazilians who are soccer fans.” Clearly, no proper risk analysis had been undertaken – a situation which resonates with the due diligence period of 3 days prior to the purchase of Liverpool.
* This flimsy approach was reinforced by the apparently rash and impulsive purchase of Cruzeiro six months later – traits which Liverpool fans are rapidly coming to associate with Hicks.
* There was also the emphasis on the cheaper “young players”, with the following quote from the (unfortunately named) Richard Law, president of Hicks’ subsidiary group: “Our job is not to turn back the inevitable, but to build Corinthians and Cruzeiro up from the junior ranks.” Hicks followed a similar tack following the takeover of Liverpool: “You need to keep your star players but also develop your young players. Young players are the lifeblood of your team, so we talked about how we can improve that side of the team.”
Corinthians had already won the Brazilian championship in 1998 so Hicks inherited a winning team. The initial expenditure assisted in retaining the league title in Dec 1999 and the club also won the inaugural FIFA Club World Championship the following month.
This is where things started to go wrong.
Unable to resist the temptation to make a quick buck, HICKS BEGAN SELLING TRANSFER RIGHTS TO THE CLUB’S STAR PLAYERS. On top of that, he decided on the bizarre idea of changing the traditional colour of the club’s shirt. He also introduced sponsorship (something which Corinthians fans felt defiled their heritage).
All of these things led to a furious reaction from supporters and widespread protest against Hicks and his partners. The company bailed out three years later, ironically having accused its local partner in Brazil of “misappropriating funds” (read the UTIMCO post and you’ll understand).
Corinthians began to spiral downwards. MSI took over the club’s management but, despite a league title in 2005, the financial problems initiated by Hicks proved too much of a burden. The club was relegated to the second tier of Brazilian football for the first time in its history in December 2007.
THERE WAS NO NEW STADIUM. Hicks invested about five hundred million dollars and within two years filed for bankruptcy.
In a recent prospectus issued to financial companies in London, Hicks claims in to be “a master of purchasing and growing professional sports teams”.
Liverpool fans, Texas Rangers fans and Corinthians fans might disagree.
write by Scott King