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Outlook: Football and business don't mix

THE FINDINGS of the Monopolies and Mergers Commission against BSkyB are so unequivocal that it seems hard to believe any merger between a broadcaster and a Premier League football club will now be allowed to go ahead. The Commission's principal concern was that Sky's takeover of Manchester United would adversely affect competition between broadcasters for TV rights. But to this, the Commission added a second, more general concern - that the merger would "damage the quality of British football" by reinforcing the division between larger, richer clubs and smaller, poorer ones.

The rights and wrongs of these conclusions are for others to debate. The effect, however, is significantly to reduce the commercial and investment potential of football. That there was ever anything to be had in this department was, perhaps, always something of an illusion.

As businesses, football clubs tend to be badly, sometimes corruptly, managed organisations which neither abide by, nor aspire to, the usual rules of publicly quoted companies. Often they struggle to make a profit, let alone a decent return. Because success on the pitch is regarded as a greater priority than the quality of the accounts, any surplus funds tend invariably to be ploughed back into ever more expensive players.

It is often said that Sky's deal with the Premiership has transformed the finances of the game. The reality is that it has transformed the pockets of its leading players. With few exceptions, the financial strength of the clubs has hardly improved at all, despite all Rupert Murdoch's money.

The upshot is that the great bulk of these companies are not worth what they sell for. Certainly, present valuations seem hard to justify if bids by broadcasters are now to be ruled out of court, confining these clubs to their cash starved, uncommercial past. This applies not just to those clubs immediately affected by the rulings - Manchester United and Newcastle United - but to the broad mass of other quoted football clubs too. Unbundling the Premier League cartel, allowing clubs to sell TV rights individually, perhaps through pay-per-view, could help the game financially, but the benefit will again be confined largely to the top clubs.

Investors were chasing a mirage when they piled into these companies. The MMC has spelt this out in black and white. It is apparently perfectly all right for broadcasters to own and generate their own content when it comes to news, drama and popular entertainment. But when it comes to sport, forget it. For sport, it seems, different rules apply. The same might be said about sport and stock market investment. The two of them just don't seem to mix.