Dunno if this has been mentioned in a previous thread, but a piece on Premier League finances in Private Eye looks a bit worrying. As an aside to a comment about how the rulers of Abu Dhabi (owners of Man City) are in good financial shape, they mention that the rulers of Dubai (bidding for Charlton; NB Zabeel is thought to be owned by the Crown Prince) definitely AREN'T. Dubai's oil is almost run out, they have over-spent and the whole country is hugely in debt. Private Eye claims Dubai will be the next Iceland, ie the whole country is teetering on bankruptcy. Dunno what truth to read in it, but I certainly trust it more than tabloid tittle-tattle. Due dilligence goes both ways, don't forget, and whilst everyone is fretting over the possibility of Zabeel pulling out, don't discount the possibility of CAFC pulling out. We could be getting ourself in the same sort of fix as West Ham otherwise!
0
Comments
I'm inclined to be more trusting purely because Private Eye hasn't made a big thing of it. Just a couple of sentences mentioned in passing in their financial column, hidden amongst a paragraph about Man City.
As Adam said it's a satirical mag not a newspaper of record. Just need to ride this period of DD out and see what happens.
in any case I don't think the PE would be the first people to know that Dubia oils was running out. The amount of reserves would be well known. that they are investing and diversifying into other sectors and countries would make good business sense so a plus not a minus.
I'm sure that's what the President of Iceland said too!
So in the week since the offer was announced I think they have just about covered the price of little ol' Charlton : - )
What happens when the banks want their money back though?
Dubai is heavily in debt, and its sources of income very finite (Dubai's oil is scheduled to run out in 2025, construction - the main part of their economy - will last about the same as they'll run out of land to build on!).
Would you continue lending money - and maintaining the debt - of someone you knew would have no source of income (ie means to pay you back) in a mere 17 years time. Put it this way, they won't be getting any 25 year mortgages any time soon!
Hence their search for investments overseas. That's EXACTLY what Iceland did and look what happened there. (Your "Iceland has no oil" is a total misnomer as the hydro- and geothermal-power generation industry in Iceland will soon overtake Dubai in terms of percentage of economy; less than 6% of Dubai's economy comes from sources of energy ie oil and gas).
Still, if they can buy us Ben Watson before they go bust, I'll be happy.
For some reason, Hislop has a particular interest in Foolham ;-)
There have been some interesting insights into the financing of Chelsea, Man Utd, Liverpool, Fulham, Man City, Liverpool, Sunderland and MK Dons.
I´ll try to explain, yes if Dubai was a single country you might have cause for concerns as the Maktoums thru their SWF:s and controlled companies got around $48bn in debts but around $300bn in assets.
The problem is that they invest mostly in real estate and that ties up a lot of their capital while they still need to invest heavily in infrastructure, water plants etc etc so they simply don´t have the cashflow of say Abu Dhabi who mainly spend their surplus money..i.e Dubai borrow to invest
But fact is that Dubai and Abu Dhabi still got a somewhat boomish real estate sector (a house bought for £1m last Xmas is still worth £1m as the credit crunch simply meant that the usual 2-4% price rise every month have disappeared) just dampened by the credit worries.
But fact is that Dubai is a part of the UAE meaning that Dubai is financially protected by Abu Dhabi who could wipe out their debts by simply using half of their surplus cash this year, and they will if they have to as Dubai is just down the road (80 miles or so) and the Abu Dhabi movers and shakers have also invested billions in Dubai real estate.
You might say that it takes around five years before a property development in Dubai start showing a positive cashflow so they could just slow down a bit and stop borrowing altogether.
Wiki entry
The emirates' current ruler, Mohammed bin Rashid Al Maktoum (the father of the head of Jabeel) is also Prime Minister and Vice President of UAE which includes Abu Dhabi. There is no way in the world that these guys are going to run out of dosh any time soon.
Can we put the toys back in the pram now please?
No problems..the internal relationships between the different emirates are rather complicated, you can say that Abu Dhabi and Dubai are the two powerhouses, Abu Dhabi because they are very much the biggest and richest emirate and Dubai because it´s the economic centre of the region.
Hence the sort of powersharing agreement between the two as both Emirs got veto rights in regards to federal matters while of course ruling their own emirates without outside influence.
If you stretch it a bit you can say that Abu Dhabi got the Oil and the military power while Dubai provides trade and entertainment.
There is nothing that would really stop any emirate from going it alone apart from the same factors that tied them together in the first place, common tribal background dating back to the Bani Yas tribe that settled in the region, fear of their much bigger neighbours (Iran, Saudi and even Oman) intermarriage between the ruling families and the costs of going it alone of course.
Dubai ain´t really a drain on Abu Dhabi financially even if the Abu Dhabi emir have a tradition of handing out monetary grants as "gifts" to his fellow emirs on a regular basis in return for being the top man (President) of the UAE.
The federal expenditures are mostly military and is money Abu Dhabi would spend anyway I guess.
The economies are sort of tied up with each other because of the common currency and central bank (all backed up by the oil wealth of Abu Dhabi) but the main thing as I see it is that they service the needs of each other i.e Dubai is providing a place for Abu Dhabi to invest money.