Why is Dermot Desmond investing €2m in Shamrock Rovers?

For love or money? Billionaire financier’s football investments show his emotional side

If  Dermot Desmond  hasn’t invested for love, or for money, then it must be for the punishment. Photograph:  Cyril Byrne

If Dermot Desmond hasn’t invested for love, or for money, then it must be for the punishment. Photograph: Cyril Byrne

 

For somebody like Dermot Desmond with a personal fortune of about €2 billion, it must seem perfectly reasonable to punt the occasional couple of million.

Still, it is intriguing to see reports that the businessman is on the verge of investing €2 million in Tallaght-based football club Shamrock Rovers for a 25 per cent stake.

Most business people who invest – nay gamble – their money in football clubs will tell you that they do it for love, and not for money.

Is Desmond buying into Rovers for money? Surely not. He is a shrewd and demanding investor, but even he must know that the chances of generating a financial return on that cash are slim in the stony grey soil of Irish football. There isn’t even a property play as the stadium is owned by South Dublin County Council.

Does this mean that Desmond is investing in Rovers for love? There is not much evidence of that, either. The financier was born in Cork before moving to Dublin as a youngster. Unlike his other football investment, Glasgow Celtic, which he has said he “had a love for... as a boy”, he has never been known for having a close association with Rovers.

Financial landmines

So why is he doing it? The real question is: with so many financial landmines in the sport, why do any wealthy businesspeople do it?

John Courtenay, the former Irish Umbro boss who used to own struggling Carlisle in England’s lower leagues, once said that investing in football was like “pissing money down a hole”. Yet, successful Irish business people have a long, proud history of getting themselves tangled up in football investments that made little financial sense on paper. The allure of the sport seems to drive otherwise rational business people potty.

Take Colm McCarthy, the influential “Bord Snip” economist. He is an evangelist of financial discipline, known for upbraiding governments for their wasteful and indulgent spending. Yet, McCarthy was a central figure in the barmy bid more than 20 years ago to move Scottish professional club Clydebank to Dublin. If McCarthy, the no-nonsense economist, had been in the audience when McCarthy the football director was trying to sell his Irish Clydebank plan, it wouldn’t be too hard to imagine the former’s lip curling.

Cork tech entrepreneur Pearse Flynn invested heavily in Scottish club Livingston during the last major Celtic Tiger boom. The club was £10 million in the hole before he came on board. He escaped with his bank account intact in 2007.

Members of the Drumaville consortium that bought Sunderland in 2006 also had a lucky escape from football’s financial purgatory, selling to US investor Ellis Short a few years later. The consortium included high-profile publicans Louis Fitzgerald and Charlie Chawke, and developers Sean Mulryan and (the late) Paddy Kelly.

Within two years of buying Sunderland, several Drumaville investors were under pressure from their banks back home following the collapse of the economy here. Without Short’s intervention in 2008 and 2009, Sunderland might well have ended up in Nama.

JP McManus and John Magnier, who sold their Cubic Expressions’ near 30 per cent stake in Manchester United in 2005 for almost $422 million, are part of that rare breed of Irish investor to have turned a buck on a football investment. Also among its ranks is Desmond, who invested in United alongside Magnier and McManus and also made a profit when Malcolm Glazer bought the club in 2005.

It is 25 years since Desmond first invested in football, when he bought into the then financial basket-case that was Celtic. He has repeatedly described it as an “emotional investment” that he engaged in mostly to help “save” the club he supported as a child.

Controlling stake

“The emotional side of it sways you. If it had been another club on the same basis, I wouldn’t have been interested in investing,” he told the Celtic View fanzine many years later. “It was easy for me to look at it closely and I started off wanting to invest rather than from a basis of refusing it.”

With a share of almost 30 per cent, Desmond does not own a controlling stake in Celtic but nothing much happens there without his approval. Over the years, he has imposed impressive financial discipline at the club, albeit at the price of occasional chagrin from fans, who would prefer to see him fund player buying sprees.

“I get that all right, about splashing the cash or putting my hand in my pocket or giving more money to the manager,” Desmond has said.

“For those people, I really have no respect or regard whatsoever. When people say that you can just solve all problems by throwing cash at it, it’s absolutely stupid. It’s an insult to my intelligence... I don’t believe in burning pound notes or euro notes or whatever the currency is. If you start that approach, you’ll go bust pretty quickly.”

For all Celtic fans’ reservations, in the 25 years since Desmond effectively took the reins, it has won the Scottish title 15 times compared to 10 for its rival Glasgow Rangers. Celtic has won the last eight in a row, a period during which Rangers almost went bust and had to fight back from a forced spell in the bottom tier of the Scottish league pyramid.

Rovers’ shareholders – it is 50 per cent owned by a group of fans – are expected to vote next month on Desmond’s investment, which will be used to further boost the club’s academy. He says he isn’t motivated by money and wants any gains reinvested in the club, as it tries to overhaul Dundalk’s purple patch of dominance.

If Desmond hasn’t invested for love, or for money, then it must be for the punishment.

******

FOOTNOTE

– Speaking of Niall Quinn’s Drumaville consortium, most of the seven-member group were based in Ireland. One of the two British members, however, has been all over the business pages of the UK press for the past week.

John Hays, the Drumaville member who served as vice-chairman to Quinn, is the British travel agent who recently bought 555 high street stores of Thomas Cook, lamented in the Guardian as “one of the worst corporate failures in UK history” with more than 8,100 redundancies.

Hays’s wife, Irene, who chairs his business, was confronted in a recent interview with comments from Ryanair boss Michael O’Leary, who in the immediate aftermath of the Thomas Cook collapse declared the package holiday “dead” as a consumer concept.

She noted that the number of package holidays being sold is rising year on year, dismissing O’Leary as “sloppy”.

Hays said that a package holiday can just as easily mean a city break with opera tickets or a faraway cruise: “ He thinks it’s just a package holiday to Benidorm.”

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