Tom Hicks and Corinthians
It seems that Tom Hicks leaves a trail of devastation wherever he goes. His disastrous foray into the Brazilian soccer market as president of Hicks, Muse, Tate & Furst left Corinthians, Brazil’s second most popular club, in a state of turmoil.
The parallels between what happened at Corinthians and what is currently happening at Liverpool are disturbing to say the least:
* There was an initial burst of publicity and fanfare when the company bought the club in 1999, with promises of big spending on top players and construction of a new 45,000-seat stadium in suburban Sao Paulo.
* There was an initial capital investment to tie up existing players and finance the purchase of one or two additional players.
* The economics behind the Corinthians deal seemed to be based on ridiculously rudimentary logic: “If you add up all the professional baseball, basketball, football and hockey fans in the United States, that number is lower than the number of Brazilians who They’re soccer fans.” fans.” Clearly no proper risk analysis had been carried out, a situation which resonates with the 3 day due diligence period prior to the Liverpool purchase.
* This flimsy approach was reinforced by Cruzeiro’s seemingly hasty and impulsive purchase six months later, traits Liverpool fans are quickly coming to associate with Hicks.
* There was also an emphasis on cheaper “young players”, with the following quote from (unfortunately named) Richard Law, chairman of Hicks’ subsidiary group: “Our job is not to roll back the inevitable, but to build Corinthians and Cruzeiro from the lower categories”. Hicks followed a similar tactic after the Liverpool takeover: “You need to keep your star players but also develop your young players. Young players are the soul 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 spending helped retain the league title in December 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. In addition, he decided on the bizarre idea of changing the traditional color of the club’s shirt. He also introduced sponsorship (something Corinthians fans felt was parading his heritage).
All of these things sparked a furious backlash from supporters and widespread protest against Hicks and his associates. The company bailed itself out three years later, ironically accusing its local partner in Brazil of “embezzlement” (read the UTIMCO post and you’ll understand).
Corinthians began to spiral down. MSI took over the club’s management goal, despite a league title in 2005, the financial troubles started by Hicks proved too heavy 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 half a billion dollars and within two years declared bankruptcy.
In a recent prospectus issued to finance companies in London, Hicks claims to be “a master at buying and growing professional sports teams.”
Liverpool fans, Texas Rangers fans and Corinthians fans might disagree.