Why AirAsia needs ‘Arry

The British are notoriously good at ignoring some of their biggest successes. The football Premier League has become a worldwide phenomenon and produces staggering television revenues. The overseas rights have just been renegotiated for the next three years and show an average increase of about 30% to produce around $3,000 million. That is surely worth a gold-plated Queen’s Award for Industry!

Owning a Premiership football club is not necessarily the way to riches but it can be an extremely effective way for someone to increase their profile. A club might require heavy investment and produce losses but, if properly managed, an owner could find the value of the club increases.

Asia is a huge market for the Premiership and accounts for nearly half the overseas television income. Even tiny Burma is paying $25 million for its share. Tony Fernandes, the CEO of AirAsia, is an anglophile and genuine football fan so the chance of buying a Premiership club must have seemed a no-brainer. AirAsia could pay normal commercial rates for branding players’ shirts and hoardings in the ground but the press buzz that would be created with constant references to Tony Fernandes and AirAsia every time the club was mentioned would be thrown in for nothing. Anyone with cable television in Asia would receive constant reminders about Air Asia and the football club – and those are exactly the people that AirAsia needs to communicate with.

Sadly, buying a controlling interest in Queen’s Park Rangers has not proved quite the dream ticket Mr Fernandes must have envisaged. The club is now at the bottom of the Premiership and is favourite to be demoted at the end of the season.

Anyone who thinks being in the division below is not so bad should take a look at Wolverhampton Wanderers’ stadium. They were demoted at the end of last season and instead of ads for major international brands, the ground is festooned with ads for a chain of UK pawnbrokers. As for as Asian television coverage is concerned, you are in the Premiership or nowhere.

Mr Fernandes has now gone into panic-mode, sacking the manager and replacing him with Harry Redknapp – a man who has achieved legendary status for doing the impossible with failing football clubs. This is expensive – it costs money to terminate contracts and Mr Redknapp’s signing-on fee would be huge, plus a rumoured million pound bonus if they get to stay in the Premiership.

Unfortunately, QPR’s mismanagement goes way beyond the actual manager. Under Mr Fernandes’ ownership they have spent tens of millions on inappropriate or over-priced players. One or two agents look to have had a particularly strong influence in the club’s purchases. It is said that the atmosphere in the team is so bad that some of the players will not even talk to the others.

Mr Fernandes cannot claim to be a hands-off owner because he attends many of the matches. He really has to hope that Houdini Harry can provide the miracle required because, otherwise, not only will he lose a major asset but there will be some awkward questions asked about how he allowed his team to get into such a state.

The idea of buying the club was for AirAsia to be linked to a major international sporting brand – not held up as an example of financial ineptitude. The reputational damage could be serious.

AirAsia really needs to keep its corporate fingers crossed that Mr Redknapp can produce the goods.

 

 

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