Tuesday, 31 May 2011

Dollar slips vs. euro on Greece aid hope

By Deborah Levine and Lisa Twaronite, MarketWatch

The dollar lost ground against the euro Tuesday after a report eased investors’ fears about Greece’s debt woes.

Both currencies gained on the yen after Moody’s Investors Service said it was reviewing Japan’s rating for possible downgrade.

The dollar index , which measures the U.S. unit against a basket of six major currencies, slipped to 74.630 from 74.941 in Asian trading Monday.

U.S. markets were closed Monday for Memorial Day and U.K. markets for a bank holiday.

The euro jumped to $1.4378 from $1.4271 Monday. See real-time currency quotes and tools.

The euro pared its gains after weak U.S. confidence data weighed on equities, reducing investors’ willingness to move away from the relative safety of the greenback into other currencies and riskier asset classes. See story on consumer confidence.

The Wall Street Journal reported Tuesday that Germany may consider abandoning a push to reschedule Greek debt early, which may pave the way for Greece to receive a new package of financial aid. Read more on Germany's stance on Greek debt.

“If the [Journal] report is confirmed by German officials, it could help remove the impasse surrounding Greece’s funding needs and ease the pressure” on the euro against the dollar, said Boris Schlossberg, director of currency research at GFT, in emailed comments.

However, others see a restructuring of Greek debt as highly probable and just a question of timing.

The euro has dropped 2.9% this month, its first monthly drop since November.

The dollar index has gained 2.4% this month.

“The political debate on how to shore up Greek finances shows no sign of being resolved, while Greek public opposition to austerity continues to run the risk of major social unrest,” said Brian Dolan, chief currency strategist at “Some form of Greek debt restructuring remains extremely likely, with only the timing open to question.

“With European data continuing to indicate a slowing ahead, we think the euro and risk sentiment in general remain vulnerable,” he wrote in a note.

Against the Japanese yen, the dollar rose to ¥81.24, up from ¥80.79

Against the euro , the Japanese unit bought ¥116.83, up 0.7%.

On Tuesday, Moody’s put Japan’s Aa2 local and foreign-currency bond ratings on review for possible downgrade, citing faltering growth prospects and a weak policy response in the wake of the March earthquake-triggered disaster.

For the month, the dollar is little changed against the yen, while the euro has dropped 2.9% against Japan’s currency.

The British pound turned down to $1.6437, from $1.6478 late Monday.

Sterling has lost 1.6% this month against the dollar.
Aussie dollar, Chinese yuan

The Australian dollar dipped to $1.0651, down 0.7%, after downbeat economic reports. Data showed a wider-than-expected first-quarter current-account deficit and a fall in housing prices in most capital cities.

In May, the U.S. unit has lost 2.8% versus the aussie.

The Chinese yuan also hit a fresh record high against the dollar of 6.4810 in spot trading, according to reports, after the People’s Bank of China set its official parity rate for the unit at a new high for the fourth consecutive session.

The central bank reportedly set the yuan’s rate against the dollar at a record high of 6.4845, up from 6.4856 on Monday. The PBOC allows the yuan to trade in a range of 0.5% on either side of the parity rate.

Deborah Levine is a MarketWatch reporter, based in New York. Lisa Twaronite is MarketWatch's Tokyo bureau chief.

Monday, 30 May 2011

How to make money 101 ways

This is a site about the things you can do on the internet that are beneficial.
I now understand more about what people are doing while on Facebook.Here's the link

I think internet marketing is the next tech bubble.I can't wait for the Facebook IPO!

Friday, 27 May 2011

Dollar dip helps stocks and commodities

Friday 1845 BST.

A switch in the way the dollar reacts to disappointing US economic data is providing support to stocks and commodities, as traders find the gospel of the buck’s inverse correlation to risk assets difficult to denounce.

The FTSE All-World index is up 1 per cent, WTI crude has reclaimed the $100 a barrel mark and high beta “growth” currencies, such as the Australian dollar are firmer.

The S&P 500 on Wall Street is up 0.5 per cent – just 2 per cent below its cyclical peak – helped by a 0.7 per cent advance for Asia and a 0.6 per cent pop for the FTSE Eurofirst 300. Globally, banks and miners are seeing the strongest gains, and traders rotate into sectors that benefit from falling interest rates and higher prices for physical assets.

Such a bullish tone would normally be met with noteworthy softness in the prices of core bonds, nudging yields higher as investors shifted funds to racier plays.

But the guts of the rally remain weak. Friday’s news of a disturbingly large fall in pending homes sales in April has cancelled out a better than expected reading of consumer sentiment.

Benchmark US Treasury 10-year yields are barely changed at 3.06 per cent, a six-month low reflecting continued evidence that economic activity in the US is stuttering. The S&P 500 also failed a critical test of a technical level, at 1,343, and is pulling back from its days’ highs.

Recently, such weak data would give the dollar a somewhat perverse boost as investors bet on funds flowing into perceived haven currencies as risk appetite waned.

This is not the case on Friday – as investors are faced with the conundrum of risk assets and core sovereigns both displaying strength of late.

One explanation for this is that the soft macro data are temporary but increases the chances the Federal Reserve will stay looser for longer, a scenario much loved by bulls of both stocks and bonds.

The dollar index, which tracks the greenback against a basket of its peers, is down 0.8 per cent to 74.93, helping drive copper up 1.5 per cent to $4.17 a pound, and push gold up 1.1 per cent to $1,537 an ounce.

The dollar has hit a record low versus the Swiss franc of $0.8535.

Part of the reason for dollar weakness is a resurgence in the euro, which is up 0.8 per cent to $1.4278 as the latest pulse of eurozone fiscal fears fades.

Dealers had been spooked on Thursday by a warning from the chair of eurozone finance ministers, Jean-Claude Juncker, that the IMF may not release next month its share of a €12bn aid package to Greece.

The market now seems to be reassessing the likelihood of such a scenario and the euro is also getting support from the crunching of yield differentials with the US currency as the Bund and Treasury yield spread sits at just 7 basis points.

Indeed, such is the trend for lower yields that the Japanese five-year has touched a five-month low of 0.41 per cent, even after Tokyo revealed that surging commodity prices had helped inflation return to the country for the first time since 2008.

The market seemed not especially fussed by news that Fitch was downgrading its outlook on Japan’s sovereign debt.

Earlier in Asian trading the region was mainly positive as strong corporate profit news and the weaker buck overshadowed lingering concerns about the eurozone and the US economy.

However, two of the major bourses remained under pressure. Japan’s Nikkei 225 was led lower by weakness in Sony, after the electronics group’s forecast of a Y80bn profit this year disappointed analysts.

Meanwhile Shanghai, lost another 1 per cent, taking its decline this week to 5.2 per cent. China’s benchmark now sits at a four-month low as traders continue to fret that Beijing’s battle against inflation will require the economy to cool further.

Elsewhere, the tone was more upbeat. The resumption of foreign buying provided some support in Seoul as technology and recently hard hit carmakers – following a production crimping strike in the component sector – pushed the Kospi up 0.4 per cent.

In Sydney, the S&P/ASX 200 rose 0.5 per cent as “bargain hunters” nibbled at blue chips, while Hong Kong’s Hang Seng showed it remains more tightly correlated to the broader global trend than its mainland peer by climbing 1 per cent as banks saw buyers.

Reporting by Jamie Chisholm in London and Telis Demos in New York

California may review AT&T/T-Mobile USA deal

(Reuters) - California regulators may open a formal examination of AT&T Inc's proposed $39 billion purchase of T-Mobile USA, a move that could delay or add conditions to approval of the deal.

If successful, the deal would create the largest U.S. mobile phone service.

To complete the deal, which many consumers and rivals including Sprint Nextel are opposing, AT&T needs approval from the U.S. Department of Justice and the U.S. Federal Communications Commission, the telecommunications regulator. State regulators can block a merger within their state.

The California Public Utilities Commission told its staff, in a meeting on Thursday, to open a proceeding to gather information about the merger for the state regulator to consider at its next voting meeting on June 9.

The commission said it wants information about the merger proposal "in light of relevant state law and public policies."

State regulators can block a merger but more typically, they tend to impose conditions for approval that are specific to the needs of that state, experts said.

Because California is such a large state, a rejection there "would sabotage the deal to a large extent," according to Bert Foer, head of the American Antitrust Institute but he added that it was more typical for states to negotiate with the federal regulators.

State reviews could also affect the timing of a deal as a merger would not close until all the reviews were competed, according Stifel Nicolaus analyst Rebecca Arbogast.

AT&T has notified California, Arizona, Hawaii, West Virginia and Louisiana about the deal. Louisiana has already said it would investigate. Sprint had asked West Virginia, California and Louisiana to review the deal.

Sprint and Leap Wireless say the deal would make the U.S. wireless industry less competitive while consumers have told the FCC that they are worried the deal will result in higher prices.

AT&T has argued that the acquisition of T-Mobile USA, a unit of Deutsche Telekom, would help it to provide a better service by allowing it to expand its network in states like California more quickly than it could have otherwise.

AT&T notified the California commission about the proposed deal on May 3 and the deal would have been deemed approved if the regulator had taken no action 30 days later.

Lane Kasselman, a spokesman for AT&T said the company is "confident in the merits of this deal and that regulatory approvals will be obtained" after the reviews.

The top executives from AT&T, T-Mobile USA and Deutsche Telekom have defended the deal at Senate and House hearings where Republicans and Democrats expressed skepticism about the benefits of the deal to consumers.

(Reporting by Sinead Carew in New York, Diane Bartz in

Washington and Poormina Gupta in San Francisco; editing by Derek Caney)

Monday, 23 May 2011

Today's Highlights:BP,Deutsche Tel and Popolare

Hope you had a fine weekend.

Didn't much trading today,but our trades are doing fine except the Deutsche Tel stock which hasn't moved much from its Friday position.As indicated before,we're not moving from our long positions just yet as we expect an upward push on the stock as the T-Mobile deal inches ahead.

Also went short on Banco Popolare on Friday and was vindicated by Standard & Poor's downgrade of Italy's debt.We won't be moving from this position in the next few days or weeks as there are more problems for Berlusconi in parliament which will continue pushing this stock downwards.And we already have a 29% return from only a few hours of trading on Friday and this morning.
Our BP(LSE) stock is doing surprisingly well despite shedding 7% nearly 2 weeks ago and is currently in the green.
Keep tuned as we build this portfolio from zero to exponential figures.

James Mwangi continues to be long in BP and Deutsche Tel and short in Banco Popolare.This position doesn't necessarily guarantee protection from risk of losses.

Gold bulls watching gold elephants

By Peter Brimelow, MarketWatch

NEW YORK (MarketWatch) — Gold’s gyrations on Friday were dramatic, probably exhausting to both sides — and possibly important. Some gold bugs think a new attempt on the highs of last month may have started.

Gold was firm in Europe, but plunged on serious selling during the New York morning — then dramatically reversed on heavy volume to close up $16.50 at $1,508.40 in the CME June contract. This meant gold was up over 1% on the week. More importantly, gold appears to have broken the downtrend which had been in place all month.

Gold stocks, as measured by the Arca Gold Bugs, also seem to have reversed their May downtrend — particularly important to the many observers who think gold shares lead the metal’s movement. The HUI was up 2.75% on the week.

This action must have been a relief to the respected, institutionally oriented Gartman Letter, which overcame its earlier worries and very early on Friday morning added two “units” of gold to its model portfolio (one of which was hedged into yen). This makes the portfolio 7/11ths gold.

During the morning, Gartman must have been wondering if its actions (and those of its hedge-fund clients) were being targeted by hostile forces — a suspicion sometimes heard in the past. As it is, Gartman appears to have judged gold momentum well.

Gold’s recovery on Friday closely followed the announcement that the Fitch ratings service had cut its ranking on sovereign Greek debt. This sparked fears that a wave of anxiety about euro-zone defaults might sweep the market. (Standard & Poor’s subsequently made matters worse by warning of a possible downgrade for Italy.)

One of the correspondents on the LeMetropleCafe webzine pointed out that the rally in gold, as Europe was closing and on a Friday, nevertheless involved heavy estimated volumes, and asked: Did Fitch bring in Western Elephants?

That is, have the powerful speculative forces which have previously run gold up on euro fears appeared again?

All of this will certainly exercise Australia’s attentive and sophisticated gold observer, The Privateer. It has contended for some time that bouts of negative publicity by the ratings agencies are orchestrated to distract the markets from America’s problems.

As it acidly observed over the weekend: “… it is clearly the ‘policy’ that the U.S. and its debt problems will NOT be the focus of the global public in general and the U.S. paper markets in particular. … The U.S. was last faced with the necessity to raise their Treasury’s debt limit in late 2009 - early 2010. That was when the European sovereign-debt crisis first hit the headlines — duly conjured up by the U.S. ratings agencies. …”

“Now, we are in the same situation again, the only difference being that the U.S. Treasury is now officially $2.2 TRILLION deeper in debt than it was at the end of 2009, less than a year and a half ago.”

“The problem is that the European sovereign-debt crisis is becoming increasingly ‘old’ news. Something BIG had to be done to resuscitate it. It was.”

The Privateer continues to be bullish on gold.

Friday, 20 May 2011

LinkedIn’s stock soars in IPO

Shares surge, valuing company at roughly $8.9 billion

Shares of LinkedIn Corp. more than doubled Thursday in a strong public-trading debut, highlighting investors’ pent-up demand for ownership in a new class of social-networking companies.

LinkedIn’s stock soared at one point more than 140% to $108.25, before receding to $94.25 by the close of its first day of trading on the New York Stock Exchange.

Propelled by vigorous demand leading up to its initial public offering, LinkedIn’s IPO priced at $45 a share, at the top end of a recently raised range of $42 to $45 a share. Previously, the IPO pricing range had been $32 to $35 for shares in the professional-networking service.

Mountain View, Calif.–based LinkedIn is seen as the first in a wave of Internet IPOs, which could include Facebook Inc., Groupon Inc. and Zynga Inc.

LinkedIn is geared to professionals, and draws a big chunk of its revenue from services offered to businesses. LinkedIn said last year it had nearly 3,900 companies using its “hiring solutions” service for recruiting.

LinkedIn announced in March that it reached 100 million members, with more than half of its members based outside the United States. The company said it was seeing its fastest growth in Brazil, Mexico, India and France.

Members listed a range of occupations from teacher and chocolatier to Elvis Presley impersonator.

LinkedIn’s IPO share gain of more than 100% from its initial price “was a fairly common occurrence in the dot-com years of 1999 and 2000,” according to Renaissance Capital.

Founder of LinkedIn Reid Garrett Hoffman (center) applauds with CEO Jeffrey Weiner (right) at the NYSE.

A few IPOs have “hit that mark” in the post-bubble era, “including, and Qihoo 360 Technology , Greenwich, Conn.-based Renaissance said. “LinkedIn may be joining the list after its close today,” it added.

Scott Sweet, senior managing partner at IPO Boutique, said LinkedIn’s blockbuster IPO will be very encouraging to companies widely expected to go public soon, such as Groupon and Zynga.

“This was to be used as a proxy for price point,” Sweet said of LinkedIn. “With it pricing at $45 and trading at $80-plus, it now seems logical that Groupon, Twitter and Zynga should and likely will file shortly in that they were very anxiously awaiting this debut.”

The main focus remains on Facebook, which has more than 600 million members, now seen as the dominant social-networking site.

“Facebook, as I have said in the past, will be pandemonium when it files,” Sweet remarked. “Facebook is so far and away the leader in this area, and nobody can catch them now.”

BP settles with Mitsui arm over Macondo spill

Terms call for $1.07 billion to settle claims over Deepwater tragedy
Simon Kennedy-MarketWatch

Shares of oil giant BP PLC rallied nearly 4% Friday after MOEX USA Corp., one of the co-owners of the Macondo oil well in the Gulf of Mexico, agreed to hand over $1.07 billion to settle claims from the Deepwater Horizon disaster.

BP said it will receive the payment from MOEX, which owned a 10% stake in the well through a subsidiary.

Japan’s Mitsui & Co. the majority holder in an entity that owns MOEX, confirmed the settlement in a separate announcement. Anadarko Petroleum Corp. held a 25% stake in the Macondo well.

The agreement makes MOEX the first of BP’s partners to agree to contribute to the cost of the disaster in the Gulf of Mexico.

“MOEX ... has joined BP in recognizing and acknowledging the findings by the Presidential Commission that the accident was the result of a number of separate risk factors, oversights and outright mistakes by multiple parties and a number of causes,” BP said.

BP’s shares rallied 3.7% in London following the announcement. See more on Friday trading in London‘s FTSE 100.

Jonathan Jackson, head of equities at Killik & Co., said he was “slightly disappointed” by the size of the settlement when compared to BP’s latest estimate that the spill will cost $41.3 billion. Overall, however, the agreement is positive news, he added.

“It is the first time that a company involved in the well has joined BP in helping to meet the cost of the accident and it appears to reinforce the likelihood that BP will not be found grossly negligent, an outcome that would bring a much larger liability under the Clean Water Act,” Jackson said.

The payment will be applied to the $20 billion trust that the oil company established last year to pay claims resulting from the deadly Gulf of Mexico explosion and spill.

“MOEX Offshore has also recognized and acknowledged the conclusions of the United States Coast Guard that, among other things, the safety management systems of both Transocean Ltd.and its Deepwater Horizon rig had significant deficiencies that rendered them ineffective in preventing the accident,” BP said.

Chief Executive Bob Dudley called on other partners in the Macondo well to also contribute to the massive cost of cleaning up and compensating victims.

Anadarko next?

“If this settlement is swiftly followed by an agreement with Anadarko, BP should be able to begin to put the whole Macondo saga behind it, especially if this is followed by an agreement with the U.S. Department of Justice,” said Jefferies International analyst Iain Reid.

Contractors involved in the Macondo project included Transocean, which was the operator of the Deepwater Horizon drilling rig, as well as Halliburton Co. and Cameron International Corp.

BP said it’s agreed to indemnify MOEX for compensation claims arising from the disaster, but not from civil or criminal fines or penalties or from claims for punitive damages.
It added that the agreement isn’t an admission of liability by either party.

Simon Kennedy is the City correspondent for MarketWatch in London.

Gold futures advance in ‘tug-of-war’ market

Gold and silver futures edged higher in electronic trading during Asian trading hours Friday, with both metals turning positive for the week.

Gold for June delivery rose $3.10 to $1,495.50 an ounce, with the move bringing the week-to-date gains into positive territory, up 0.1%. Silver for July rose 23 cents to $35.16 an ounce, bringing week-to-date gains to 0.3%.

In regular New York trading on Thursday, gold settled down $3.40, while silver closed down 17 cents, after some disappointing macroeconomic data. Read more on Thursday's metals moves.

Although both gold and silver could post a gain this week, the path to higher ground has been by no means smooth.

“There is still a tug-of-war taking place between those who believe the commodity trade has peaked in front of the end of [the U.S. Federal Reserve’s] quantitative easing 2, and those who believe it is just a correction,” said metal analysts at MF Global.

Commodity futures plunged earlier in the month, with silver futures selling off after margin requirements to trade the metal were raised.

The MF Global analysts said Friday that they believe the recent price action is a correction rather that the start of a sustained downward move after the April 28 Federal Open Market Committee statement and press conference.

“We had previously expected gold to peak near the end of QE2 on June 30, but the April 28 FOMC meeting pushed those expectations back due to its dovish tone,” they said.

“Comments from [Fed board members] Evans and Dudley continued that tone by suggesting that the Fed should not overreact to inflation and that accommodation is still appropriate. That tone was also continued by weakness in the Philadelphia Fed survey and existing-home sales numbers yesterday. The inability of Congress to cut spending and agree on a debt-ceiling hike is also supportive, in our opinion,” they said.

Copper for July delivery rose 2 cents to $4.07 a pound, after falling 5 cents on Thursday.

Platinum for July delivery rose 50 cents to $1,769.50 an ounce, after dropping $10.90 in New York the previous day.

Quantitative Easing is an ugly name for a simple idea.Central banks buy long-term government bonds with newly printed money,flooding the markets with new cash in other words.This raises the bonds prices,lowers their yields and provides a helpful boost when central banks' main tool,the short-term interest rate is close to zero.

The markets have pegged in QE2 to cease by the end of this quarter thus sinifying an end to recessionary fears.This erodes gold's value as a safe asset against the dollar pushing the price downwards.

Sarah Turner is MarketWatch's bureau chief in Sydney.
Additional Reporting:James Mwangi in Nairobi

Tuesday, 10 May 2011

3 defense stocks to buy after bin Laden’s death

While it’s still early, it appears that the killing of Osama bin Laden is a game changer. The U.S. has captured huge amounts of vital intelligence, which is likely to severely disrupt the Al Qaeda network.

In fact, the result could be an acceleration of drawdowns in Iraq and Afghanistan. And yes, there is likely to be a rethinking of the defense budget.
With high unemployment and slow economic growth, Americans want to find ways to bring back fiscal responsibility. No doubt, the defense budget is a fat target.

This is certainly bad news for the larger defense firms like General Dynamics , Lockheed Martin  , Northrop Grumman  and Raytheon  Already, they are feeling the pressure of lower bookings as well as increased cancellations.

If history is any indication, the lower spending could last five to 10 years. Consider that new Secretary of Defense Leon Panetta is a budget hawk. During the Clinton administration, he was the chief of the Office of Management and Budget.
Despite all this, there are still opportunities for investors — that is, the smaller companies in the defense industry. The wars of the future will inevitably require cutting-edge technologies.

This was certainly apparent in the operation to kill bin Laden. President Barack Obama’s national security team used real-time technologies to track the events. It also looks like the SEALS used a next-generation stealth helicopter.

Another advantage for smaller firms is that the Pentagon has introduced new regulations that try to avoid single-source contracting. As a result, these companies are likely to participate in higher-end projects.

So what are some of the top small companies to watch? Here’s a look:

Rockwell Collins  : The company has a large commercial business, such as communications and electronics for business jets and airliners. But there is also a military segment. The technologies include automated flight control, surveillance and simulation.

While this strategy can overstretch a company, Rockwell has actually been able to effectively leverage its platform. Often its commercial technologies are adapted to military applications. It usually means lower-priced bids on projects.

Yet the driver for Rockwell is likely to be its commercial business. As the global economy continues to rebound, there will be more spending on airline investments and corporate jets. Rockwell has already landed key contracts for the Boeing  787 and the Cessna.

Rockwell also has operating leverage in its business. In the latest quarter, the company was able to improve its operating margins by 60 basis points. The margin improvement is likely to continue. Read about the top 10 stocks for 2011 on

Harris Corp.  +1.19% : The company develops sophisticated inflight-deck avionics, mission communications and cabin electronics. It also has a global platform, which spans 27 countries.

But about three-quarters of revenue come from the U.S. government. Because of this, there has been much concern from investors. The price-earnings ratio is only 10 and the shares are trading at 6 times EBITDA. In other words, the valuation is quite low.

So how can Harris deal with its reliance on government business? A key strategy is acquisitions. Consider that Harris has already been ramping its dealmaking, with deals for companies like Schlumberger Global Connectivity Services (which provides satellite communications services for energy markets).

Harris definitely has a strong balance sheet to carry out more transactions. The company is expected to generate cash flow from operations of $775 million to $825 million in fiscal 2011 and boasts a dividend yield over 2% despite its small-cap status in the defense sector. Read about 6 High-Yield Dividend Stocks to Hold Forever on

FLIR Systems +1.09% : The company is a leader in infrared technologies. Over the next few years, it’s a good bet that the Pentagon will continue spending on these items, which have applications for things like night vision. But there is much broader appeal for FLIR’s offerings, such as in law enforcement, homeland security and border patrol.

In the latest quarter, revenues spiked 30% to $373.5 million. The main driver was the commercial business, which grew a sizzling 51%.

Then again, FLIR has had a long-term record of strong performance. Over the past 10 years, the average annual growth rate of revenue was 23% and the earnings-per-share rate was 24%.

Vital to the success to FLIR has been its talented engineers. For example, the company has seen recent breakthroughs in areas like gas detection, food inspection, predictive maintenance and building monitoring.

Hilary Kramer is the editor of the GameChangers and Breakout Stocks Under $5 stock-picking newsletters.

Friday, 6 May 2011

Americans see English soccer as risk worth taking

Pitfalls abound, including unlimited budgets, but huge payoff looms

After Stan Kroenke’s acquisition of a majority stake in soccer club Arsenal, five English Premier League clubs are in American hands. But soccer investment isn’t quite the sure thing that level of interest would suggest.
Stan Kroenke

Unlike the major U.S. sports, the Premier League has no limits or penalties on what a team’s owner can spend on the squad, and revenue can vary greatly each year depending on whether a team plays in European competition. Unlike U.S. sports, the 20 Premier League teams also face the threat of relegation — demotion from the league and an associated loss of revenue if they finish a season with one of the three worst records.

But the league is also a proverbial El Dorado for prospective owners, a promised land of almost limitless potential growth, a sport where an owner can on paper make hundreds of millions of dollars in just a few years, and where authorities seem poised to act to ensure a more level financial playing field.

Three of the clubs in American hands, Arsenal, Manchester United and Liverpool, are among the biggest brands in the world’s most popular sport. Manchester United, for example, claims to have 300 million fans outside the U.K.

The clubs are yet to realize the commercial value of that far-flung support, and there are questions whether — in Asia, especially — the interest can be monetized.
But experienced owners may like their chances of at least increasing marketing and merchandizing income — cue the growing interest from U.S. sports-team owners.

Manchester United, owned by Tampa Bay Buccaneers owner Malcolm Glazer, recently opened a commercial office in London — a move a local owner may not have made. And Fenway Sports Group, which owns the Boston Red Sox and Liverpool, made a deal with basketball superstar LeBron James that will see the player and the soccer club marketed together in some countries.
LeBron James

English clubs are also relatively cheap, particularly for Americans used to the eye-watering price tags on most domestic sports teams.

Tampa Bay Buccaneers owner Malcolm Glazer bought Manchester United, recently valued by Forbes as the world’s most profitable club, for close to £800 million pounds in 2005. Press reports suggest he has already dismissed a billion-pound offer for the club. FSG bought Liverpool late last year for about £300 million.

By comparison, the National Football League’s Miami Dolphins were bought for roughly $1.1 billion in 2008, while the Golden State Warriors of the National Basketball Association were sold last summer for about $400 million.

“U.S. team values are sky-high, and it’s not as if there are lots of valuable U.S. sports franchises available to buy,” said Tom Cannon, professor of strategic development at the University of Liverpool’s school of management.

Kroenke’s Arsenal investment, which values the club at £731 million, may be savvier than most. Arsenal is one of the few money-making Premier League clubs, with a profit of close to £60 million last year.

The club also has more room to grow. Deloitte estimates that Arsenal’s commercial income, which includes money from sponsorship deals and merchandise sales, lags rivals’.

In 2010, according to Deloitte, Manchester United’s commercial income was £81 million, Liverpool’s was £62 million and Chelsea’s was £56 million. Arsenal’s income was just £44 million.

“In the longer term, if its strategy of pursuing international commercial development is successful, it could provide [Arsenal] with a financial strength matched by few clubs,” said Deloitte in its report.
Risky business

There are of course still risks for Premiership owners. Unlike the NFL, but like the NBA, some clubs lose money. But unlike even the NBA, year-to-year revenues can be very unpredictable.

For the top clubs, the prize is finishing in the top four places in the league and playing in the UEFA Champions League against Europe’s other big clubs. But that place isn’t guaranteed: Liverpool, in the tournament for the past eight years, didn’t feature this year and is unlikely to make it into next year’s competition. Champions League income is worth roughly $50 million a year to Liverpool, said Cannon. Liverpool’s most recent accounts, ending in 2009 when the team was in the Champions League, showed a £35 million profit.

“Missing the Champions League is bad news for them, and the owner has to decide how to budget for that lost income,” said Cannon.
Meanwhile, Randy Lerner and Ellis Short, American owners of Aston Villa and Sunderland, respectively, have poured millions into their loss-making clubs since buying them, though their initial investments were low — Lerner bought Villa for about £60 million, and Short reportedly spent less than half that amount.

Given their investments, any profit Lerner and Short make depends on how long they hold on to their clubs and whether their teams continue to do well, said Rob Tilliss, principle at Inner Circle Sports, who worked on FSG’s Liverpool acquisition.
Hungry billionaires

There’s another hurdle for Premier League owners: billionaire owners who spend their own cash with impunity.

The U.K.’s Daily Telegraph newspaper said recently that Chelsea owner Roman Abramovich poured £740 million of his own money into the club in the seven years following his 2003 acquisition. Meanwhile, Manchester City owner Sheikh Mansour bin Zayed al-Nahyan has reportedly invested about £600 million in the roughly two years since he took over there.
“I’m not sure the Americans coming in ... appreciate how much Abramovich and Sheikh Mansour are willing to spend,” said Cannon.

Partly in response to this largesse, European soccer’s governing body, UEFA, is introducing its so-called fair-play rules, which will require clubs to spend only what they earn. But until the rules take effect in 2013 it’s hard to say how effective they’ll be — some question whether UEFA would really be willing, for example, to ban Chelsea or Real Madrid from the Champions League if they spent beyond the limits.

Tilliss said he thinks the fair-play rules will force clubs to balance their revenues and expenses. Further, he said, owners like Abramovich and Mansour will have to stop using their own wealth to subsidize their clubs. It’s a view he believes is shared by incoming U.S. owners.

If successful, the rules may make soccer clubs even more attractive to U.S. owners.

One sports-business professional said he’s spoken to several NFL owners who would be interested in buying Premier League teams if there was cost certainty. He declined to name the owners. There are plenty of opportunities among England’s 92 professional clubs for those willing to take the risk.

Sam Mamudi is a reporter for MarketWatch, based in New York