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Tuesday, 25 January, 2000, 13:53 GMT
NTL buys into Aston Villa

Villa will get 26m from the deal

Aston Villa has become the latest football club to raise money by selling a stake to a cable company.

The deal could lead to the creation of a "Villa TV" channel.

NTL, the UK's third-largest cable company, will give Aston Villa a 26m interest-free loan. After five years the loan will be repayable by new Villa shares equal to a stake of 9.999% of the club.

The deal will be chanelled through NTL subsidiary Premium TV, which in exchange will handle Aston Villa's television, radio and e-commerce rights.

The firm will also become the club's exclusive agent for the sale of media sponsorship, advertising and publishing rights.

Revenue will be split with 70% going to Aston Villa and 30% to Premium TV.

Financial gamble

In purely financial terms, the deal is a gamble for NTL, as the Villa stake can either be worth much more than 26m - or much less. Judging from the past performance of shares in football clubs, it is likely to be the latter.

However, the real value of NTL's investment is the firm's hold on the club's television rights.

Media companies have been scrambling to buy the rights to UK football clubs, with BSkyB taking stakes in Sunderland, Manchester City and Leeds, Granada opting for Liverpool FC, and NTL snapping up a share of Newcastle United.

BSkyB's bid for Manchester United was famously rejected by authorities on competition grounds.

Football broadcasts attract advertisers, generating an important revenue stream for television companies.

Villa TV

Villa fans, in turn, could soon see more of their club than they could ever have hoped for.

Villa's finance director Mark Ansell said the the link-up with NTL could lead to the creation of a Villa TV channel.

He said: "We are entering into new business worlds and for that we need new expertise ... in the media and e-commerce".

Villa makes a loss

The money comes at an opportune time for the club, which had to announce a loss of 3.8m for the six months to 30 November 1999. This compares with a pretax profit of 13.8m a year earlier.

Those figures, though , were boosted by a 15.7m profit reaped from selling players. Dwight Yorke, who transferred to Manchester United, brought the club 12.6m.

The club blamed the lack of European fixtures for falling attendances.

Aston Villa chairman Doug Ellis said the NTL loan would help pay for the planned upgrade of the club's stadium and its plans to build a 150-room hotel close to the Villa Park site.

Planning permission for the hotel and for expansion of the stadium capacity from 39,000 to 51,000 was granted by Birmingham City Council earlier this month.

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See also:
25 Jan 00 |  The Economy
Broadcasters battle for football
19 May 99 |  Your Money
Share in your team's success
13 Jan 00 |  Business
Aston Villa in cable TV talks
13 Jul 99 |  The Company File
Granada buys stake in Liverpool FC
09 Dec 99 |  Business
Newcastle Utd's cable deal
31 Aug 99 |  The Company File
BSkyB buys stake in Leeds
05 Nov 99 |  The Company File
BSkyB buys into Man City
17 Dec 99 |  Business
BSkyB buys into Sunderland
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