Aston Villa Plc Business Information, Profile, and History

History of Aston Villa Plc

Aston Villa plc is the publicly listed company governing the activities of England's Aston Villa Football Club and the Villa Park stadium in the city of Birmingham. A founding member of the Football League's Premier Division, Aston Villa is also among the first football (soccer) teams to become listed on the London Stock Exchange, joining such renowned teams as Manchester United and Arsenal in a run-up to what many consider will be a new era in sports marketing, when barriers to sports team ownership, notably by media corporations, are expected to fall. As such, Aston Villa has already entered a relationship with American cable television company NTL Inc., which has been building up its shareholding position in the more than 125-year-old team. The majority of Aston Villa's revenues, which neared £36 million in 2000, come from gate receipts. Broadcasting fees provide another 20 percent of annual sales, while merchandising and royalty receipts add 14 percent of the company's revenues. Aston Villa also operates conference and convention services, and expects to open its own hotel in the future. The company is also renovating its aging stadium, built in 1924, boosting the number of seats to 51,000. Aston Villa is led by chairman and CEO Herbert Douglas Ellis, who also owns some 33 percent of the company's stock.

Soccer Pioneers at the Turn of the Century

The history of Aston Villa began in the post-cricket season in Birmingham in 1874, when four players on the Villa Cross team sought a means to keep the team together during the winter off-season. Soccer had begun to make its appearance in England in the later part of the 19th century, swiftly gaining popularity and later replacing cricket itself as the United Kingdom's most popular sport. The Villa Cross team decided to take up the newly organized Football Association (FA) rules--which differed from the so-called Rugby Union rules of a rival form of football--and by 1875 had organized their first team of 15 players. The team played their first--and only--game of the year against a local Rugby Union team. In order to accommodate both sets of rules, the two sides agreed to play the first half of the game according the Rugby Union rules and using the oblong rugby ball. The second half of the game was played using the round ball and following Football Association rules. The future Aston Villa went on to win its first of many games.

The group stepped up its playing schedule the following winter, including a number of matches played on the playing field of its future permanent home. The arrival of Scot George Ramsay in 1876, and then fellow Scotsman Archie Hunter, sparked the beginning of Aston Villa's professional era. By then, the growing popularity of soccer in the area had enabled the team to beginning charging at the gate; in its first paying game, the team netted more than five shillings. The playing prowess of captains Ramsay and Hunter helped the team attract growing numbers of spectators. The team itself was gaining strength and by the end of the decade was confident enough to enter the FA Cup.

Association soccer had taken the United Kingdom by storm, prompting legislation to codify the growing numbers of professional teams and players. Toward the turn of the century, FA teams were required to distribute shares to investors, a means to enable trading among the teams without implicating the FA itself. The popularity of the sport was also seen in the rise of the FA Cup; by the mid-1880s, more than 130 football clubs were vying for FA Cup positions. Aston Villa's own breakthrough came in the 1886-1887 FA Cup competition, when the young team captured the title before a crowd of 15,000.

For the next season, Aston Villa became one of the founding members of the new Football League. Designed to provide a more regular playing schedule among a limited number of more evenly matched teams, the Football League eventually developed into several divisions, with top ranking teams competing in the Premier Division. The formation of the Football League also helped to ensure rising numbers of spectators--and gate receipts&mdash competitions reached new levels of professionalism.

In 1892, Frederick Rinder, originally from Liverpool, joined Aston Villa as the team's financial secretary. Rinder was to introduce a number of standard business practices to the team's financial structure. Rinder also installed the first turnstiles at the entrance to the team's playing field, bringing in more revenues to the team. The importance of these were growing as the popularity of football grew. When Aston Villa played--and won--its third FA Cup final match in 1894, it was before a crowd of more than 42,000, establishing a new attendance record.

At the turn of the century, Aston Villa established a more lasting record--that of winning the mythical double, that is, the FA Cup and Football League championship in the same year. The double win in 1897 was to remain the only double achieved by any team for more than 60 years. The team also officially opened its home field, which was still to known as Aston Lower Grounds before taking the Villa Park name itself. The team's new home seemed to inspire Aston Villa on a new string of victories that was to last until the outbreak of the World War I.

Wartime Disruptions in the 20th Century

Yet the years leading up to World War I were to prove one of the few highlights for the team over the next several decades, culminating with the league championship in 1910. This was, however, to be the team's last league championship trophy until the end of the century. Three years later, the team won their fifth FA Cup.

The mobilization for the British war effort devastated the ranks of its soccer teams, and the Football League disbanded for the duration. League play only resumed in 1919. Aston Villa scored an early success, taking the FA Cup trophy in 1922. By then, the team was pulling down attendance figures of an average of 35,000 spectators per game, and as much as 66,000 for games against sworn rival teams such as West Brom. Yet Aston Villa's fortunes on the playing field were now set to go into a long decline; nearly 40 years were to pass before the team saw a new FA Cup trophy.

Nonetheless, the team was to continue to provide some of the great names in U.K. soccer history. And at the dawn of World War II, Aston Villa became an international name when the team, touring German, refused to present the Nazi salute before Hitler, the only British team that had refused to do so. During the war, however, league play was once again suspended, and Villa Park was taken over by the military; part of the stadium was even used as an air raid shelter. While the team continued to play--filling in its side with servicemen as guest players--full competitive play did not return to England until 1946.

Aston Villa's recovery proved extremely long. By the mid-1950s, the team's continued losses placed it under threat of relegation to the Football League's Second Division. Despite a losing record in league play, the team did manage to pull out a victory in the FA Cup in 1956. That victory was not enough to sustain the team, and by the end of the decade, Aston Villa faced a brief relegation to the Second Division.

By the beginning of the 1970s, even Second Division seemed too much for the flagging team, and Aston Villa found itself relegated to the Third Division. The team's finances were also in disarray, as attendance rates plummeted with the team's on-field losses, at one point dropping down to just 12,000 spectators. Slumping gate receipts led the team into losses of £200,000 by 1968. Meanwhile, the Villa Park stadium was in need of repairs.

New directors were brought in to help steer the club out of its financial troubles. Among them was Herbert Douglas Ellis, who had built up a successful travel agency business in the region and had been one of the pioneers of the packaged holidays in the Birmingham market. Ellis took over as chairman of Aston Villa. Ellis also slowly took over ownership of the club, buying up shares from a number of original shareholders. In this, Ellis became part of a larger industry trend, as a number of other businessmen quietly bought up the shares in a number of the United Kingdom's football teams. Ellis reportedly acquired his controlling share of Aston Villa for an estimated £500,000. While never confirmed, this figure paled in comparison to the team's valuation of more than £64 million at the time of its flotation in 1997.

Under Ellis, Aston Villa quickly regained its momentum. By 1975, the team had recaptured a place in the Premier Division and had also gained a spot in the UEFA Cup, the first time the team had entered European competition. In that year, however, Ellis resigned his position and his shareholding after a boardroom fight. Seven years later, Ellis was called back in to lead the team, which revealed a debt of more than £2 million. By then, however, Aston Villa had taken its first league championship in 71 years and was on its way to scoring its first win in Europe, capturing the European Super Cup in 1982.

Public Corporation for the 21st Century

The mid-1980s marked yet another low point for the team, as continuing losses saw its average attendance rates drop to just 15,000, the lowest since the beginning of the World War I. The team was also entering into an extended period of personnel problems, as Aston Villa became something of a revolving door for team managers; in just ten years, the team had hired and sacked six managers. The team also temporarily slipped out of First Division play at the start of the 1990s.

Throughout the 1990s, Aston Villa continued to display substantial evidence that it remained among the United Kingdom's top teams. In the 1993--94 season, the team took the league championship, its first trophy win in more than 12 years. Aston Villa was also becoming a fixture in European play, earning places in the UEFA throughout much of the second half of the decade.

Ellis became a still richer man when Aston Villa joined the wave of soccer clubs becoming publicly listed companies in the mid-1990s. Aston Villa's own public listing came in 1997, giving the company--called Aston Villa Plc--a market valuation of £64 million. Part of the interest in the new corporations was the growing marketing success of U.K. soccer, where teams such as Manchester United were becoming among the best known soccer teams worldwide. Still more interesting, however, was the potential for cross-ownership as teams and media companies began to woo each other for potential future marriages, expected to come early in the new century as rules changes were expected to allow cross-ownership for the first time. Aston Villa found its own suitor in U.S. cable company NTL Inc., which began building its shareholding at the turn of the century.

As Ellis approached his 80s, his grip on the club began to raise questions about his successor. These were heightened when, after a personal dispute, Ellis' son Peter was ousted from the company's board of directors. Yet father and son patched things up, and by 2001 the younger Ellis had regained a seat on the board. By then, Aston Villa had launched new plans to extend beyond its sport team. After the winning approval for a revamping of its Villa Park stadium--boosting seating to more than 51,000--the company, which had a strong real-estate portfolio in the Birmingham area, and particularly in areas adjacent to the stadium, unveiled plans to build a 150-bed hotel and conference center and a 160,000 square-foot shopping center.

These activities were expected to help cushion the variability of the company's gate receipts and other team-centered revenues. Particularly as player salaries had begun to skyrocket--jumping by some 24 percent in 2000 alone--and as teams found themselves increasingly competing on an international scale for broadcasting coverage, Aston Villa's own profitability had come under pressure. Despite rising revenues, which topped £35 million at the end of the company's 2000 fiscal year, Aston Villa was forced to post a loss in early 2001. Nonetheless, the company was widely regarded as one of the best run among the top U.K. teams, and a strong field at the turn of the century--including a second-place finish in the FA Cup final in 2000--gave Aston Villa reason for cheer as well as cheers from its fans.

Principal Subsidiaries: Aston Villa FC Ltd.; Aston Villa Football Club Ltd.; Aston Villa Indoor Cricket Centres Ltd.

Principal Competitors: Arsenal Football Club plc; Chelsea Village plc; Leeds Sporting plc; Leicester City plc; Liverpool Football Club plc; Manchester United plc; Tottenham Hotspur plc.

Chronology

• Key Dates:

• 1874: Founding of Aston Villa soccer team.
• 1887: Team wins the Football Association Cup.
• 1924: Inauguration of Villa Park stadium.
• 1968: Douglas Ellis becomes team chairman.
• 1982: Ellis becomes majority shareholder.
• 1997: Aston Villa lists on London stock exchange.
• 2001: Company begins a stadium expansion.