"There were times when I was pulling my hair out and I wanted to strangle him," says football tycoon Milan Mandaric of his relationship with new Tottenham manager Harry Redknapp. But standing in the dock at Southwark Crown Court, awaiting the verdict of their tax evasion trial, football's "Odd Couple" were one. Mandaric put his hand on Redknapp's back, saying, "Don't worry, Harry, it will be fine." When the not-guilty verdicts came in, they hugged.
Mandaric, who faced two trials for tax evasion (see below), describes the four-year investigation as a "horrible dream". Having saved Portsmouth, Leicester City and Sheffield Wednesday from financial ruin, he believes he's been treated shabbily, says The Sunday Times. "I've done a lot for football in this country through love of the game, not because I was making any money." His passion left a sizeable hole in his £100m fortune.
"Mandaric's personal journey is remarkable," says The Independent. Born just before World War II, he spent his early childhood hiding from the Nazis (who sent his father to a concentration camp) in the Yugoslavian mountains. When peace came, the family struggled. After training as an engineer, Mandaric joined his father's car spares business, turning it into one of the country's largest businesses. First hailed as a hero by Tito's government, then denounced as a "capitalist traitor", he fled to America.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Get 6 issues free
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Having lost one fortune, Mandaric built another. In California in the 1970s, he caught the first wave of Silicon Valley selling his first company, Lika (a circuit board specialist), to Tandy for a vast profit in 1980, before cleaning up again making keyboards for Apple. "I suppose you could say it was the classic American dream," he observed.
The cash funded his dream of owning a soccer club founding the San Jose Earthquakes to play in the nascent North American Soccer League, and importing George Best and Pele.
When the US soccer revolution fizzled out ("you can't buy tradition", Mandaric told The Times), he tried his hand in Europe, settling on Portsmouth FC, bought for £5m in 1988. Mandaric earned a reputation for being "trigger-happy" with managers, getting through four before he met Redknapp in 2002. They clicked, holidaying together and steering Portsmouth into the Premier League.
But it was always a combustible relationship. When Redknapp defected to arch-rival Southampton, it was "a bitter divorce", though they were later reunited. The partnership dissolved for good when Mandaric sold Portsmouth for £47m in 2006 and then bought Leicester City and Sheffield Wednesday.
By then, the taxman was circling. Has this soured his love of British football forever? "I don't know how long it will take to repair the damage to my emotions," he admits. Many clubs are crying out for his cash and turnaround skills. He could start with Rangers.
A game awash with "bonuses, bungs and kickbacks"
Mandaric and Redknapp's acquittal "marks an ignominious end" to an £8m police and HMRC investigation into alleged football corruption "that secured not a single conviction", says Paul Kelso in The Daily Telegraph. It emerges that Mandaric stood trial, with Portsmouth's former CEO Peter Storrie, in a separate case last year, which also saw him cleared.
HMRC insists it has "no regrets" about pursuing the prosecution. But should the case have been brought to court in the first place? Eight million pounds seems a lot to spend to recoup the tax HMRC claimed was payable on the £186,000 Mandaric paid into Redknapp's Monaco bank account.
It is easy to see why the taxman thought the case worth a punt, says Simon Jenkins in The Guardian. The Premier League is awash with "bonuses, bungs, kickbacks and abuse of tax shelters" and Redknapp had, after all, described the payment to a News of the World journalist as a "bonus". The jury accepted his explanation that the cash was, as Mandaric always contended, "seed money for investment" and untaxable.
But even Redknapp's biggest fans may have "gulped" at the revelations about how finance in football works notably the prosecution's claim that, despite earning a £4m salary, he felt entitled to a sizeable "commission" for "selling his own club's star players to rival teams".
HMRC hoped to make examples of the pair, says Andreas Whittam Smith in The Independent. The problem was that they were private individuals and not large companies. Unlike the "sweetheart deals" the taxman strikes with the latter, he is uncompromising in pursuit of the former.
But while the verdict was a relief for the duo, football remains an unaccountable business, "whose practices most other companies would find unacceptable", says Mihir Bose in The Independent on Sunday. If reform ensues, the case will have done "much good".
Investors should buy into the nuclear power renaissance – Merryn Somerset Webb
ETFs are getting active - is your portfolio ready?
