A Thai monopoly and Leicester's triumph
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A Thai monopoly and Leicester's triumph

A fan cheers during the Leicester-Manchester United match last week. (Photo by Pattarapong Chatpattarasill)
A fan cheers during the Leicester-Manchester United match last week. (Photo by Pattarapong Chatpattarasill)

No good party should be spoiled. As Leicester City's well-earned triumph is being celebrated and admired, accompanied by endless elation and intrigue, the anatomy of this previously unheralded, unsung and unlikely championship team that has just conquered the coveted Premier League title will be talked about long into posterity. It is truly incredible, an unprecedented feat harking back 132 years in LC Football Club's trying and grinding history.

But when the partying has run its course and a fuller perspective coheres and contests for attention, Leicester City's meteoric rise will likely come into question, not for the prowess displayed on the pitch and stratagems crafted in the locker room, but for the financial wherewithal that drove the team from the brink of relegation to the pinnacle of English football. On closer scrutiny, the Thai ownership of Leicester City hails from the money behind the King Power business monopoly.

King Power is not the only monopoly in Thailand, and Leicester City is not the only Premier League team with financing from questionable origins. But Thailand is supposed to be in an era of clean government and good governance, driven by an official anti-corruption campaign that should frown on conflicts of interest, nepotism and cronyism. We should not succumb to celebrating success and big money without due regard to how they come about.

King Power is a family-owned business empire, headed by Vichai Srivaddhanaprabha. Its cash cow is the proprietary concession of Thailand's duty-free business. Duty-free is fundamentally simple. It buys at low prices from outside the country and sells at higher prices in Thailand, and relies on borders and contractual terms to keep foreign and domestic competitors at bay. In addition, a duty-free business also benefits from the government's tax regime. The higher the government's excise tax on imported luxury items, such as cosmetics and wines and spirits, the more attractive duty-free prices become.

A visit to any of King Power outlets will attest to this easy way of milking money from price differentials. Wine and beauty products cost substantially less than what is on offer in regular Thai shops with import duties and/or excise taxes. But if visitors frequent similar duty-free shops in other places, such as Hong Kong or Dubai, King Power's prices are higher. Buying these products from foreign countries would indeed be cheaper but Thailand's customs department ensures that this form of competition with local duty-free is not allowed. With a government licence to pocket the margins between prices outside and inside Thailand, King Power has grown richer and richer over the past two decades.

From its duty-free base, King Power has diversified both vertically and horizontally into related businesses, particularly tourism. Vertically, it has offered house-brand products that are available in its various outlets. Horizontally, it has expanded into the hotel industry. King Power's downtown shopping facilities in Bangkok with lower prices have become fierce competitors to other retailers. Somehow King Power has benefited from outsized bargaining power with Airports of Thailand, the state-owned enterprise that operates the country's six main international airports, commanding ample space for airport pick-up counters.

The business group is now using its know-how in duty-free to expand internationally, including in Japan and Myanmar. Leicester City thus adds immense brand value for King Power, as does its sponsorship of major polo events involving celebrities and royalty. The football income from Leicester City also includes the usual player fees, broadcasting rights, souvenirs and other paraphernalia.

King Power's chief business acumen is in securing such monopolistic duty-free concessions in the first place and then to keep leveraging its myriad revenue streams. This is a murky area where business and politics intersect.

What is factual is that King Power has done well in business over the past decade, and its monopoly concessions are secure, despite the vicissitudes of Thailand's polarised political environment. Mr Vichai was seen as close to the government during the era of former prime minister Thaksin Shinawatra more than a decade ago. But then he was also cosy with the coup regime under Gen Sonthi Boonyaratglin in 2006-07, and similarly close to the two proxy Thaksin administrations in 2008 and the Democrat Party-led government in 2009-10.

With Thaksin's virtual return to power via his sister Yingluck Shinawatra in 2011, Mr Vichai was still going from strength to strength. In the current coup regime, Mr Vichai can count the Defence Ministry permanent secretary and certain senior-most officials in the bureaucracy as classmates from their National Defence College cohort.

The King Power patriarch is a proto uber-tycoon in Thailand, similar to other ultra-wealthy business elite who grew up on monopoly concessions granted by the government and bureaucracy. Thaksin also rose to prominence in this fashion, hitting the big time with a mobile phone monopoly given to his budding telecom business in the late 1980s. Mr Vichai is quiet and apparently much more modest than Thaksin, staying clear of direct involvement in politics. At a basic level, their concessions work the same way, exploiting consumers via price differences and keeping competition away with agreement from bureaucrats and politicians -- not the kind of good governance practices being espoused since the May 2014 coup.

All of this does not take away from Leicester City's phenomenal achievements, from the role of its conductor on the pitch, Claudio Ranieri, to the talent and sheer hard work of its players. Some of them, such as goalkeeper Kasper Schmeichel and striker Jamie Vardy, almost became the also-rans of international football. Much has been made of King Power's Buddhist rituals and the supernatural alignment of stars but the bottom line about Leicester City's success is down to perspiration and teamwork around minds and bodies that were in sync at the right time, reinforced by expert scientific advice and training.

What Leicester has accomplished will withstand the test of time. It will be indelibly etched for years to come that a band of small guys from nowhere won big in an era of over-commercialised sports oiled by money machines like those of Manchester United or Arsenal. Whether and how King Power will be remembered down the road depends on its ability and willingness to diversify and become more transparent and accountable to the consumer markets it has gained so much from.


Pavida Pananond is associate professor of International Business at Thammasat Business School and Thitinan Pongsudhirak is associate professor and director of the Institute of Security and International Studies, Faculty of Political Science, Chulalongkorn University.

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