Showing posts with label debt. Show all posts
Showing posts with label debt. Show all posts

Monday, 26 April 2010

Billionaires, Boardrooms and Bad Debts. What Happened to Football?

Reclaim the Game (RTG) is back. That statement will, most likely, invoke one of two reactions—“who?” or “at last”. If you’re one of the former, and you consider yourself a real football supporter, read on. For the latter, we’re happy to be back with you from a self-imposed exile of just over a year.

Yes, it really is that long since RTG last blogged, twice a week, to try and highlight, debate and share with you, the massive issues facing football. We questioned the problems of true competitiveness in the game, dodgy ownerships of clubs, the highly divisive cult of football celebrity and the perennial woes and moans about the England national team—including making our pessimistic, yet sadly accurate, predictions of England’s failure to reach Euro 2008.

It doesn’t take a genius to work out that all of these problems are still current one year on and, effectively, they stem from the very same thing: the relentless incursion of corporate values and culture into our national sport.

“If football drives business, that's fine; but under no circumstances can we allow business to drive football. Otherwise we're dead. We have to make sure that youngsters taking up the sport do so for the right reasons - because it's a game".

Michel Platini, Four Four Two Magazine, May 2008

Yes friends, Reclaim the Game is back with our own dedicated site to confront these issues head-on. Why? Because we believe they are getting more serious by the day. In fact, they are proving a greater threat than when RTG first started blogging in 2007.

By way of explanation, let RTG tell you about what happened a few Saturdays ago. We were enjoying a quiet beer with a life-long Manchester United supporter, watching Jeff Stelling and his cohorts groaning and yelling their way through the scores and match reports on Soccer Saturday. Charlie Nicholas was the ex-pro talking us through events from Old Trafford, the Man United against Burnley match. It appeared that United’s poor run of form at that time might continue as they struggled to impose themselves on what most thought was an ‘easy three points’ game. “United lack the fluidity and goal threat of recent years”, opined Charlie. When eventually the deadlock was broken in the final quarter, with a Berbatov goal, the United supporter wasn’t ecstatic, nor relieved. He simply said “shit!”

When questioned about his attitude, our United friend simply said that recent events had reminded him of his belief that, eventually, the appalling financial state that United had been allowed to get in, would lead to their downfall. In his opinion, had it not been for the fact that United had just had, arguably, its most successful three years ever, the financial shit would most surely have hit the fan some time ago. In other words, he was resigned to the fact that United would eventually have a meltdown, crushed by an ever increasing burden of debt, and, treated as a cash cow for businessmen with little or no feeling for the club or football. While pleased to see United score what was likely to be a late winner, he felt that it might need a crisis on the field to properly bring to a head the one that was unfolding off it.

As United’s recently announced corporate bond raising exercise highlighted in its (legally required) risk section, everything is up for grabs. The players, the ground and the training complex – everything could be sold to pay back bond holders. Interestingly, there was also an implied admission that United had players who were recruited for their ability to be marketed in their own countries. While this is a topic for another day, think about the implications of what that actually means in an environment that is supposed to be a competitive sport.

Wherever your football-supporting sympathies lie, and whatever you may think about Manchester United, remember, this movement is fighting for football as a sport to be enjoyed, not as a means for a few corporates to line their pockets at our expense. Manchester United is the most profitable football club ever whose revenue dwarfs most others in the game. The very existence of the Premier League owes itself to the popularity of clubs like United. If this can happen to them, it can happen to any club. Like it or not, that threatens the very existence of the game.

"We’ve talked all night about business models, ownership, governance and financial structures. Ownership of a football club comes with a degree of social responsibility. It’s a strand of our DNA. It affects people and communities. North to South, West to East and the very cohesion of those communities are affected by the football clubs within them. Compare football with the banking system, where the so-called free market was found sadly wanting and you can see the future we face in football."

Anon Football Supporter speaking on BBC Radio Debate on Future of Football, March 2010

What is so striking these days is that football discussions in the pub now are less about tactics, selection or players’ abilities. More and more they are centred around profit and loss, chief executives and communication directors. How many supporters do you hear longing for their club to be bought by a rich foreign billionaire? That’s the way many have come to measure likely success – or worse still, even survival!

Unless you are a supporter of Chelsea or Manchester City, your club is threatened by ever increasing transfer fees and player salaries. There’s only so much you, the supporter, can be milked to meet this demand before debt is the only way forward. If your club tries to be prudent, it will find it hard to produce better teams, win trophies or even avoid relegation.

And how long can supporters of even the two aforementioned clubs expect their owners to keep giving hand outs? Wouldn’t most true football supporters be happier if their team won trophies because of the ability of their club to attract support and players through their own business acumen. After all, it was only a tiny minority of French supporters that were happy about how one of their own cheated to get to the World cup.


"There is one certain fact about debt, it has to be repaid or refinanced. The debt mountains are owned and therefore the clubs are owned by either financial institutions - some of which are in terrible health - or very rich owners who are not bound to stay, or not very rich owners who are also not bound to stay. As we all know today, finance institutions have finally become highly risk-aware. They break debt into smaller packages mixed with other more or less toxic debts and sell these impenetrable instruments on. This poses very tangible dangers. Not only is debt at high-risk levels, we are also in a period when transparency lies in an unmarked grave. There is little point in thinking this now affects everyone except football. I predict, especially in today's financial climate, it cannot go on."

FA Chairman, Lord Triesman, October 2008

This is what RTG is really about. Corporate interests are killing our game and putting its very future at grave risk while the powers that run the game sit on their backsides and watch it happen.

RTG does believe that we can turn this around. But it requires debate and, at some stage, action. We don’t profess to know all the answers, but we are keen to continue the debate and raise awareness through these pages. After all, these issues have defeated some of the best minds produced by civilisation: that debate about capitalism versus society – or, if indeed, there is even such a thing called society. RTG believes there is. Sport, and particularly football, is a very important component of our society and it is worth preserving before the money men come to your town and take your club away.

"The fit and proper persons test does not do the job sufficiently robustly. A review is now inevitable because football clubs are not mere commodities. They are the abiding passion of their supporters. We forget that at our peril."

FA Chairman, Lord Triesman, October 2008

Anyone who doubts that could happen, just ask a Portsmouth supporter. Yes, Portsmouth FC, a member of the oft-described “richest league in the world”. Need we say more?

Tuesday, 27 May 2008

All's Well, That End's Well?

At the close of another season, there are many in the game who believe English football has never been in better shape. After all, we’ve had a final day finish to the Premier League for the first time in nine years, the new record-breaking lucrative TV deal kicks in next season and gates are up in all leagues bar the Championship, where they are only slightly down. There was an all-English Champions League final and English teams made up three of the semi-final quartet and, but for the luck of the draw, Arsenal should have claimed the fourth spot. It would appear English football has finally emulated, and surpassed, the Italian and Spanish leagues. OK, we’ve had to accept not qualifying for Euro 2008, but that’s all Steve McClaren’s fault, isn’t it? Now, at least with the appointment of Fabio Capello, a commitment to building the academy at long last and the setting of some actual short and long-term objectives by the FA (debatable though they are), England seem to be going in the right direction.

So why is RTG not sharing in this euphoria? Let’s leave aside, for one minute, the disappointment of watching an Englandless tournament that starts next week. What actually happened during this season 2007/2008?

Before the start, Arsenal were written off by the pundits as likely to drop out of the top four, to be replaced by Spurs. After three games or so, Manchester United were written off for the title because they drew a couple of their opening games and lost to Manchester City. Similar sentiments were expressed about Chelsea following the departure of Mourinho. Whilst RTG does not claim to be the world expert on predictions, we stuck to our guns to reiterate the point made at the end of the 2006/2007 season that the same four would occupy the top four spots yet again. In fact, despite the fact that Manchester United lost five times in the season, there were still 22 points between first place and fifth and 51 points between first and the three relegation spots. So, effectively, nobody caught up despite Sky’s Andy Gray asserting boldly that, “this season the gap is closing”. The truth of the matter is that, due to changes of ownership and pre-mortgaging future TV revenue, a few more clubs had a lot more cash to splash around.

Worryingly, the perception that, nowadays, clubs and especially newly promoted clubs, need to spend heavily to survive, has really grown. Take the case of Sunderland, who spent around £50 million to survive their first season back in the Premier League – just! Recently, even more players have come out to plead the case to their chairmen to open the purse strings. Tim Howard, the Everton goalkeeper, being the latest in an ever-growing list. This, despite David Moyes’ pessimistic, but probably realistic, statement toward the end of the season that there is a glass ceiling above fifth place.

This summer’s close season is predicted to break all records in transfer spending. Some are even predicting that Chelsea will break six figure millions for their transfer budget. To RTG, this is reminiscent of the arms build up, during the cold war, that ultimately bankrupted one of the only two countries that could compete. If, as is widely forecasted by the financial markets and government organisations, there is an economic downturn, are they still going to be able to fill grounds and reach the TV audiences that much of Premier League football is reliant upon? Most clubs have again announced inflation-busting rises in ticket prices for next season but how long will it be before supporters’ wallets are closed to pay for increased food and fuel prices? And when these economic factors kick in, how long will it be before supporters of the majority of teams in the Premier League decide that, watching a team that won't win anything, is not a priority in an ever-decreasing wage packet?

Let’s remind ourselves that the season’s all-English Champions League final was contested between the two most indebted clubs in the history of football. United and Chelsea have a combined total debt of approximately £1.5 billion. Chelsea’s debt would appear to be fairly safe as long as Abramovich maintains his interest. But what of Manchester United? It only takes a slight downturn and some of the fine margins they are trading under may come back to haunt them.