Football Management

Commentary on the management of over 160 English football clubs by Dr John Beech, winner of the FSF Writer of the Year Award 2009/10 Twitter: @JohnBeech Curator of Scoop.it! Football Finance

Opening a can of worms?

Posted by John Beech on March 27, 2013

The varying relationship between football clubs and their local councils I have, in a previous posting, described as a postcode lottery.  It is often a vital one, especially when the stadium sits at the heart of an issue.  I am of course particularly aware of this as a resident of Coventry, where a protracted dispute lingers on with ever more serious potential consequences, as those who follow my news tweets (@JohnBeech) will be aware.  (Even after the High Court hearing yesterday there are unanswered questions, so I’m going to pass on commenting until things are clearer.)

The European Commission is not a body which ever normally prompts me to write about football, but a recent news item had set me thinking.  The report (1) referred to an in-depth investigation by the European Commission into the relationships between five Dutch councils and their local football clubs.  The concern was with whether there had been any breaches of EU law in the way that the councils may possibly have given illegal state aid to the clubs.

The full official report on the EC’s investigation so far can be found here.  The specific findings to date on the five clubs under investigation are given below:

Name of club

Year of measure

Description

NEC (1st league) 2010 Municipality of Nijmegen bought off a claim made by NEC for €2.2 million.
MVV (2nd league) 2010 Municipality of Maastricht waived a claim of € 1.7 million on MVV and bought the stadium for €1.85 million.
Willem II (1st league) 2010 Municipality of Tilburg lowered rent of stadium with retroactive effect, total advantage €2.4 million.
PSV (1st league) 2011 Municipality of Eindhoven bought land from PSV for €48.385 million and leased it back to this club.
FC Den Bosch (2nd league) 2011 Municipality of Den Bosch waived a claim of €1.65 million on FC Den Bosch and bought training facilities for €1.4 million.

It is not the enormity of the potential crimes that set me thinking, rather their almost mundane nature.  In England, were there clubs who would find themselves in similar, if not identical circumstances, inadvertently being guilty of receiving illegal state aid?  On the face of it, the answer is surely ‘yes’.

Certainly there are English clubs which rent their stadiums from the local council as the owner of the stadium.  There are equally certainly others who have received financial support in building new stadiums.

What really set me thinking about all of this was the accidental discovery of a report that Spanish clubs may also be under investigation.  This I came across in the 7th March issue the print edition of the English language version of the respected newspaper El Pais (not, I have to be honest, part of my regular reading material – it was a freebie on a flight from Madrid to Munich).  I’ve been unable to find the report in English on the newspaper’s website (but the original Spanish is here).

The report implied that the Spanish investigation was not taking place in a pubic way – there was an inferred secrecy surrounding it.  Could it be that the football clubs of yet other nations were under investigation?

If such an investigation were (and you’ll note my cautionary use of the subjunctive) to take place with respect to English clubs, which might have cause for concern?

Given my clear admission that I am not a legal expert, for once I would positively encourage readers’ comments.  I would particularly like to hear the views of legal academics who specialise in football clubs (and even post-games Olympic stadiums, and post-Commonwealth-games stadiums!).

Posted in Stadium | Tagged: | 5 Comments »

For once, a personal note

Posted by John Beech on February 4, 2013

Apologies to regular readers for an ‘off topic’ posting, but, to be fair, this is a personal blog.  Rest assured – it will not become a habit.

The sharp-eyed may have noticed a change in the ‘About’ section.  One of those apparently landmark life events occurred at midnight last Thursday – I went from being a full-time employee to ‘senior citizen’ status.  Although I was actually 65 in October, it is only now that I have chosen to switch to being a pensioner.

From Friday, my relationship with Coventry University changed.  I have accepted an Honorary Research Fellowship, which means that I retain my affiliation to the university, but any work I do for them in future is by mutual agreement and subject to individual contract.

Quite what this change will mean in practice remains to be seen.  I guess I’ve been lucky that in recent years my day-job has included what I would actually choose to do by free choice – research football finance and governance.  Not for me a shift to an allotment then!

I plan to continue and perhaps extend my lecturing in Sports and Events Management, public speaking, researching and consultancy.  As I write, I have commitments every month until July in, first, Madrid and then in Kufstein, Austria.  In November I will be spending three weeks lecturing at the Russian International Olympic University in Sochi.

There will of course be significant gaps in my diary, and I plan to focus even more on my particular interest – the role of fans in football governance and club ownership.

How this will affect my blogging is not yet clear.  If things go the way I envisage, I would expect ‘normal service’ to be maintained.  There is unlikely to be a significant increase as I have only ever posted when I felt I had something worthwhile to say.  My tweeting of NEWS items should be unaffected.

My transition from employee to ‘retiree’ should, all in all, be rather less of a transition than for most people.  I see it as an opportunity, and am open to interesting offers!

Posted in Uncategorized | 3 Comments »

‘Part and parcel of the modern game’

Posted by John Beech on January 29, 2013

To develop an old media dictum, a ball boy kicking a footballer, now that would be news.  The Eden Hazard incident (1) was always going to have legs as a story because of its ‘shock horror’ value.  Its inherent symbolism, a Goliath kicking a David, would guarantee that.  As has emerged, there were nuances of the particular incident, which have only added to media interest, which will swell up again when Hazard’s case is heard by the FA.

Not only was it a case of a footballer (at this stage, allegedly) kicking a ball boy, it was a case of a highly, highly paid footballer allegedly kicking a partisan volunteer.  To me this was the true shock horror element.  It epitomised the incongruity of the modern game.  On the one hand there are, in the Premier League, players on enormous salaries, whilst, on the other, vital contributors to the flow of the game, unpaid underage volunteers.  Quite how underage was, of course, an element which added to the story.  The ball ‘boy’ turned out not to be 11 as originally reported, but in fact 17.

Where else but in the modern game would you find a physical confrontation between two people with, to use the language of organisational behaviour, such a phenomenal power distance between them?  Power distance in football, at least as measured by salary, is a real oddity – participants exist on a greatly extended scale, ranging from players, through managers (where else would a manager earn less than his subordinates?), then a considerable distance along the spectrum match officials, all the way to unpaid volunteers.  It is a mixture that is explosive, and it is surprising that it has rarely exploded.

Chelsea’s initial reaction was, not surprisingly, to defend Hazard (2).  I say ‘not surprisingly’, because I am mindful that this was the club that managed to smooth over an incident in which a fire arm was discharged, albeit accidentally, in the workplace injuring an intern (3).

Among the many differing reactions was a condemnation of the ball boy for his attempt to waste time.  This is arguably misplaced, as time-wasting is undoubtedly ‘part and parcel of the modern game’.  It has of course been officially sanctioned since the 1967-68 season by the process of tactical substation.  Out of curiosity I looked at the substitutions that had taken place the previous weekend in the Premier League.

Minutes

No.

0-9

1

10-19

0

20-29

0

30-39

1

40-49

1

50-59

4

60-69

17

70-79

12

80-89

14

90+

2

Even a cursory glance shows a wild skew towards the later stages of a match.  Substitutions because of injury would tend to happen far more evenly, and it is obvious that tactical substitutions are ‘part and parcel of the modern game’.  That particular weekend, all twenty clubs made two substitutions, and twelve of them made a third.

My gripes with this aspect of the modern game are twofold.  Firstly it generates an immense irritation for the fans of one of the two teams, and indeed the players, as the Hazard incident demonstrates well.  In short, it lowers the entertainment value of a match, and tends to enhance the feeling of ‘we wuz robbed’.  Which is my second gripe.  Time-wasting is, in my eyes, unethical from a sporting perspective.  Tactical substitution is all about trying to cement a current score by allowing the opposition less opportunity to compete on the pitch.  It simply doesn’t make sense from the perspectives of sport as sport or of sport as entertainment.  It doesn’t even make sense from the perspective of sport as business to irritate and frustrate half the people who generate the revenues.

It s surely time we moved on from meekly accepting what is ‘part and parcel of the modern game’, started to look at the modern game critically, and call for change to ensure that ‘sport as sport’ is the dominant perspective.  Time in fact for a major and effective review of football governance.  Oh, I forgot… (4)

The time for redefining the modern game is surely badly overdue.  Who though is holding their breath?  Well, for once, I’m just a tiny bit optimistic!

Posted in Ethics, Governance, Organisational culture | Tagged: , , | 1 Comment »

The stadium curse

Posted by John Beech on December 3, 2012

The topics of the stadium which has become separated from its club in ownership terms, and the mixed blessing that a new stadium can bring, are ones that I have covered in previous postings (see postings passim).

The battle over Fratton Park is shortly to be resolved in court (1).  The twisted history of Portsmouth’s financial ills and, indeed, its ownership ills seem to be moving towards a denouement.  Certainly as a member of the Pompey Supporters Trust, and a strong advocate of fan ownership, I want the Trust to ‘win’ the case (they are not a directly participating party, hence the quotation marks).  The case for a much lower valuation is a strong one, and for once I’m optimistic that the result will, for once, go the right way.  If it doesn’t, it will almost certainly mean the liquidation of the club, and the fight to establish a resurrection club will begin in earnest no doubt.

Nearer to home, literally, as I live and work in Coventry, if not metaphorically, the issue of the ownership of the Ricoh is almost as prominent on my radar.

Its origins go back to the heady days when Coventry was enjoying a notably long and unbroken run in the top flight, dating back to 1967 and the managership of Jimmy Hill.  Its then stadium at Highfield Road dated from 1899, and, with a post-Taylor capacity of approximately 23,500, it lacked any of the facilities that a Premier League stadium needed to compete from a business point of view.  It was not a million miles from Fratton Park to be honest.

In 1997, under the Chairmanship of Bryan Richardson, grand plans were announced for an ultra-modern stadium to be built on a brown-field site on the northern edge of the city, close by Junction 3 of the M6 (and adjacent to the Coventry-Nuneaton railway line).  Arena 2000, as it was originally to be called, was to be the envy of many a self-respecting Premier League, with a retractable roof and a removable pitch, making it ideal for other revenue-generating activities such as pop concerts.  What could possibly go wrong?

Well, just about everything:

  • The brown-field site, which had been the site of Foleshill Gasworks, proved problematic.  Contamination of the site required two years of remedial work to make it reusable (2).
  • The club was being operated unsustainably.  By 2003 debts were at a level of £20 million (3) and continued to rise (4) and rise (5).
  • On the pitch, Gordon Strachan failed in the battle to keep the club up in 2001.
  • In 2002 it was only possible for the building project to continue with the formation of a new joint company, Arena Coventry Limited (6), 50% owned by Coventry City Council and 50% by the Alan Edward Higgs Charity, a wealthy local charity for children which has a strong sports interest.
  • Sponsorship of the stadium by local car manufacturer Jaguar, itself under financial pressure, fell through as production of their cars in Coventry ceased (7).

To cut a long and tortuous story short, the stadium was built, but to a significantly lower specification than originally planned (capacity was reduced to 32,500), Ricoh took on the sponsorship, and Championship Coventry played their first game there in 2005.  Not that this proved a particular turning point for the club.  In 2007 a potentially club-saving takeover by American consortium Manhattan Sports Capital Partners fell through (8).  Then, having come within twenty-five minutes of going into Administration, the club was acquired by venture capitalists SISU (9).

Although SISU planned to buy at least the 50% of the shares owned by the Alan Edward Higgs Charity, this has not happened, and the club continues to rent the stadium from Arena Coventry Limited.  From the club’s financial perspective, the stadium is thus a monthly liability rather than the major asset and revenue generator originally envisaged.

Relegation from the Championship to League 1 in 2011 exacerbated an already difficult situation.  Attendances and revenues were hit.  The agreed rent, reported to be £100,000 per month, became significantly unrealistic for a League 1 club to sustain.  Again cutting a long story short, the owners and club have been unable to agree a compromise rent that is realistic, and the club, SISU that is, started a ‘rent strike’ in March last year (10).  Obviously this is a situation that cannot run on indefinitely, and in the last few weeks matters have come to a head, with both sides apparently digging their heels in and maintaining collision course.  On the one hand, Deputy Conservative leader John Blundell says that ACL may have to seek a winding-up order over the unpaid arrears (11), while on the other Coventry City Chief Executive Tim Fisher accuses Arena Coventry Limited of pulling out of talks (12).  Whatever the rights and wrongs of the respective protagonists, some compromise needs to be reached, and rapidly.

As well as the two confrontational tales of Fratton Park and the Ricoh, there is a crumb of comfort on the stadium front at Stockport County’s Edgeley Park (13) where a deal has been announced that will see the club running the stadium at a reduced rent and retaining the revenues from it.  Let’s hope there will positive news to report shortly from both Coventry and Portsmouth.

Posted in Assets, Investors, Ownership, Stadium, Trusts | Tagged: , , , , | 7 Comments »

Pompey – the turning point?

Posted by John Beech on November 20, 2012

I’ve not blogged recently on the Pompey basket case.  Not because there wasn’t much happening, but rather because there has been almost too much happening to stop and take a coherent view.  In fact, the last time I posted was back in March 2011, when I commented “Portsmouth City Football Club Ltd. is dead – long live Portsmouth Football Club (2010) Ltd.!” (1), and it reads today like some historical piece, and at least a tad ironic to boot – the tagline was “Onward and upward at Portsmouth?

The announcement that a conditional sale to the Pompey Supporters Trust has been agreed (2) brings at least some sort of turning point.

That the alternative bid from Balram Chainrai was turned down by the Administrator can only be good news – just how many times can the same person ‘save’ a club?  Trevor Birch’s choice may or may not have been influenced by the blogs of Micah Hall (3), but certainly the lack of response to the questions Micah posed to Tavistock Communications, Portpin’s PR company, spoke volumes.  Micah’s digging deserves an award, and shows how far a fan can go in the bigger picture of financial decision-making.

The fly in the ointment of the sale is, of course, the issue of the value that Chainrai is trying to place on Fratton Park.  Unless he finally decides to bow out gracefully, accepting that he made a very bad business call, the matter will go to court.  With independent valuations at a much lower level, the Trust stands a very good chance of getting the desired result.

There is also the matter of a potential further ten points deduction on coming out of Administration.  Here I am less optimistic.  I fear it will be yet more evidence that the deduction of points is an entirely dysfunctional sanction, but let’s not burn our bridges before we come to them.

All-in-all, there does finally seem to be a light at the end of the tunnel, and this hopefully will prove a turning point in the club’s miserable fortunes.

In the bigger picture, it may well prove to be a turning point in the road to fan ownership of clubs.  It does need to be seen though as one of many turning points, as I’m sure Brentford. Chester, Exeter Wrexham, and Wimbledon fans, and that’s not a definitive list, would be quick to point out.  It’s significance will depend on how well the hybrid model involving High Net Worth Individuals will work in practice.  If it does work, it will doubtless encourage the Supporters Trusts at bigger clubs such as Liverpool, Manchester United and Newcastle.

As a member of the Pompey Supporters Trust, I feel considerably more confident regarding the future than I have for a very long time.  I’ve even put a bottle of bubbly in the fridge, but I’ll not actually open it though until Fratton Park is in the fans’ hands.  The only certainty is the debt of gratitude Pompey fans owe to the PST Board.  Let’s show our gratitude by uniting behind them.

Posted in Community, Fans, Insolvency, Ownership, Points deduction, Sanctions, Stadium, Trusts | Tagged: , , , , , , , | 3 Comments »

Round-up of Season 2011/12

Posted by John Beech on September 8, 2012

The 2011/12 season has been characterised by long-running sagas.  Normally I find myself in an annual review recounting a series of relatively self-contained accounts of the woes which have beset a number of clubs, but many of those listed below are far from resolved scenarios.

The selection is not systematic – it consists of the clubs who have found themselves on my radar screen; further suggestions are welcomed.

Ashford Town
For a club to have its two co-owners feuding (1) was always likely to lead to tears before bed-time.  Add to this a withdrawal from its league in 2010 (2) and there is a clear downward pattern.  This July HMRC issued a winding-up petition  (3).

Billingham Town
A long dispute with Hartlepool over who should pay for improvements to the Billingham stadium (4) had been resolved in December 2010, but in January this year Billingham sought to wind themselves up (5).  However, HMRC then stepped in with their own winding-up petition (6).  The former of the these two seems to have been granted in April (7), but nonetheless the club is still is playing.  Any insight into what has happened would be much appreciated.

Coventry City
Coventry City have faced financial problems since their relegation from the Premier League in 2001, not least because of the development of the Ricoh Arena, a less ambitious materialisation of what had originally been called Arena 2000, originally designed with a retractable roof and a removable pitch (8).  In 2007, in a moment of financial crisis with the club having announced its intention to go into Administration, it was bought by venture capitalists SISU.  Since then SISU has failed to inject enough money to buy back the Rich from the local council and a local charity.
SISU have struggled to find the right balance between economising and maintaining team performance, thus causing complaints from fans.  The financial struggle led to SISU stopping paying the rent for the stadium in April this year in an attempt to force a lower a rental.  The confrontation was resolved in court last month, but details have not been made public (9).

Croydon Athletic
The imprisonment of owner Mazher Majeed for his part in cricket’s ‘spot-fixing scandal’ last November (10) made the club unsustainable.  It was promptly fined and deducted 10 points (11), adding another straw to an already broken back.  Unable to find a new owner, the club withdrew from the Isthmian League, unable to fulfil its fixtures (12).  A resurrection club, AFC Croydon Athletic, has been formed however (13).

Darlington
A sorry tale of desperation and despair, covered in postings passim and on the TwoHundredPerCent website, but eventually one of hope.  In early May fans group Darlington 1883 finally succeeded in taking over the club (14), but at what a price – the club had been forced into exile (15 and 16), and demoted to the Northern League Division 1 (17).  Onwards and upwards!

Harlow Town
Another sorry tale, this time tied up with the owners’ divorce (18 and 19; note the dates).  The club entered a CVA back in September 2009 (20).  Last November the club faced a winding-up order from HMRC (21), but this was finally dismissed in February.  In the same month, new owners had taken over (22).  Any further insight from local readers would be appreciated.

Kettering Town
Not the ultimate car crash – that comes lower down the posting – but certainly one of the most dragged cases.  See postings passim and on the TwoHundredPerCent website.  The season just finished was yet another traumatic one.
Having started the season by going into exile at the former Rushden & Diamonds stadium in Irthlingborough, less than ten miles away, there seems to have been no synergy in attracting new fans, as is reflected in the appearance of fan-owned AFC Rushden & Diamonds, also in exile, at Wellingborough, ground-sharing with Wellingborough Town, less than five miles from Irthlingborough.
Debts built up, and in June the club had to enter a CVA, with debts reported to be £1.2m (23), and HMRC hot on the club’s heels (24).
Meanwhile, want-away owner Imran Ladak had handed over the reins to ‘acting Chairman’ George Rolls, at least, until he was suspended from football for five years by the FA (25).  Ritchie Jeunne took over as Chairman (26), albeit extremely briefly, and now, in a Chainraiesque twist, Ladak is back (27).  The long-suffering Poppies Trust continue to fight on doggedly (28) notwithstanding demotion and a 10 points penalty (29).

Neath
Chased over debts by HMRC and then Barclays (30), the Welsh Premier League club was wound up at the end of May (31).

Northwich Victoria
Another depressing season for the clubs’ fans – evicted from their stadium (32), and then a crazy saga about where they could and couldn’t play (33), and expulsion from the Northern Premier League (34).  You couldn’t make it up.

Plymouth Argyle
It seems some time ago now, but the final chapter in the club’s survival was last October, and so within last season.  Mark Murphy has a neat summary of events here.

Port Vale
Yet another long-running saga – see postings passimandTwoHundredPerCentfor details.  Notable events and non-events during the 2011/12 season were the appointment of an Administrator in March (35), the lack of an attempt to take over by long-time suitor Mo Chaudry (36) and the Administrator’s misplaced faith in Keith Ryder as a potential owner (37).

Portsmouth
Here we go yet again.  The ‘club as company’ has been, more or less continuously, the basket case of English football for the past four decades, and this last season has proved no exception, with the arrest of the latest owners in November (38) and a now familiar drop into Administration in February.  I’m going to hold back in my lengthier comments for the moment as we seem to be on the point of either the start of a new chapter in the saga or dénouement.
Suffice it to say, in the red corner is Balram Chainrai, threatening to ‘save the club again’.  To me this is a bit like ‘giving up smoking’ – you can’t logically apply the phrase on more than one occasion.  In the blue corner is the Pompey Supporters Trust (vested interest declared – I have made a pledge to buy shares, and would urge all Pompey fans to do likewise here)

Prescot Cables
In an act all too rare in English football, the supporter-owned club took the difficult but realistic decision to return to amateur status (39).

Rossendale United
Effectively defunct at the end of the previous season, the club still appeared on my radar screen.  In March the club was still being chased for £37,000 by HMRC (40).  In January the defunct stadium had been gutted by fire (41), and the next month the owner, Andrew Connolly, had announced plans to redevelop the site with 50 new houses (42).  This forced the abandonment of plans for a resurrection club (43)

Rothwell Town
Which is, by the way, five miles from Kettering and thirteen from Irthlingborough.  In May 2010 the club had withdrawn from the Southern League due to financial difficulties (44), and a mooted rescue did not materialise (45).  Last October the club went into Administration (46), and in March the ground was put up for sale (47).  As far as I can make out, there have been no further substantive developments – again any local input would be appreciated.

Stockport County
Yet another season of uncertainty for County (see postings passim and TwoHundredPerCent).  The end of a ground-sharing agreement for Edgeley Park  with Sale Sharks will have added to the financial pressures (48).

Truro City
An interesting case of amazing success on the pitch, driven by a ‘benefactor’, which has proved unsustainable (49).  The club has been pursued by HMRC (50), struggled to play its players (51), and at the start of the current season has had to seek protection through Administration (52).  Two mysteries remain – the involvement of the Salisbury City Chairman, William Harrison-Allison (53), and the sale of the ground (54).  The timing of the latter will guarantee that this story has legs.

Widnes
The joker in this particular pack, destined to be an obscure name that only reappears occasionally in pub quizzes.  It marks an attempt by Steven Vaughan, he of Barrow, Chester and at one time allegedly Wrexham fame (see postings passim), through his son, to create a football club from scratch.  Originally to be called Widnes Town (55), it had to change its name on the not unreasonable grounds that Widens Town already existed (56).  Finding a ground to pay at proved challenging (57) and Stephen Vaughan seems to have opted to weave his own very particular brand of football magic in Malta instead (58).

Very roughly, the clubs involved fall into two groups.  First here are the League clubs.  Here there seems to be a continuing trend of slightly fewer clubs getting into financial difficulty, but those that do do so on a grand scale, and perhaps do so on a kind of cyclical basis – one crisis leads directly to the next one.

The second group, the non-League clubs, frequently display Benefactor  Withdrawal Syndrome (BWS).  The unsustainability of this business model becomes particularly problematic when the ‘benefactor’ has lifted the club up the pyramid to a level where his withdrawal makes survival especially difficult.  Clubs like Crawley Town and Fleetwood are surely vulnerable to BWS, not to mention the League and Premier League clubs of much longer standing who have become benefactor-dependent.

When I started preparing this posting, I did so with as close to a sense of cautious optimism as I manage.  With the natural exception of Portsmouth, surely things were beginning to look a little rosier in the football football finance garden.  Having completed it, I’ve fallen back to more usual mood of pessimism, wondering when club owners are going to get a grip and face reality (full marks to Prescot Cables as an exception).  Not that aren’t some good practice stories out there – Wrexham and Chester provide the most encouraging examples.

At least fifteen years ago I wondered ‘when the bubble was going to burst’.  This has obviously proved the wrong metaphor.  Suggestions for a more appropriate one are welcomed.

Posted in Benefactors, Debts, HMRC, Insolvency, Ownership, Resurrection, Trusts | Tagged: , , , , , , | Leave a Comment »

A little, light UEFAnomics

Posted by John Beech on June 24, 2012

(with doff of cap to my chum Stefan Szymanski and his co-author Simon Kuypers, the second edition of whose fascinating book Soccernomics is just hitting the book stands)

With the Euros now in full swing, much media emphasis has been placed on the cultural differences of the various competing nations.  With justification, there has been much concern placed on racism.  The investigative and selective Panorama programme highlighted this, although a similar programme might have been made about England by Polish or Ukrainian broadcasters, to be met with howls of indignation in England.  Clearly there is an issue here, but the scale of the issue is very difficult to gauge, especially from the UK.  It’s not this issue that I am looking at though, but at another ‘cultural’ one.  Having spent some of my early years living and working in Central Europe, and having made work visits to Eastern Europe in the period leading up to the fall of communism and subsequently – last week I was in Bucharest, and I’m currently in St Petersburg – I’ve found myself wondering whether Eastern Europe had ‘caught up’ with Western Europe in footballing terms.  If the emergence of democracy had resulted in improved social conditions, such as in the areas of education, disposable income, access to sports facilities, etc., now being on a par with Western Europe, this should be reflected in the qualifiers for Euro 2012, and in their FIFA rankings as an indicator of form leading up to the Euros.

Country

FIFA ranking
(July 2012)

FIFA points
(July 2012)

Qualified?

Spain

1

1456

Y

Germany

3

1288

Y

Netherlands

4

1234

Y

England

6

1185

Y

Croatia

8

1053

Y

Denmark

9

1019

Y

Portugal

10

996

Y

Italy

12

977

Y

Russia

13

975

Y

France

14

964

Y

Greece

15

953

Y

Sweden

17

910

Y

Republic of Ireland

18

907

Y

Switzerland

21

868

Norway

26

787

Czech Republic

27

771

Y

Bosnia-Herzegovina

29

756

Slovenia

30

742

Hungary

31

735

Turkey

33

732

Serbia

34

725

Wales

38

658

Slovakia

39

649

Scotland

41

611

Montenegro

50

581

Armenia

51

579

Ukraine

52

572

Y(H)

Romania

52

572

Belgium

54

564

Estonia

57

528

Austria

58

524

Poland

62

518

Y(H)

Belarus

69

497

Finland

75

464

Latvia

76

459

Albania

79

451

Israel

81

427

Lithuania

88

380

Bulgaria

90

373

Georgia

95

359

Macedonia

101

338

Northern Ireland

103

336

Azerbaijan

112

300

Luxembourg

121

283

Faroe Islands

122

279

Cyprus

125

266

Iceland

131

248

Moldova

140

212

Kazakhstan

141

209

Malta

147

195

Liechtenstein

148

177

Andorra

199

15

San Marino

206

0

[Y = Yes; Y(H) = Yes, as host]

The first conclusions that one must come to are that FIFA points correlate pretty strongly with qualification for Euro 2012 (which is hardly surprising as the qualifying games are included in the FIFA points), and that Poland and Ukraine were unlikely to have qualified had they not been the co-hosts.  The Czech Republic were the ‘tail-end Charlies’ in qualifying, and Switzerland, and to a lesser extent Norway, must feel disappointed at not qualifying given their recent form.

The first stage of the Euros, in its round robin format, should also show some correspondence with form (the knock-out stage probably less so).  The following table is sorted by points achieved in the first round at the Euros.

Country

FIFA ranking (July 2012)

FIFA points (July 2012)

Qualified?

First round points

Germany

3

1288

Y

9

Spain

1

1456

Y

7

England

6

1185

Y

7

Portugal

10

996

Y

6

Czech Republic

27

771

Y

6

Italy

12

977

Y

5

Croatia

8

1053

Y

4

Russia

13

975

Y

4

France

14

964

Y

4

Greece

15

953

Y

4

Denmark

9

1019

Y

3

Sweden

17

910

Y

3

Ukraine

52

572

Y(H)

3

Poland

62

518

Y(H)

2

Netherlands

4

1234

Y

0

Republic of Ireland

18

907

Y

0

Netherlands fans have the most right to feel disappointed at their team failing to progress, those of the Czech Republic the most elated.

The first difficulty in setting about looking at the relative strengths of different blocks of countries arises with the fact that the ‘E’ in UEFA is not quite the Europe we learned about in school.  As with the Eurovision Song Contest, the boundaries of Europe have been stretched.  While it may be obvious that UEFA includes Ukraine, it is perhaps less obvious that UEFAland actually stretches as far as the border between Kazakhstan and China.

I have divided the countries into the following blocks: the old Western Europe (WE); the old Eastern Europe (EE); the old Soviet Union (SB); the old Yugoslavia (Yu), which always maintained a position on non-alliance and was a country which always allowed its players to work for Western European clubs; and the others (Oth) who do not fit into the main categories – Israel and Turkey.

To add the ‘UEFAnomics’ dimension, I added a column showing the population of each country based on latest actuals or estimates, and, to allow for size, a column showing the number of FIFA points per million people.  The latter is, of course, a very crude indicator, and does not allow for the anomalies at the ends of the spectrum – the ‘minnows’, where the random talent of individuals has a much stronger relevance to success, and the ‘giants’, where the sheer size of the country makes it perhaps difficult to identify all individual players’ talents.  I’ll make the same disclaimer that Peter Snow used to make for the famous Swingometer – “Remember, it’s just for fun”.

Country

FIFA ranking (July 2012)

FIFA points (July 2012)

Qualified?

First round points

Population

Points / 000,000s of Population

Block

Faroe Islands

122

279

49,267

56,630

WE

Liechtenstein

148

177

36,010

49,153

WE

Montenegro

50

581

625,266

9,292

Yu

Iceland

131

248

320,060

7,749

WE

Luxembourg

121

283

509,074

5,559

WE

Malta

147

195

452,515

4,309

WE

Estonia

57

528

1,340,194

3,940

SB

Slovenia

30

742

2,050,189

3,619

Yu

Cyprus

125

266

838,897

3,171

WE

Croatia

8

1053

Y

4

4,290,612

2,454

Yu

Wales

38

658

3,006,400

2,189

WE

Latvia

76

459

2,217,053

2,070

SB

Republic of Ireland

18

907

Y

0

4,588,252

1,977

WE

Bosnia-Herzegovina

29

756

3,839,737

1,969

Yu

Northern Ireland

103

336

1,799,392

1,867

WE

Denmark

9

1019

Y

3

5,543,453

1,838

WE

Andorra

199

15

84,082

1,784

WE

Armenia

51

579

3,262,200

1,775

SB

Macedonia

101

338

2,055,004

1,645

Yu

Albania

79

451

2,831,741

1,593

EE

Norway

26

787

4,985,870

1,578

WE

Lithuania

88

380

3,187,176

1,192

SB

Slovakia

39

649

5,445,324

1,192

EE

Scotland

41

611

5,254,800

1,163

WE

Switzerland

21

868

7,952,600

1,091

WE

Serbia

34

725

7,120,666

1,018

Yu

Sweden

17

910

Y

3

9,415,295

967

WE

Portugal

10

996

Y

6

10,578,776

942

WE

Finland

75

464

5,404,956

858

WE

Greece

15

953

Y

4

11,305,118

843

WE

Georgia

95

359

4,469,200

803

SB

Hungary

31

735

10,014,324

734

EE

Netherlands

4

1234

Y

0

16,847,007

732

WE

Czech Republic

27

771

Y

6

10,562,214

730

EE

Austria

58

524

8,414,638

623

WE

Moldova

140

212

3,559,500

596

SB

Israel

81

427

7,869,900

543

Oth

Belarus

69

497

9,503,807

523

SB

Belgium

54

564

11,007,020

512

WE

Bulgaria

90

373

7,364,570

506

EE

Azerbaijan

112

300

9,165,000

327

SB

Spain

1

1456

Y

7

46,030,109

316

WE

Romania

52

572

19,042,936

300

EE

England

6

1185

Y

7

52,234,000

227

WE

Italy

12

977

Y

5

60,681,514

161

WE

Germany

3

1288

Y

9

81,799,600

157

WE

France

14

964

Y

4

65350000

148

WE

Poland

62

518

Y(H)

2

38,186,860

136

EE

Kazakhstan

141

209

16,600,000

126

SB

Ukraine

52

572

Y(H)

3

45,888,000

125

SB

Turkey

33

732

74,724,269

98

Oth

Russia

13

975

Y

4

143,030,106

68

SB

San Marino

206

0

31,887

0

WE

Can the Faroe Islanders really be the top achievers?  Well, certainly they are no longer the minnows who could be relied on to roll over and be thrashed, as Scotland infamously discovered.

I find it particularly interesting that the top four achievers who qualified were Croatia, the Republic of Ireland, Denmark and Sweden – all deserve credit for qualifying for the Euros and commiserations for not making it beyond the first round.  Russia, on the other hand, emerge as massive underachievers.

Finally, to return to my original query, I’ve sorted the table by country block (putting Israel and Turkey to one side).

Western Europe:

Country

FIFA ranking (July 2012)

FIFA points (July 2012)

Qualified?

First round points

Population

Points / 000,000s of Population

Faroe Islands

122

279

49,267

56,630

Liechtenstein

148

177

36,010

49,153

Iceland

131

248

320,060

7,749

Luxembourg

121

283

509,074

5,559

Malta

147

195

452,515

4,309

Cyprus

125

266

838,897

3,171

Wales

38

658

3,006,400

2,189

Republic of Ireland

18

907

Y

0

4,588,252

1,977

Northern Ireland

103

336

1,799,392

1,867

Denmark

9

1019

Y

3

5,543,453

1,838

Andorra

199

15

84,082

1,784

Norway

26

787

4,985,870

1,578

Scotland

41

611

5,254,800

1,163

Switzerland

21

868

7,952,600

1,091

Sweden

17

910

Y

3

9,415,295

967

Portugal

10

996

Y

6

10,578,776

942

Finland

75

464

5,404,956

858

Greece

15

953

Y

4

11,305,118

843

Netherlands

4

1234

Y

0

16,847,007

732

Austria

58

524

8,414,638

623

Belgium

54

564

11,007,020

512

Spain

1

1456

Y

7

46,030,109

316

England

6

1185

Y

7

52,234,000

227

Italy

12

977

Y

5

60,681,514

161

Germany

3

1288

Y

9

81,799,600

157

France

14

964

Y

4

65,350,000

148

San Marino

206

0

31,887

0

(Average population of country in Western European block: 15,352,615)

Eastern Europe:

Country

FIFA ranking (July 2012)

FIFA points (July 2012)

Qualified?

First round points

Population

Points / 000,000s of Population

Albania

79

451

2,831,741

1,593

Slovakia

39

649

5,445,324

1,192

Hungary

31

735

10,014,324

734

Czech Republic

27

771

Y

6

10,562,214

730

Bulgaria

90

373

7,364,570

506

Romania

52

572

19,042,936

300

Poland

62

518

Y(H)

2

38,186,860

136

Average population of country in Eastern European block: 13,349,710

Former Soviet block:

Country

FIFA ranking (July 2012)

FIFA points (July 2012)

Qualified?

First round points

Population

Points / 000,000s of Population

Estonia

57

528

1,340,194

3,940

Latvia

76

459

2,217,053

2,070

Armenia

51

579

3,262,200

1,775

Lithuania

88

380

3,187,176

1,192

Georgia

95

359

4,469,200

803

Moldova

140

212

3,559,500

596

Belarus

69

497

9,503,807

523

Azerbaijan

112

300

9,165,000

327

Kazakhstan

141

209

16,600,000

126

Ukraine

52

572

Y(H)

3

45,888,000

125

Russia

13

975

Y

4

143,030,106

68

(Average population of country in former Soviet block: 22,020,203; average population of country in former Soviet block excluding Russia: 9,919,203)

Former Yugoslavia:

Country

FIFA ranking (July 2012)

FIFA points (July 2012)

Qualified?

First round points

Population

Points / 000,000s of Population

Montenegro

50

581

625,266

9,292

Slovenia

30

742

2,050,189

3,619

Croatia

8

1053

Y

4

4,290,612

2,454

Bosnia-Herzegovina

29

756

3,839,737

1,969

Macedonia

101

338

2,055,004

1,645

Serbia

34

725

7,120,666

1,018

(Average population of country in former Yugoslav block: 3,330,246)

The results are not entirely surprising.  With the exceptions of Croatia, the Czech Republic and Russia, all the teams who made it to the Euros through competition were from Western Europe.

Is this an indication that Eastern Europe has not caught up with Western Europe over the last twenty years?  Well, possibly, but there are other reasons, notably the issue of the population of each country.  The next table ranks countries by population.

Country

FIFA ranking (July 2012)

FIFA points (July 2012)

Qualified?

First round points

Population

Points / 000,000s of Population

Block

Russia

13

975

Y

4

143,030,106

68

SB

Germany

3

1288

Y

9

81,799,600

157

WE

Turkey

33

732

74,724,269

98

Oth

France

14

964

Y

4

65350000

148

WE

Italy

12

977

Y

5

60,681,514

161

WE

England

6

1185

Y

7

52,234,000

227

WE

Spain

1

1456

Y

7

46,030,109

316

WE

Ukraine

52

572

Y(H)

3

45,888,000

125

SB

Poland

62

518

Y(H)

2

38,186,860

136

EE

Romania

52

572

19,042,936

300

EE

Netherlands

4

1234

Y

0

16,847,007

732

WE

Kazakhstan

141

209

16,600,000

126

SB

Greece

15

953

Y

4

11,305,118

843

WE

Belgium

54

564

11,007,020

512

WE

Portugal

10

996

Y

6

10,578,776

942

WE

Czech Republic

27

771

Y

6

10,562,214

730

EE

Of the 16 largest countries in Euroland, only Poland (at no. 9 in population), Romania (no.10) and the Czech Republic (no.16) appear in the list, together with Russia (no.1), Ukraine (no.8) and Kazakhstan (no.12) from the old Soviet block, the remainder consisting of nine Western European countries plus Turkey.  Could it be that Eastern Europe suffers in football success from consisting of smaller countries?

Of the 16 largest countries in Euroland, only Poland (at no. 9 in population), Romania (no.10) and the Czech Republic (no.16) appear in the list, together with Russia (no.1), Ukraine (no.8) and Kazakhstan (no.12) from the old Soviet block, the remainder consisting of nine Western European countries plus Turkey.  Could it be that Eastern Europe suffers in football success from consisting of smaller countries?  Consider which countries have actually reached the finals:

Country

Winners

Runners-up

Finalists

Germany

3

3

6

Soviet Union

1

3

4

Spain

2

1

3

Czech Republic

1

1

2

France

2

2

Italy

1

1

2

Denmark

1

1

Greece

1

1

Netherlands

1

1

Yugoslavia

2

2

Belgium

1

1

Portugal

1

1

[Yugoslavia were losing finalists in 1960 and 1968.  A reconstituted Yugoslavia today would have a combined population today of 19,981,474, ranking it as the tenth largest UEFA country by population.]

These musings, of course, prove nothing, but they do suggest that being big helps, and, if you are an Eastern European country, you are generally a bit disadvantaged in this respect.  This has implications for Euro 2016 when the number of countries qualifying will increase from 16 to 24.  Eastern European countries will be no better placed to win, but statistically we should expect to see them make up a greater percentage of the qualifying countries, which will be good for them in terms of exposure and international experience.

As for this evening, well, using UEFA points as a predictor of form, England seem to have the edge.  Maybe I shouldn’t tempt providence though, and, in any case, form is a worse predictor in the knockout stages than in the first round because it is being applied to a single game rather than three games

[Apologies for way the tables appear - WordPress.com is not very helpful at formating tables prepared in Word]

Posted in UEFA | Tagged: | 3 Comments »

So, is it really ‘goodbye Bluebirds, hello Red Dragons’?

Posted by John Beech on June 7, 2012

Like the old joke about anti-social behaviour in a lift, what is happening at Cardiff City is just plain wrong at so many levels.

The root causes of the problem lie in Sam Hammam’s decision to build a new stadium, the resulting deep financial difficulty that Cardiff got themselves into with Langston and the Damoclean debt hanging over the club as a result, and Peter Ridsdale’s decision to involve the club in what was, from the first, described as a ‘strategic marketing alliance’ with Malaysian investors (1).  As he said at the time, “It will be a long-term alliance.  It will include youth development, it will include the opportunity to explore the whole fan base.  It will certainly include sponsorship.  We are already talking to them about shirt sponsorship and stadium naming rights without any definite conclusions at this stage.  We are also talking about their assistance in trying to put this club on the sort of financial footing that we would have liked to dream of when I first arrived at this football club.

Needless to say, there was no public talk of the shirt sponsorship involving what has just been announced.

Indeed, as recently as 10 May Dato Chan Tien Ghee said, in an open letter to fans, wrote:

The new club crest and home colours which were being discussed were intended to demonstrate the symbolic fusion of Welsh and Asian cultures through the use of the colour red and the predominant featuring of a historical Welsh dragon under the Cardiff City FC name. This would have been a springboard for the successful commercialisation and promotion of the club and its brand, driving international revenues and allowing us to fund transfers and success locally, thereby giving the club the best chance of competing at the higher reaches of competition.

This was not meant as a slight in any way shape or form on the club’s traditions or history which we recognise are the lifeblood of any club. It was intended as a positive change to allow us to adapt and embrace the future. Notwithstanding a number of rumours there were no further plans to turn the stadium red or make other radical changes. ” (2)

His use of “were being discussed” and “would have been” must have suggested to many, including myself, that the rebranding of club with a change in shirt colour and change in logo were now a dead duck, a not unreasonable understanding as he continued In the light of the vociferous opposition by a number of the fans to the proposals being considered as expressed directly to our local management and through various media and other outlets, we will not proceed with the proposed change of colour and logo and the team will continue to play in blue at home for the next season with the current badge.

He kept his word for less than a month.

In his open letter he also alluded to the current instability in the club’s business model thus: “It is clear to all concerned that the club simply cannot continue to function and exist in its current state, effectively losing large amounts of money each month, while acquiring more and more debt.”  No one can reasonably disagree with view.

In the debate that has broken out in the last couple of days since the announcement of the decision to do a U-turn (3), or to use the language you might expect from someone engaged in a ‘strategic marketing alliance’ – “Following a comprehensive review of wider supporter feedback via email, letters, media coverage and polls run via the official Supporters Club and Media Wales and as a consequence of the above commitment, Cardiff City Football Club will also reactivate rebranding proposals with a view to exploiting and maximising its brand and commercial revenues in international markets” – attitudes seem to have become polarised into two camps.  On the one hand, what is happening is a Faustian pact which involves selling the soul of the club.  On the other, the club’s survival depends on a business plan that will result in untold wealth pouring in from new fans in the Far East.  As is so often the case, it is difficult to engage in debate regarding the relative merits of these two views because they are based on different meanings of the word ‘club’ (4).  The present attempt at debate assumes that these are two mutually exclusive and opposed views, and that there are no other possibilities, no room for overlap, and no possibility of compromise.  That certainly seems to be the view of the Malaysian investors.  Which raises a number of issues in itself.

It suggests that the future of the club hangs on the fickleness of future supporters in the Far East who a) would support a club in a red shirt but not one in a blue shirt, and that b) providing the club’s shirt is red and has a dragon on it they will support in sufficient numbers to pay off the rest of the ‘Langston debt’, reinvigorate the club’s fortunes (in both senses of the word), and allow the investors to see a return on their investment.  As to a), I think this is simplistic and over-stated.  As to b), I can understand the Malaysian investors looking to the marketing success of Manchester United, but they might better have a word with Balram Chainrai, or those behind the K&K Shonan Management Corporation (5), erstwhile ‘saviours’ of Plymouth Argyle.

What is happening at Cardiff is little short of seeing owners who view a club as a commodity which can have some brand value spray-painted onto it to make it stand out from the rest.  A simple question to Dato Chan Tien Ghee – if the key to your success lies in owning a red club, why didn’t you buy a red one?  If the answer is simply ‘Well, Peter hadn’t got a red one in his briefcase to show us’, God preserve us.

Others have tried this drastic rebranding, with some commercial success.  An obvious example is that of SV Austria Salzburg, which Red Bull bought and rebranded as FC Red Bull Salzburg in 2005, complete with change in club colours and logo.  The new club has enjoyed considerable success since the takeover, but the old club had also, and that is where the comparison begins to break down.  Red Bull bought an already successful club and turned it into an even more successful one.  But in doing so they alienated fans to such an extent they started a new club, which they called SV Austria Salzburg, and which has already climbed, Wimbledon and FC United of Manchester style, from the seventh tier of the Austrian football pyramid to the third tier.

I’ll leave my final thought to the SV Austria Salzburg fans who are reported as having raised this banner in the past few days.

Posted in Cashflow, Debts, Fans, Investors, Marketing, Merchandising, Ownership, Stadium, Strategy | Tagged: , , , , , , , , | 5 Comments »

Deconstructing Peter Lorimer

Posted by John Beech on May 15, 2012

Peter Lorimer’s thoughts on fans being on the boards of football clubs (1) were, at least as reported by the BBC, somewhat confusing and even confused.

Certainly his assertion that he does not envisage a member of the Supporters Trust having a place on the Leeds United board is hardly a surprise given the way that Chairman Bates views fans (2).  In fact, it’s no more ‘news’ than would be David Cameron announcing that he could not envisage an Argentinean having a place on the Port Stanley Parish Council.

As Lorimer said, “People put a lot of money in and they’re entitled to run the club as they want.”  I was reminded of the Ingram brothers and their long-running confrontation with the Yeltz Supporters Trust (3).  To many on the owners’ side of football’s divide, legal ownership is simply about the right to control, and there is no recognition of the fans’ perspective of psychological ownership.  There are exceptions – most notably that at Arsenal, where the notion of being ‘custodian’ rather than ‘owner’ has a long history – but their numbers are few.

In other words, Lorimer simply pointed out that current owners, be they ‘benefactors’ or investors, see Supporters Trusts as the natural enemy, because they want to take over the company running the club.  As Basil Fawlty once put it, a ‘statement of the bleeding obvious’.

What was confused and confusing with his comments were his attempts to add a rationale to the argument – one that doesn’t need to be there, and, in the case of his comments, is a flawed rationale.

He was quoted as saying with respect to having members of the Supporters Trust on the board of a club “For me it’s never worked at any club” and “I just don’t think it works on a whole scale. I’ve seen a number of occasions where fans have ended up running a club and it’s ended in disaster.”.

I can only think of one case that I would consider to have ended in disaster, which was that of Notts County, where the Supporters Trust was all but conned out of ownership (4 and postings passim).  Another case that was not an unmitigated success was that at Bournemouth, with the Supporters Trust having to give up control of the club as it continued to struggle financially (5).

Incidentally, while digging the last link out of my files, I came across the following snippet for The Independent of 12 January 1993.  I reproduce it without comment as it may be of interest to those who followed a recent unsuccessful prosecution:

A PAYMENT of £100,000 made to Harry Redknapp, West Ham’s assistant manager, when he left Bournemouth last summer was paid personally by the chairman of the south coast club. Norman Hayward gave Redknapp the gift when he left the club after nine years in charge. Bournemouth had been swamped with angry calls and letters from fans who threatened a boycott when it was made known how much Redknapp was receiving at a time when the club was fighting for survival with debts of £2.6m. Hayward said yesterday the payment came from his own ”personal funds”.

But I digress.

The Bournemouth case, at least in wider context, is typical of clubs when Supporters Trusts take over – they almost invariably do so in the direst of circumstances.  ‘Benefactors’ and investors take over in a variety of financial circumstances, so any comparison is automatically weighted against the Supporters Trusts being successful.

To be clear though, there are numerous examples of Supporters Trusts turning a club round.  It is easy to fail to appreciate the numbers involved, especially as many cases are further down the pyramid.  Recent data from Supporters Direct shows the following clubs with Supporters Trust shareholdings (%):

AFC Telford United 100
Chester FC 100
Enfield Town 100
FC United of Manchester 100
Gretna 100
Hendon 100
Merthyr Town FC 100
Runcorn 100
Scarborough 100
Fisher FC 100
Clydebank 99.99
Inverness Clachnacuddin 76
AFC Wimbledon 72
Exeter City 63
Brentford 60
Newport (IOW) 51
Chesham United 45
Aylesbury United 38
Clyde 32
Dundee 26
Carlisle United 25.37
Dover Athletic 25.1
Lincoln City 25
York City 25

etc. etc., including Swansea City.  In total, 95 English and Scottish football clubs are run by companies with Supporters Trust shareholders.  68 clubs have a Supporters’ Trust director on the board.  The following are fully supporter-owned: AFC Telford United; AFC Wimbledon; Brentford; Chesham United; Chester FC; Clyde; Clydebank; Crusaders (Northern Ireland); Enfield Town; Exeter City; FC United of Manchester; Fisher FC; Gretna; Hendon; Merthyr Town FC; Newark Town; Prescott Cables; Runcorn; Scarborough; Stenhousemuir; Stirling Albion; and most recently, Lewes and AFC Rushden and Diamonds.  There may well be more – please comment if I’ve missed any from these lists.

This hardly squares with Lorimer’s claim that “it’s never worked at any club”.  More to the point, I wonder whether he really believes that ‘benefactors’ or investors are more likely to make a success of running a club.  My list of clubs that have suffered events is littered with the failures of clubs that were NOT run by Supporters Trusts.

If Peter Lorimer really thinks that traditional owners make a better fist of running clubs than Supporters Trusts, I can only recommend that he starts reading a fascinating new series of postings by Ian King on the twohundredpercent website – The 100 Most Controversial Football Club Owners of All-Time.  It will open his eyes.

Posted in Benefactors, Investors, Ownership, Trusts | Tagged: , , , | 4 Comments »

Why I shall be especially grumpy this Saturday afternoon

Posted by John Beech on April 3, 2012

Football clubs ‘in poor financial health’” a headline on the BBC News website has just screamed (1).  Apparently “many clubs are continuing to spend too much, principally on players’ wages, as they always have done”.  What?  Surely not?  Well, OK, the said headline was in the Business section of the BBC website rather than their Sports section.

Begbies Traynor, who over the years have been Administrators of Chester City, Kingstonian, Lincoln City, Huddersfield Town, Northwich Victoria, Wrexham, Farnborough Town, Crawley Town, Scarborough, Bournemouth, Halifax Town, Southampton, and now Port Vale, have just completed a survey looking at the finances of Football League clubs.

Beneath the trite headline, there was some detail of interest.

Of 68 teams surveyed in those divisions, 13 have signs of distress such as serious court actions against them, including winding-up petitions, late filing of accounts and “serious” negative balances on their balance sheets.

That 19% compares to just 1% in the wider economy, the firm said.

In particular “the financially distressed clubs include three in the Championship, six in League One and four in League Two.”  Obviously the survey had been completed under conditions of confidentiality, so we can only speculate on which these thirteen clubs might be that are under short-term financial pressure, a temptation which I will resist, at least publically.

There are also the clubs which, to me, have potentially longer-term pressures because they operate on business models which may not be sustainable.  Two which have caught my eye with their recent publication of financial results are one likely to be relegated to the Championship, Wigan, and one about to be promoted out of the Football League, Southampton.

At Wigan (2), turnover was reported as up 16% on the previous year, although this, it was conceded, was “mainly due to the increased Premier League broadcasting rights contract”.   Worryingly though, net losses had risen from £4m to £7.2m.

Wigan fans might take some comfort from the fact that:

Net debt including bank borrowings and loans from David Whelan and his family remained virtually unchanged at £72.2m compared with £72.6m in the previous year Since the year end £48m of debt was converted to equity which significantly reduces the Club’s long term liabilities.

Chief Executive Jonathan Jackson commented:

This position would not have been possible without the continued financial support of Chairman, David Whelan. The post year end conversion of debt to equity has significantly strengthened the Club’s financial position and has, to a very significant extent, written off the debt owed to Mr Whelan.  The club cannot continue to make losses every year and we are continuing to shape all aspects of the Club to ensure the long term future remains positive both on and off the pitch.

Perhaps just a hint there that Mr Whelan’s pockets are not bottomless.  It was he who has called for control on players’ wages (3).  It was Wigan that managed to hit a wages/revenues ratio of an utterly unsustainable 208.3% in 2004/05 (posting passim).

Meanwhile over at Southampton another ‘debt for equity’ conversion was reported last Thursday (4).  The estate of former owner Markus Liebherr had ‘invested’ £33m over two seasons but had now converted these loans into shares.  (My reason for putting single quotes around ‘invested’ is that I do not see loans as investments.  If I had pushed my credit cards to their spending limits, would I talk in terms of MasterCard and Visa investing heavily in me?).

This conversion certainly takes the financial pressure off a club which last season made a net loss of £11m in gaining promotion from League 1.

The Liebherr family seem to be in that rare group of benefactors which includes Steve Gibson at Middlesbrough – those prepared to dig into their pockets deep and for the long term.  At Middlesbrough the club is “now free from debt owed to external providers” (5).

Looking along the South Coast from the perspective of a long-suffering Pompey fan (but who is number 1 a football fan rather than a club fan), a club in deep, deep trouble not least because it is still paying some players Premier League wages as it faces the drop, my eye caught on the wages/revenues ratio at Southampton, a very high 93%.

This counter-evidence in the discourse over the financial strengths and weakness of clubs is hardly typical.  While few clubs, correction, no English clubs, are as financially distressed as Portsmouth, the Begbies Traynor report paints a more typical picture.

As Portsmouth head for Southampton this Saturday, to be ‘entertained’ as the media like to phrase it, I’ll not be building my hopes up for a surprise Pompey victory.  The earlier derby this season may have been a draw, but Portsmouth now have a depleted squad, forced upon them by their financial circumstances (and as one might well argue, not before time).  No, I’ll be quietly fuming on the absurdity that the outcome on the pitch will have been determined ultimately by the lottery of how rich and how committed your club’s benefactor has been.  It may be a football match, but it certainly is being played in a context of competitive balance.  One club has been the subject of heavy financial doping, and is paying the price, and one is the subject of financial doping, but has so far kept the ‘habit’ under control.  One is a savage indictment of the failings of the benefactor model, and the other is fortunate enough to be able to say ‘OK so far’.

If any good at all is to come out of the ‘basket case’ circumstances Portsmouth finds itself in, it will be through a new and more sustainable financial model, which is why I fully support the community share offer from the Pompey Supporters Trust.  Post-commercial era football has totally lost it way.  Clubs have become the playthings of sugar daddies, and have, as in the cases of Portsmouth and Southampton, sugar daddies with no local connection.  Ownership has become a lottery, and fans have been betrayed as a consequence.  Football governance looks as it will receive only light-touch reform, but that is insufficient to set it back on a road where the results of games are determined in a context of competitive balance.  Financial Fair Play, whatever the extent to which it will actually prove successful, is a no brainer.  And fan ownership is the only way to ensure clubs are a part of the community whose name they are happy, and proud, to identify themselves by.

This posting is, for the moment, open to comments, but please bear in mind that this is not a fans’ forum – it is a personal blog, which is happy to encourage serious debate.  Trolls will have their comments deleted, as will those who favour the so-called banter of ‘scummers’ and ‘skates’.

Posted in Benefactors, Community, Debts, Financial doping, Governance, Insolvency, Ownership, Wages | Tagged: , , , , , , , | 5 Comments »

The new broken-time payments

Posted by John Beech on March 24, 2012

The decision by UEFA to increase significantly the compensation fee paid to clubs for releasing their players to play in Euro 2012 (1) – for Euro 2008, the total compensation was €43.5 million; for Euro 2012 a total of €55 million had been proposed, but the figure is now to be €100 million (£83.4 million) following pressure from the European Club Association (ECA) (2) – is not entirely unexpected, and not entirely unreasonable. I have my concerns about it though…

Professional football was born on the back of the issue of broken-time payments – compensating amateur players for time they had had to take off from their day-jobs. It’s hardly inconsistent, over a century on, that clubs would seek broken-time payments for players released for international duty.

Nor is it inconsistent that, in a post-commercialised football age, the selection of a player for international duty has little to do with honour and duty, but rather more to do with maximising revenues for the national team.

Certainly international duty, notably with respect to the African Cup of Nations, can have a worrying impact on particular clubs.

There is also the issue of injury while on international duty, although this seems to be resolving itself by the number of declared injuries which somehow heal themselves miraculously quickly once the ‘threat’ of international duty has passed.

By and large then, my view is one from a natural perspective of a mixture of realism and cynicism.

My concern is more at the level of unintended consequences. I’m in the middle of a major research project looking at the concentration in certain European football leagues. Notwithstanding the current difficulties of one of the two clubs, Scottish football, for example, offers no exemplar of healthy competitive balance in its top tier. Since the Scottish Premier League was founded for the 1998/99 season, there has so far been just one single appearance, as runner-up, by a team other than the Auld Firm in the top two at the end of the season (it was Hearts in 2005/06 in case you are scratching your head). The last time another club won the Championship was back in 1983/84 (Alex Ferguson’s Aberdeen), and you have to go back to 1903/04 to find the last season that neither club was winner or runner-up (since you ask, the winner was Third Lanark and the runner-up Hearts; you will be less surprised that Rangers were third and Celtic fourth). While the Auld Firm’s stranglehold on their domestic Championship is the strongest in Europe, the majority of European national leagues suffer from ‘Big 2’, ‘Big 3’ or ‘Big 4’ syndrome (see also posting passim), a fact that is contrary to the principle of maintaining competitive balance within a league.

The reasons that leagues became dominated by a handful of clubs are varied, and the dominance usually dates back to a pre-commercialised era. Our research is beginning to show that the maintenance of dominance in a national league is strongly correlated with the distribution of the broadcasting revenues of the Champions League and the Europa league (and of course their predecessors). In short, rewarding clubs financially for simply being the top clubs reinforces their position, by ensuring that the rich clubs get ever richer, and can hence, afford, the better payers.

As these enhanced UEFA fees to clubs for Euro 2012 will, albeit on a smaller scale, have the same, presumably unintended, outcome, it concerns me that the lack of competitive balance in European national leagues is once again being reinforced, something which is NOT good for the game.

Posted in Revenues, UEFA | Tagged: , | 4 Comments »

The Tax Man cometh…

Posted by John Beech on February 23, 2012

There can be no doubt that the abbreviation HMRC is one which has hit pretty well every football fan’s radar screen recently.  There have been the two big Administrations at Portsmouth and Rangers.  Bubbling away in the background is not only the issue of whether clubs’ use of Employment Benefit Trusts constitutes tax evasion (and is hence illegal) or merely tax avoidance (perfectly legal), but also HMRC’s challenge to the legality of the Football Creditors Rule, which has seen it take substantial hits in its revenues since the Crown lost its ‘preferential creditor’ status in 2003, which resulted in ‘football creditors’ coming higher in the ‘pecking order’ when things went pear-shaped.  At present clubs in Administration face an obstructive HMRC when seeking to enter a CVA which would see HMRC being paid anything less than 100p in the pound.

Has the general approach of HMRC to football clubs changed over time?  It states its position pretty consistently, as it did thus with respect to Rangers: “We can’t discuss specific cases for legal reasons, but tax that has been deducted at source from the wages of players and support staff, such as ground keepers and physios, must be paid over to HMRC.  Any business that fails to meet that basic legal requirement puts the survival of the business at risk.

So, just what is HMRC’s track record over time in pursuing football clubs?  I’ve been researching its propensity to ‘present a winding-up petition’ against a football club, and how it’s changed in terms of frequency over the period since 1960.  Some of the outcomes are unsurprising, but others may be a little surprising.

The full data set is available here, and I will endeavour to keep this list up-to-date.  It covers all English and Welsh clubs, but not Scottish clubs, and has been developed by searching the London Gazette database.

Here are some thoughts on what I found:

  • HMRC and its predecessors (the Inland Revenue, who were responsible for collecting direct taxes such as income tax [including PAYE] and National Insurance contributions, and HM Customs & Excise, who were responsible for collecting indirect taxes, notably VAT, merged to form HMRC in April 2005) seem to have shown little favour towards League clubs, and even less to non-league clubs.
    In total since 1960, they have presented a total of 181 winding-up petitions, against League clubs on 58 occasions, and against non-league clubs on 123 occasions.
  • The frequency has varied considerably.  There were only two petitions presented in the 1960s, whereas in the peak decade to date, the 1990s, 62 were presented.
    (Images can be enlarged by clicking on them)
  • A year-by-year plot of petitions since 1990 reveal a more nuanced pattern.  After a burst of activity in 2002, HMRC seem to have eased off presenting petitions until taking up the challenge again seriously in 2009, with a greater proportion of League clubs being the object of HMRC’s interest.
  • My impression from the list of clubs involved is that there is something of a North/South divide, with a disproportionate number of Southern clubs in the list
  • HMRC has complained of ‘serial offenders’ and there is some evidence of this.  Bournemouth were on the receiving end of 5 petitions between 1995 and 1997; Chester City received 6 between 1986 and 2009; Crawley Town received 6 between 1973 and 2010; Doncaster Rovers received 4 between 1988 and 1994; Hartlepool United received 7 between 1982 and 1993; Hull City received 6 between 1992 and 2000; Margate received 4 between 2001 and 2010; Northwich Victoria received 4 between 1983 and 2008; Southend United received 4 between 2000 and 2011; and Stockport County received 4 between 1975 and 1999.

Looking at just the list of Winding-Up petitions of course tells only part of the story.  The size of the debt to the Tax Man has grown astronomically.  When Accrington Stanley withdrew from the Football League in 1962, the club owed the Tax Man roughly £4,500; Portsmouth owed HMRC approximately £11 million when they sought the protection of Administration in 2010.  The interesting question is why did HMRC hold back in the period up to 2009 and allow such large debts to grow.  It’s not as if they have a track record in the longer term of being tolerant with football clubs.

One petition in the list intrigues me, and I would appreciate any input from readers who know of the circumstances: in 1993 Customs & Excise presented a petition against Gorton and District Sunday League Football Club, and the club was indeed wound up as a result.

Posted in Debts, HMRC, Insolvency | Tagged: , , | 5 Comments »

That feeling of déjà vu at Pompey, all over again

Posted by John Beech on February 17, 2012

Portsmouth’s return to Administration today (1) for the second time in a smidgen under two years speaks volumes, especially coming in the week that Rangers, a rather more iconic club, suffered the ignominy of Administration too (2).  High profile those these events are, the phenomenon of financial problems is not confined to te top clubs.  This season so far we have also seen Darlington go into Administration, as have Rothwell Town way down the pyramid.  Prescot Cables have returned to amateur status mid-season, and poor Croydon Athletic have disappeared, at least for the moment.  (A full listing of English football clubs’ insolvency events in the modern era is available here; a warning, it does not make pleasant reading)

It would be easy to dismiss the case of Portsmouth as a special case (especially bad, that is).  The ‘club as company‘ has a long and shameful tradition.  It was formed in 1898 to replace the previous club, Royal Artillery, who were disbanded because of that delightful euphemism ‘financial irregularities’ – payments to players which were blatantly undermining their supposed amateur status.  Funny how history can return to haunt you.

By 1912 the owners were already in deep financial trouble, and the company was voluntarily wound up and promptly reformed, thus wiping out its debts (3), a procedure which is no longer legal, but was far from rare in those days.  The mind boggles at how football clubs today would behave if it were still a legal option like this open to them.  To use a ‘Partridgeism’, the club ‘bounced back’, entering the Football League in 1920, winning the FA Cup in 1939, and the old First Division title in 1949 and 1950.

The road was only downhill after that, obviously excepting the recent relatively spell in the Premier League and FA Cup win.  Sporting decline was followed by financial decline.  A series of owner/benefactors who failed in various degrees is a familiar mantra to Pompey fans – since 1973 the list reads John Deacon, Jim Gregory, Terry Venables, Martin Gregory, Milan Mandric, Sacha Gaydamak, Sulaiman Al Fahim, Ali Al Faraj, Balram Chainrai, and Vladimir Antonov.  Whatever criticisms can be made about them individually, the lack of any continuity has hardly been good for the club.  And there will doubtless be further criticism to come as the unravelling enquiries of both this period of Administration, and the previous one, tease more and more uncomfortable detail out of the wood work.

Of the 200+ files I have on English football clubs, Portsmouth’s is the biggest.  It would be convenient to say that this is because I am Pompey fan.  That would not  though be honest.  It’s because they have a spectacularly aberrant history of ownership and mismanagement.  ‘Spectacularly aberrant’ from normal business, that is.  Merely ‘worse than most’ with respect to other football clubs.

The themes which have dogged Portsmouth occur throughout my files, and all over this blog:

  • Owners who did not have deep enough pockets, and yet push clubs further into unsustainable financial positions
  • Owners unlikely to win ‘Ethical Businessman of the Year’ competitions
  • Owners who have clearly not read the dictum of Mr Micawber in David Copperfield (Charles Dickens was born in Portsmouth, so the reference is particularly appropriate)
  • Repeated failure to pay HMRC on time

Portsmouth’s latest ‘misadventure’ should provide a wake-up call.  But then so so should their one two years ago.  Will the governing bodies just hit ‘snooze’ again?  I like to think not, but, would you believe it, I’m not optimistic.

I can’t argue that the imposition of the Financial Fair Play protocol, or effective club licensing ,or an effective Fit and Proper Person Test would necessarily have avoided Pompey’s current discomfort.  Without them though, another round of insolvency events is inevitable.  It doesn’t have to be that way and nor should it be.

Surely the football world must finally wake up to sorting out, as its highest priority, its financial messes, by attacking the causes rather than the symptoms  rather than stressing over the number of English clubs left in European competition or who the next England manager should be.

Posted in Benefactors, Ethics, Financial doping, Fit and Proper Person tests, Globetrotterisation, Governance, History, Insolvency, Ownership | Tagged: , , , , , , , , | 4 Comments »

That elusive number of insolvent football clubs

Posted by John Beech on February 13, 2012

Today’s breaking news makes for grim reading.

First there are the reports that Portsmouth is to go into Administration again (1).  With the club’s bank account now frozen, players and other staff unpaid, and an early parachute payment in the offing, this comes as no great surprise.

Meanwhile, North of the Border, it is reported that Rangers are declaring their intention of going into Administration (2).  In theory at least, Administration might yet be avoided – they might manage to negotiate a deal with their creditors, but this seems unlikely as it involves HMRC and a sum of £49m , or they might find a new owner in the meantime (which seems almost as unlikely).  The process of ‘declaring intent ‘ provides a company with temporary protection from creditors.  Two precedents from English football spring to mind: Plymouth Argyle (who did subsequently go into Administration) and Coventry City in 2007 (who found a buyer in the nick of time, thus avoiding Administration).

Those interested in the complexities of what has been going on at Rangers should follow the excellent Rangerstaxcase blog.

It was the case of Coventry City that prompted me back then to find what proved to be an elusive number – the number of top flight clubs that had gone into Administration.  So elusive did it prove to be that I started compiling relevant data in an attempt to produce it myself.  The results of this research I have now added to the blog on a new page No. of Clubs, accessible by clicking on the link or from the top menu.  Please read the bumf at the top of that page before diving in!

Posted in Insolvency | Tagged: | 2 Comments »

The Magic of Football – still there in the Cups?

Posted by John Beech on January 27, 2012

It’s increasingly difficult to see any magic in the beautiful game other than black magic, especially when you look at it from a financial perspective.  You only need to think of the narrow escapes at Plymouth and Wrexham recently, and both Portsmouth and Darlington are standing on the edge of the precipice.

The Cups may be a different matter however.  Recently Louise Taylor suggested that the FA Cup Third Round had failed to cast any magic on fans (1).  Below I’ve taken her data and, in italics, added some more.  It struck me that whatever magic there might be would be associated with the possibility of a giant-killing, or, as the BBC have started to call it, a ‘cupset’.  Did the possibility of a cupset bring out the fans, especially in the case where the ‘minnow’ was playing at home.

Home Club

Tier

Away Club

Tier

Away – Home Tier

FA Cup attendance

Average league attendance

Difference

MK Dons

3

QPR

1

-2

19,506

8,217

11,289

Swindon Town

4

Wigan

1

-3

13,238

7,887

5,351

Bristol Rovers

4

Aston Villa

1

-3

10,883

6,122

4,761

Gillingham

4

Stoke

1

-3

9,872

5,482

4,390

Macclesfield Town

4

Bolton

1

-3

5,757

2,222

3,535

Fleetwood Town

5

Blackpool

2

-3

5,092

1,781

3,311

Dagenham & Redbridge

4

Millwall

2

-2

3,396

2,161

1,235

Crawley Town

4

Bristol City

2

-2

3,779

3,181

598

Brighton and Hove Albion

2

Wrexham

5

3

18,573

18,595

-22

Chelsea

1

Portsmouth

2

1

41,529

41,632

-103

Manchester City

1

Manchester United

1

0

46,808

47,013

-205

Doncaster Rovers

2

Notts County

3

1

9,535

9,750

-215

Peterborough United

2

Sunderland

1

-1

8,954

9,233

-279

Liverpool

1

Oldham

3

2

44,556

44,857

-301

Tottenham Hotspur

1

Cheltenham

4

3

35,672

36,071

-399

Sheffield Wednesday

3

West Ham

2

-1

17,916

20,041

-2,125

Barnsley

2

Swansea

1

-1

7,380

10,719

-3,339

Norwich City

1

Burnley

2

1

22,898

26,516

-3,618

Nottingham Forest

2

Leicester

2

0

18,477

22,224

-3,747

Watford

2

Bradford

4

2

8,935

12,731

-3,796

Birmingham City

2

Wolverhampton

1

-1

14,594

18,682

-4,088

Fulham

1

Charlton

3

2

20,317

25,315

-4,998

Middlesbrough

2

Shrewsbury

4

2

12,631

18,164

-5,533

Coventry City

2

Southampton

2

0

9,000

14,813

-5,813

Everton

1

Tamworth

5

4

27,564

33,407

-5,843

Reading

2

Stevenage

3

1

11,295

18,554

-7,259

Sheffield United

3

Salisbury

6

3

10,488

18,559

-8,071

Hull City

2

Ipswich

2

0

10,246

18,922

-8,676

West Bromwich Albion

1

Cardiff

2

1

12,454

24,794

-12,340

Derby County

2

Crystal Palace

2

0

10,113

26,133

-16,020

Newcastle United

1

Blackburn

1

0

30,876

48,866,

-17,990

Totals

2.29

2.32

1

522,334

602,644

-80,310

I have added the away teams, the tiers in which each team plays, and the difference between the tiers at each game.  The list has been sorted into an order from the greatest increase to the greatest drop in the number attending.

The results are not entirely surprising.  Where the home team is two or more divisions below the away team, the fans have turned out in extra numbers.  At games like Everton v. Tamworth and Sheffield United v. Salisbury, the home fans staying away outnumber any boost in the ‘minnow’s’ away following.  The two biggest differences are at matches between clubs in the same division.  Overall there is a fairly clear picture of the FA Cup lacking magic except when a home team might just cause a cupset.

Below is a graphic representation with a rather unscientific trendline.

It’s unscientific in that there are many variables at work here, including, for example, the distance away fans have to travel, and, in any case we are dealing with fairly small numbers of games.

One difficulty is that a scientific look at this phenomenon would require details of ticket allocations for away fans (and implicitly therefore home fans, given that stadium capacity is known) and the percentage of these which were sold.  Does anyone know a single source on the internet which gives these?  This would be an interesting topic for research as the outcomes would provide a basis for a scientific allocation of tickets for away fans.

Posted in Community, Fans | Tagged: , | Leave a Comment »

 
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