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

Archive for February, 2011

The scarf your mum knitted and competitive balance

Posted by John Beech on February 22, 2011

I haven’t been enjoying lunch lately.  Nothing to do with the food in the university canteen; it’s my daily read of The Guardian I blame.  That Matt Scott in particular had me choking today (1) over my vegetarian shepherds pie, although the oxymoron itself hadn’t put me in the best of moods.  I was so bothered that I’ve created a new tag (‘financial doping’) as a result, and will apply it retrospectively as time permits.

To be fair, Matt is an excellent writer, and its was the implications of what he wrote that vexed me, rather than the content per se.  His lead story was about a new Sport+Markt report on European Football Merchandising (2), a snip, I would imagine at 5,831 euros (no, I kid you not, such is the price of valuable market research in the football sector these days).

Matt reported:

The key finding of the European Football Merchandising Report, a survey of 182 clubs and 10,000 fans, was that United’s global revenues (excluding television income) have fallen by 10% in 12 months. The report’s author, Dr Peter Rohlmann, told Digger this was attributable to the “green-and-gold” campaign against the club’s owners.

“Our data show the club has lost retail revenue from the year 2009 to 2010 by around 10%,” Rohlmann said. “This is due to the fact that all the circumstances about the ownership and the behaviour of the Glazer family were not positive in the minds of Manchester United fans. This has had a direct impact on their merchandising spend.”

Rohlmann did not disclose the figures relating to United’s merchandising income because all disclosures made to Sport+Markt by clubs are on a confidential basis. However, he stated that the report analyses all of United’s self-generated merchandising revenues, along with those of their licensing partners such as Nike.

As United reportedly seek a 50% improvement on their £302.9m, 13-year Nike shirt deal, which expires in 2015, the demonstration of a decline in revenues comes at a bad time for the club. The Premier League leaders’ share of the merchandising market, which is worth €1.2bn for the 10 highest-earning clubs across Europe, has also slipped. They are now ranked sixth, down one place from 2008.

A spokesman for the club disputed Sport+Markt’s findings, saying royalties from the profit-share arrangement with Nike had risen in each of the past four years.

Now let’s just stop and put that into its real perspective.  That’s €1.2bn, or a smidgen over £1bn, or a £100m per club, that the fans of just ten clubs have spent in one year on merchandising.  Rather a far cry from the days when you got your mum to knit you a scarf in your club’s colours, and perhaps splashed out on a rosette on Cup day.

As I said, it’s the implications of this that bother.  Such enormous sums spent on the merchandising of a few clubs results in ensuring that the rich and strong clubs just get richer and stronger.  In other words, it distorts the competitive balance in the respective leagues.  It’s not a million miles from financial doping – the attempt to buy success by distorting the balance of competition.  This is normally in the form of ‘benefactors’ pouring money into clubs à la Manchester City or Chelsea, or, at a different level, Crawley Town.  What’s particularly insidious here is that it’s the fans who are being drawn in to pay for the club’s habit.

There is at least one up-side to this though – the Green and Gold campaign is having the desired impact.  As for me, I’ll stick to wearing my favourite footie T-shirt (available from WSC – who still won’t reciprocate a link on their links page, incidentally).

As this was The Digger column that was provoking this reaction, I should have guessed there would be more to incense me.  Matt also reported:

Any defence whose last line consists of Sébastien Squillaci and Manuel Almunia is vulnerable to the attentions of a journeyman striker picked up from the French fourth division. And Jonathan Téhoué, left, proved it in the FA Cup fifth round against Arsenal. Now Digger can reveal just how valuable the Frenchman’s equaliser is expected to be for Leyton Orient. Arsenal turn over £3m for every home game and under the terms of the FA Cup revenue-sharing agreement Orient will be due 42.5% of the net gate receipts that the Emirates Stadium replay generates.

Although the Gunners have yet to announce ticket prices for the 2 March match, the profit is expected to be in the region of £1.6m, raising £700,000 for the League One club. If the match is televised, it will make close to £1m for Barry Hearn’s club – not bad for one game, considering Orient’s total turnover of £3.3m in the 2008-9 season.

Here there is at least an income to the club related to their performance on the pitch.  Orient certainly deserve some good news after their shabby treatment by the Premier League.  My gripe is not with Orient but rather with the fact that in general the distribution of broadcasting rights has the same result – making the rich clubs even richer and distorting the balance of competition.  And who’s feeding the habit?  It’s the fans again.

Have we really lost all sense of the sporting ethic?  Sadly I think I know the answer to that one.

Posted in Benefactors, Broadcasting rights, Ethics, Financial doping, Merchandising, Revenues | Tagged: , , , , , | 1 Comment »

Did Crawley Town get it right?

Posted by John Beech on February 18, 2011

As the excitement mounts over a certain FA Cup tie, one story in the news seems to have become just a flash in the pan.  However, it strikes me as one that has some puzzling, even disturbing, dimensions that deserve exploring.  And there are a number of unanswered questions.

I’m referring not to the decision of Crawley Town to accept sponsorship from The Sun (1) – I wonder if they would have been so eager if it were Liverpool rather than Manchester United – or to the fact that a significant share holding is owned by as yet unidentified ‘minority offshore shareholders’ (2), but to the infamous Munich video (3).

As Daniel Taylor reported in The Guardian reported (4):

Crawley posted the video on YouTube, as well as the club’s website, without realising that one of the people dancing by the stage frequently makes aircraft gestures to mock the tragedy in 1958 when the plane carrying United’s team crashed on the runway at Munich, killing 23 of the 44 passengers, including eight members of the team, on the way back from a European Cup tie against Red Star Belgrade.

The video was filmed at Crawley’s ground last Tuesday, two days after the 53rd anniversary of the tragedy, and the same man can also be seen simulating a plane crashing into the ground and holding up his fingers to count one, then nine, then five and eight to symbolise 1958.

Clearly the fan’s actions are completely indefensible and go way beyond bad taste and deeply into the offensive.

Taylor also reports:

There were several takes for the video and Crawley have replaced the original one with a version that does not feature the Munich jibes. The club’s information is that the man responsible is a Crystal Palace supporter.

“The people who made the video are absolutely devastated,” Williams [Crawley Town Chief executive] said. “I’ve had Mike Dobie on the phone in tears because none of us had seen it. It was intended as a charity song and we would never condone behaviour like that. We have found another take missing the idiot who was responsible.”

If there were several takes of the video, it strikes me as extraordinary that no-one noticed the fan’s actions and that they weren’t noticed when someone was deciding which take to select for publishing on the website.  Have heads rolled for this incompetence, I wonder?

Interesting too is Crawley Town’s assertion that the person involved was a Crystal Palace supporter.  If it was as simple as that, why then was he present?  Is banning him from Crawley Town a punishment?

He has been banned from Crawley Town for life, a punishment you might well see as a reasonable response.  But it certainly seems inconsistent with the ban handed out to another miscreant in the news recently – the Stevenage Town fan who, on the pitch, punched one of the players of his own team and has received a ban from grounds not for life but for six years (5).  At least one of these two bans seems to me disproportionate.

There is also the issue of what Crawley Town then did – they informed the police.  The ‘fan’ has now been arrested “on suspicion of causing harassment, alarm or distress” (6).  Whether you consider this reasonable or not, it is in marked contrast to the fact that Sky did not report Andy Gray and Richard Keys to the police, nor was there police involvement following this little gem from Bernie Ecclestone (7):

In a lot of ways, terrible to say this I suppose, but apart from the fact that Hitler got taken away and persuaded to do things that I have no idea whether he wanted to do or not, he was in the way that he could command a lot of people, able to get things done.

The latter in particular is surely far more likely to be considered as ‘causing harassment, alarm or distress‘, yet Ecclestone continues unabated as F1 supremo.  Again, I am not in any way defending the actions on the Crawley Town video or Bernie Ecclestone; I am pointing out that there is an inconsistency in the proportionality of response.

The mutual loyalty between ‘fan’ and ‘club’ is a moral minefield.  In this case, club has to accept some responsibility for the ‘fan’s’ actions because they broadcast them, not in a live broadcast but in a chosen take of the video which they produced.  I pose the question though of whether Crawley Town’s responses, through which it is the ‘fan’ who receives all the blame and all the punishment, are entirely appropriate.

Posted in Fans | Tagged: | 3 Comments »

‘Club’, ‘club’ or ‘club’??? A 3Cs model

Posted by John Beech on February 9, 2011

The evidence submitted by the Premier League to the House of Commons Select Committee prompts me to write again on the inherent ambiguity of the word ‘club’.  The evidence contains the following statement:

English football clubs are very resilient with 95% of the clubs in the Football League in 1923 still in existence today and the vast majority within two divisions of their 1923 position

How can you square this with the equally true statement that over half the clubs in the top 92 have suffered insolvency events since 1990, with frequent cases of Administration and a new company being formed by new owners?  The difference, of course, lies in what exactly is meant by the word ‘club’.

In one significant respect it is not a word that should, in any case, be applied to today’s ‘clubs’.  It dates from the nineteenth century when football clubs were indeed members’ clubs, run by and for their members, associations of two or more people united by a common interest or goal, but professionalisation of the game at the end of that century meant that the formation of a limited company became the only practical way to operate.  ‘Members’ disappeared from the equation.  The use of the word ‘club’ persists, however, nearly always at least in the actual name of the company.  A breach of the Trades Description Act perhaps?

If we ignore the meaning ‘members’ clubs’ then there are to me three distinct meanings, and they are all too easily confused.

First there is the social construct.  This is the ‘club’ that fans normally think of as being the club.  It doesn’t actually exist in any formal sense, but is incredibly ‘real’ to its supporters.  It provokes the ‘till I die’ element and the tattoos.  It is built on heritage, culture, mentality and mythology.  To illustrate it, I have used in presentations a photo of the famous John Portsmouth Football Club Westwood.  It is notable indeed for its longevity.  It survives the disappearance and (later) resurrection of a club, and often with slight changes in name – think Aldershot; think Accrington Stanley.  Or conversely, don’t think Wimbledon and MK Dons – it is precisely the construct of ‘Wimbledon’ that to some extent is still contested, a fight over ‘Whose Wimbledon is it anyway?’.  (I’m sure readers don’t need telling the answer by the way!)  This example serves well to show how this social construct is also embedded in location and identity, which gives it its permanence.

In short, it is the club as construct that fans support.  There is no inconsistency other than the use of the word ‘club’ when fans find themselves in conflict with the owners of the ‘club’ (and, remember, there are no longer members of the ‘club’), to use a second meaning – the club as company, a different  meaning.  My loyalty to Pompey – the club as construct – does not in any way automatically transfer to a loyalty to Messrs. Mandaric, Gaydamak, Al Fahim, Al Faraj, Chainrai or indeed Uncle Tom Cobleyski.  I doubt too that John Eastwood has been tempted to have any of their faces as tattoos.

This distinction between club as construct and club as company is an important one.  In particular, it should be considered when desperate directors call on fans to get the collecting boxes out to save the club.  fans will certainly want to save their club as construct, but want to think twice about saving their club as current company, i.e. the current board of directors.

The club as company does not show the longevity, or continuity, that club as construct does.  Frequently the inclusion of a bracketed year in the company’s name is an indication of discontinuity, for example, Middlesbrough Football and Athletic Club (1986) Ltd., Wrexham Football Club (2006) Ltd.  95% of the (football club) companies around in 1923 are most definitely not still in existence!

The third version of club is the club as crew, in other words the players.  The crew has a continuity, but no consistency of membership over time.  The crew is a case of Trigger’s broom, with players coming and going, and sometimes reappearing in an opposition team.  The days of one-club players such as Jimmy Dickinson (Portsmouth) or Jack Charlton (Leeds) are long gone.  As fans we show them our loyalty, but the minute they leave our loyalty tends to evaporate, as we perceive a lack of loyalty to the club as construct on their part.

Three different meanings of the word ‘club’ with quite significant difference in the loyalty we show them, in longevity and in continuity.  Is it just petty academic differences?  I think not.  For fans, it is the construct that matters ultimately.  Directors have been known to have no concern for club as construct; the postings on this blog can certainly suggest some examples.

The important distinction to me is the fans’ view of club as construct as opposed to the directors’ perspective of club as company.  My blood boils when directors use the club as construct to get fans to help them hold on to power in the club as company.  There are certainly situations when fans might well be advised to not donate to collections, as this can just prolong the mismanagement of their beloved club.

Mind you, confusing, at haste, club as construct with club as crew can be a mistake to regret at leisure, as at least one Liverpool fan must now be doing.

Posted in Fans, Governance, Identity, Ownership, Players' careers | Tagged: , , , , | 8 Comments »

A fish rots from the head down

Posted by John Beech on February 4, 2011

Watching the transfer window lurch to its conclusion has not been an edifying experience – I didn’t have high expectations mind you, and my thoughts were possibly coloured by the constantly breaking internet connection at the hotel in Central Europe where I am staying.

Certainly I was slightly surprised to read last Friday, from my position of intermittent ignorance, that Premier League spending had been “restrained” (1) according to Deloitte.  This of course was before the surreal outbreak of activity which saw Torres transferred to Chelsea for some opaque figure, possibly with as high a valuation as £70m (2), and Carroll transferred to Liverpool for £35m (3).  These transfers certainly helped to restore the inflationary trend of the past few years (4).  While an argument can be made in defence of Liverpool’s position, it is not encouraging to find Alan Pardew ‘vowing’ (I hate the word, but am clearly out of line with most journalists) to spend all the money on new players (5).  Much less encouraging was the report in The Times of India that the Torres transfer had been personally funded by Roman Abramovich (6), this at a club that is ‘strong’ despite losses of £70m (7).

Where does all this leave Financial Fair Play and an end to financial doping?  Well, UEFA apparently seem unconcerned, stating that they have “full confidence that the clubs are increasingly aware of the nature of the financial fair play rules, which aim to encourage clubs to balance their incomes and expenses over a period of time covering 4-6 transfer windows” (8).  I can’t honestly say that I share that level of confidence.  It seems to me that some clubs are pushing spending to the limit and are making no attempt to keep the spirit of financial fair play.

The continuing lack of restraint the top of the pyramid simply continues to stretch the vertical integrity of the football pyramid.  The guaranteed payments by the respective leagues show the increasing distortion.  A Premier League club is guaranteed a payment of at least £41m, a Championship club receives just under £5m, and a League 1 club £1m.  No wonder that ‘ambition’ pushes lower level clubs to unsustainable levels of expenditure.  Breaking point has been reached in some cases and is nearby in others.  A cull through my intermittent bookmarks of the last ten days highlights a few cases:

  • Clevedon Town
    The club is facing a mass exodus of players because of their worrying financial situation (9), exacerbated by Jack Frost.
  • Histon
    The club was recently visited by the bailiffs, although was apparently “all just a misunderstanding” (10).
  • Kidderminster Harriers
    An on/off deal to save the club is, as I write, off, and players are unpaid (11).
  • Leyton FC
    The club has been forced to withdraw from the Isthmian League Division 1 North mid-season (12).
  • Plymouth Argyle
    The club is now dependent on survival on funding finally turning up from its absentee Japanese investors (13).  Under threat from HMRC and with other debts, the future of the club is by no means certain.
  • Welling United
    The club has faced allegations that players wages have not been paid on time (14).
  • Windsor and Eton
    A sad case this – the club was in no position to contest a winding up petition from HMRC (15) and is now no more (although there is talk already of a resurrection club).  Whatever criticism may be levelled at the club’s directors, it is difficult to disagree with President Barry Davies’s assertion that “Not enough money in football these days filters down.

It’s the minnows that are really suffering, and will continue to suffer until the highest level of football gets itself in order.

[Normal service should be resumed when I return to the comfort zone of my own wifi system in the early hours of Sunday morning.  This posting is thanks to the University of Applied Sciences in Kufstein, Tirol, Austria.]

Posted in Cashflow, Governance, HMRC, Insolvency, Premier League, Resurrection, Transfers, UEFA | Tagged: , , , , , , , | 7 Comments »

 
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