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

Posts Tagged ‘Governance’

‘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 »

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 »

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 »

Pompey and the potential for points deduction

Posted by John Beech on November 29, 2011

Having carefully got through as far as Prescot Cables in the first half of my round up of clubs in trouble below the Premier League, I had rather assumed that I could at least get Part 2 published before returning to the subject of Portsmouth.  Clearly that was not meant to be.  So here are some first thoughts on what will be an ongoing saga of, well, Pompeyesque proportions.

For most fans there will be the question of points deduction, a matter for the Football League.  As it stands, at least for the moment, the company which owns Pompey, Portsmouth Football Club (2010) Limited, is not in Administration, as it is at pains to point out in its official statement (1); it is the parent company, Convers Sports Initiative plc, which is (2).  It is the issue of how closely the two companies are linked that the Football League will have to rule on.

The obvious precedent to spring to mind is that of deadly rivals Southampton, where the decision was that the company owning the club and the parent company were so intimately involved that the club should suffer points deduction on account of the parent company going into Administration.  It’s worth quoting from the Football League’s statement (3) at the time:

The [Grant Thornton] report [on which the decision was based] concluded, among other things, that:

1.The Holding Company has no income of its own; all revenue and expenditure is derived from the operation of Southampton Football Club Limited (SFC) and the associated stadium company.

2.The Holding company is solvent in its own right. It only becomes insolvent when account is taken of the position of SFC and the other group companies.

3.The three entities (the Holding Company, SFC and the stadium company) comprise the football club and they are inextricably linked as one economic entity.

If we compare the situation at Southampton then with the situation at Portsmouth now, there are major differences.  At Portsmouth currently:

  1. CSI does have income of its own and definitely does not derive all its income and expenditure from Portsmouth Football Club (2010)
  2. CSI is insolvent in its own right; its insolvency does not arise because of any insolvency on the part of Portsmouth Football Club (2010)  [I grant you that it’s hardly a cash cow, but it’s not Portsmouth that has brought CSI down]
  3. CSI and Portsmouth Football Club (2010) are not inextricably linked as one economic entity; CSI’s website shows their structure (4) to consist of a number of unrelated subsidiaries: Boom!, DGB Convers, GP Week, Leaders, Power Play Golf, Sportpost and WRC, as well as Portsmouth FC

On this basis, there is a strong case that CSI’s Administration should not result in a points deduction for Portsmouth.

If Portsmouth Football Club (2010) should itself seek protection by going into Administration, that would be entirely different matter, and points deduction would without doubt be incurred.  The Football League has no precise published tariff, but I would expect something in the region of 17 to 20 points.  How likely is that to happen?  The Administrators of CSI will almost certainly be looking to sell off its components, and Portsmouth is in effect already ‘on the market’.  With the added complication of Portpin and Balram Chainrai’s involvement in the insolvency of CSI though, it’s not a club that will be fighting off suitors.  In the meantime, the club “has funding in place for the short term, but will now be seeking alternative investment for its longer-term requirements”.

Not a very encouraging situation, but what’s new for Pompey fans?

[For new readers, I make clear that I am Portsmouth fan and a member of the Pompey Supporters Trust.  The thoughts above are, nonetheless,  my thoughts from the perspective of an academic researcher.]

Posted in Football League, Governance, Insolvency, Points deduction | Tagged: , , , | 16 Comments »

A not quite 24 carat golden age of football ethics?

Posted by John Beech on November 16, 2011

Received wisdom seems to be that, once the baton of running FIFA was passed on from safe and reliable English hands, there was a rapid descent into a quagmire of unethical goings on.  Even Uncle Sepp himself now admits that FIFA “has had a rough time of late” and concedes that there is now “the need for change and the urgent need for sweeping reforms” (1).  He concludes “FIFA remains committed to walking the walk and won’t get stuck in solely talking the talk. By December, this will become clear for all to see. Until then, I invite everybody to bear with us so that we can clean house and come back to the public with facts that allow FIFA to enter a new decade of doing business. And never again revert to doing “business as usual”.”  Whether he himself decides to ‘walk the walk’ is anybody’s guess.

I’m just back from a work trip and have been reading en route Sir Stanley Rous’s autobiography Football Worlds, published in 1978, a couple of years after he had been replaced as FIFA’s President by João Havelange.  A couple of passages particularly caught my eye as they reveal that back then all was not 100% squeaky clean.  Consider this first quote:

In Nasser’s day I was once present to watch a game there when the Sudan played Egypt in the final of a competition.  My host was General Mostafa, later Vice-President of FIFA, and an enthusiastic crowd of 110,000 worked themselves to a pitch of excitement when the winner had to be drawn by lot after the game had ended with the scores level.  The referee was blindfolded before making the draw, and a great roar of cheers greeted his pulling out the slip with Egypt on it.

When the General returned from the field I congratulated him on the luck of the draw.  He replied that there was no luck involved as, by agreement, both pieces of paper had Egypt written on them.  He may have been joking, but the Sudanese officials showed no sign of disappointment and the result made the day for Nasser and the spectators.

This, for some reason, brought to mind a different recent occasion when, rather than two identical slips of paper, a voting card had only one choice on it.

Sir Stanley was not averse to telling a story against himself.  He writes this from his days refereeing, concerning a game between Millwall and Charlton:

At a crucial point in the game I saw a defender’s hand fist the ball away in a goalmouth melee.  As I blew the whistle for a penalty the players untangled themselves and looked at me in surprise.  It was then that I realised that it was the goalkeeper, not a full-back, who had punched the ball.  So I walked past the penalty spot, past the goalposts, to the edge of the crowd and called at the top of my voice: ‘If the man with the whistle blows it again I will have him removed.’  Then I restarted the game by dropping the ball and the mistake was retrieved without disaster.

A more innocent age perhaps, or perhaps not, than the kind of confessions that can appear in autobiographies today (2) – a reference to Matt Le Tissier, to save you clicking through.

Overall, one would have to conclude that, compared to today’s ills, it was generally a much more ethical football scene, but not some Halcyon era of perfect ethics.

Posted in Ethics, FIFA, Governance, History | Tagged: , , , | 5 Comments »

A hint of significant change at FIFA?

Posted by John Beech on October 8, 2011

Well, don’t hold your breath, but there is just a possibility.

The conferences I usually attend are for academics, and any confrontation is usually so subtle that it needs to be decoded.  Which is one reason I particularly enjoy the two-yearly Play the Game conferences, with their exciting mix of investigative journalists, academics and sports practitioners.  The latter group normally does not include anyone from FIFA, but the conference which has just finished in Köln proved to be a notable exception.  The Play the Game organisation, for those unfamiliar with it, describes itself as “an international conference and communication initiative aiming to strengthen the ethical foundation of sport and promote democracy, transparency and freedom of expression in sport” (1).

Sepp Blatter had been invited, but with stunning predictability he turned the invitation down “due to a great amount of similar demands” (2).  If he meant demands that he face his critics over the way FIFA is mismanaged, that’s probably understandable.

On Thursday, however, in a joint session with presentations by the indominatable Andrew Jennings, long-time scourge of FIFA, and his opposite number in Germany, Jens Weinreich, who should be in the audience but Walter di Georgio, FIFA’s newly appointed Director of Communications (now there’s a job I wouldn’t want!), sitting just two rows behind me.

Confrontation was inevitable, especially when Jennings, produced a list of what he said was 167 bribes recorded by the Zug Prosecutor’s office, which he (Jennings) is fighting to get published (3).  Di Gregorio took understandable exception to Jennings’s assertion that FIFA had the classic characteristics of a Mafia family.  Worse was to come when Jennings and di Georgio clashed over the reason for Jennings being banned by FIFA from its press conferences; this concluded with Jennings shouting “Liar!” from the podium.

It will be interesting to see whether di Georgio comes good on his offer to speak to the next Play the Game conference in 2013.  Apart from anything else, he will no doubt have to survive a post-conference debriefing with Blatter, which I’d love to be a fly-on-the-wall at!  Assuming Jennings is finally successful in publishing the Zug court documents – there is a slow Swiss legal process to go through yet – we will have to see whether Blatter survives.

Among other football-related topics discussed at the conference was a two-hour session entitled Financial fair play, or football’s foolish plan, chaired by Supporters Direct Europe’s Antonia Hagemann.  Speakers were, in order, Sefton Perry (UEFA’s Benchmarking Manger for Club Licensing), Professor Stefan Szymanski, myself, and Christian Müller (until recently the Chief Financial Officer of the German Football Association [DFL]).  The four presentations and the following discussion can be viewed here, following an incongruous 30 seconds beer advertisement.  My own contribution is at about 40 minutes in.

The final session of the conference turned to a key issue for all sports today, that of ‘quis custodiet ipsos custodies?‘ or ‘who guards the guardians?’.  The outcome was a call to the IOC to gather all stakeholders to draft a code for good governance in sport (4).  While I welcome such a move in general, I have a problem with it being under the auspices of the IOC.  How likely is this to find a positive response from ‘barely Olympic sports’ such as football and tennis, and non-Olympic sports such as F1, the rugby codes, North American sports and golf?  At the heart of this is the fact that the major professional sports do not fit well with the sports already engaged with the IOC.  And of course there is, for English football, the whole ‘Home Nations’ issue, an already touchy subject.

Posted in FIFA, Governance, UEFA | Tagged: , , | 1 Comment »

The devil’s work

Posted by John Beech on September 29, 2011

For someone who has no great love of the media, Sir Alex certainly knows how to get himself in the headlines.  His latest claim is that football has sold its soul to the TV ‘devil’ (1).  Attractive though his choice of metaphor is, with the vision it generates of a BSkyB ‘evil empire’, it just doesn’t really work when his other complaints he makes are vectored in.

He complains that the broadcasters have too much power, especially with regard to their influence on fixture lists.  But isn’t that inevitable when you sell your soul to the devil?  It’s exactly that power that the ‘devil’ broadcasters have bought.  And I don’t recall that the standard ‘devil buys soul’ contract allows for renegotiation of the terms.

He complains too that the broadcasters haven’t paid enough for the rights.  That may or may not be the case, and Sir Alex is not being unreasonable in making the suggestion as it is the Premier League who ‘sold their soul’ rather than Manchester United, Sir Alex’s club.

The Premier League though do not of course distribute broadcasting rights to clubs equally, and Manchester United does rather nicely thank you compared with the weaker clubs in the league (who, to maintain competitive balance, should if anything get more than Manchester United, rather than less).

On the whole, I’m not unsympathetic to some of the points he makes, but, in his case, methinks he doth protest too much

Posted in Broadcasting rights, Governance, Premier League | Tagged: , , | 5 Comments »

Just how slow can a car crash be?

Posted by John Beech on July 3, 2011

On Tuesday we were told that the long-running Plymouth Argyle saga was on the verge of taking a significant turn according to Administrator Brendan Guilfoyle: “at a meeting with the preferred bidder held today, Tuesday, June 21, 2011, the terms of a formal sale and purchase agreement were agreed by both parties” (1).  These terms of course include the separation of ownership of the stadium and the club, invariably bad news for a club.

On Wednesday Peter Ridsdale, as ever the Spinmeister, announced “Our objective is to have [the deal] go through by the end of this week” (2), which, in my book at least, promptly increased the odds on this actually happening.

Sure enough, as I write, no deal has yet been announced.  Nor will any imminent deal have any significant impact on the longer term stability of the club.  There is still the issue of the club’s Golden Share to be resolved, and the potential fly in the ointment is Kevin Heaney, owner of Truro City Football Club and not entirely successful property developer (3).  Ridsdale happily purrs “Mr Heaney would only be the landlord of the [Home Park ground] and would have nothing to do with Plymouth Argyle Football Club. As long as the club is independently owned and financed, there is no reason why the Football League should complain.”  Predictably the Football  League’s chairman has promised that “the governing body will “rigorously enforce” its regulations before giving the takeover the green light” (4).  This is the Football League that rigorously enforced its regulations with respect to the anticipated removal of West Ham to Leyton Orient’s doorstep (5), so perhaps the Spinmeister has reason to be optimistic.  I doubt it however.

There is too the small matter of Ridsdale’s impending court case, which continues to cast a shadow over any new dawn in Argyle’s fortunes (details of the charges here).

As a Pompey fan, I am only too familiar with false dawns.  At present, the consensus among Portsmouth fans seems to be to give the new owners, Vladimir Antonov and Convers Sports Initiatives, a ‘fair chance’.  The Football League apparently have by sanctioning the takeover (6).  The Financial Services Authority were, against their general flow of approval, less inclined to allow another Vladimir Antonov business, the Lithuanian Bankas Snoras, to operate in the UK (7), the problem being a failure to provide all the required information to the regulator.  Another Antonov deal, the purchase of Spyker Cars from Saab attracted attention when there were allegations, strongly denied, that Antonov had links with the Russian mafia (8).

To me, it seems that, not only do we suffer from ineffective ‘Fit and Proper Person’ Tests in English football, we suffer from the lack of any Fit and Proper Governance Test.  While we are quick to (rightly) condemn what has been going on in FIFA of late, perhaps some mote-casting would be in order at the same time.

UPDATE – 5 July 2011

Apparently the deal is “all on track“, although presumably that’s the track with leaves on it.

Posted in Fit and Proper Person tests, Football League, Governance, Ownership, Stadium | Tagged: , , , , | 5 Comments »

Chester revisited

Posted by John Beech on June 28, 2011

Not a return visit to the carryings on of Stephen Vaughan, or the resurrection at the Deva, but a revisiting of the Report of the Committee on Football, aka The Chester Report, published in 1968.  With the current Select Committee report on Football Governance in preparation, it seemed timely to have look at what has and hasn’t changed since Norman Chester and his committee found when they looked at the game almost forty-five years ago – his committee was appointed in June 1966 and first met on 19 July 1966.

In this first posting I’m going to look at how the context has changed, and then, in a couple of postings spread over a couple of weeks, I’m going to focus on the similarities and the differences of then and now, and finish with some thoughts on whether we have learned any lessons.

His terms of reference are interesting: “To enquire into the state of Association Football at all levels, including the organisation, management, finance and administration, and the means by which the game may be developed for the public good; and to make recommendations”  (the emboldening is my addition).  What I find interesting is that the Committee took what we would today describe as broadly stake-holder approach.  They included looking at the game from the players’ perspective, and from that of referees and linesmen, but, although a view from the fans’ perspective is often explicit, the committee didn’t explicitly report on the state of the game from a fans perspective.  The notion of fan ownership of professional clubs was yet to emerge.

Most striking too is the financial state of the professional game at that time.  Gates had been declining since a peak shortly after the war, and professional clubs were beginning to have to come to terms with the scrapping of the maximum wage and destruction of the retain clause following the Eastham case.  The writing was on the wall that the game was going to see a flurry of wage escalation and that commercialisation would be the inevitable response, although shirt sponsorship, for example, would still be banned for almost another 15 years.

Given the generally weak state of the game, the following data is perhaps surprising.  It is in the report but its source is the 1966 PEP report on English Professional Football.

Match receipts and
Other Operating Income

Salaries, team and
admin expenses

Profit/Loss
on all matches

Profit/Loss adjusted
by Average Earnings

Division 1

£3,770,333

£3,310,667

£459,667

£47,700,000

Division 2

£1,674,333

£1,937,000

-£262,667

-£9,090,000

Division 3

£1,149,667

£1,658,000

-£508,333

-£17,600,000

Division 4

£691,667

£1,160,000

-£468,333

-£16,200,000

LEAGUE TOTAL

£7,286,000

£8,065,667

-£779,667

-£27,000,000

(The original data was for the three seasons from 1963/64 to 1965/66, which I have averaged, and the final column I have added using the MeasuringWorth.com calculator to give an idea of the profit/loss in today’s terms allowing for inflation.

‘Wealth at the top’ is still the case today, although the Premier League clubs would be happy to turn the kind of profits being turned 45 years ago, inflation adjusted or not.  There is a financial disparity between the tiers, although it was nothing like as large as today – broadcasting rights had yet to be a major factor in football.

Interestingly the disparity between levels had been growing significantly over the previous ten years, as this table from the Chester report shows:

Match receipts
1956-1966

Team and Ground Expenses
1956-1966

Division 1

+72%

+157%

Division 2

+15%

+131%

Divisions 3 and 4

+11%

+114%

The lower tiers were already failing to keep income up to a level to cover expenses even more miserably than the old Division clubs.

More to come in later postings, but interspersed with more typical postings on the current scene.

Posted in Costs, Governance, History | Tagged: , , | Leave a Comment »

Of Dave and Goliath

Posted by John Beech on June 15, 2011

Watching Boylergate unfold still from the slight detachment of the Tirol is a singularly unedifying experience.

I should first make clear that I count Dave as one of my friends, and that I am also friends with a number of Supporters Direct employees whose jobs are now at risk.  I am not however a pre-move Wimbledon fan or an AFC Wimbledon fan.  I strongly disliked what happened, but I tend to see Sam Hammam and the local Council as the villans of the piece rather than Pete Winkleman.  I wish that the MK Dons would drop the ‘Dons’ part of their name, in the hope that all concerned would finally move on and adopt a more realpolitik approach.  That said, I find it fairly low down on the list of things that seriously bother me – it’s down there with Spennymoor Town, Livingston and Clyde (and maybe Kettering Town next), rather than up there with FIFA and corruption, for example.

The crisis, for that is what it is from a Supporters Direct perspective, seems to have issues at several different levels, the first and most immediate of which is the issue of what Dave Boyle tweeted (no click-through as Dave has deleted the particular comments which have had such drastic implications).

What he tweeted, he wrote in his personal capacity (it clearly states on his Twitter account “Comments reflect my views alone etc.“), but, of course, we can’t in practice ever disassociate ourselves from our employer that neatly (although I would argue the case for academic freedom if that employer happened to be a university!).  Dave seems to have recognised this, and resigned as CEO of Supporters Direct.  Why, it’s reasonable to ask, was that not an end to the matter?

Well, as Glen Moore reported it (1) in The Independent:

When his tweets came to the notice of the FSIF they wrote to Dame Pauline Green, chair of SD, asking for her comments. She replied that Boyle had apologised and promised there would be no repeat. The trustees of the FSIF, who include the Football Association and the Government as well as the Premier League, took the view that someone in his position, even if tweeting in a personal capacity, could not make such statements in a public forum and merely be given a rap on the knuckles.

This line was taken in the context of a crackdown on abusive behaviour in the game, including the FA’s Respect campaign and the recent suspension imposed on Wayne Rooney for swearing into a TV camera after scoring against West Ham. The FSIF board subsequently released a statement saying they “no longer had confidence in Supporters Direct’s leadership and judgement”. Funding previously offered to the tune of £1.5m over three years, was withdrawn.

An interesting question, which I have not seen an answer to, is why this anonymous person brought the tweets  to the attention of the FSIF rather than complain directly to Supporters Direct.

The FSIF (the Football Stadia Improvement Fund) (2) is itself part of the Football Foundation which is funded as described.  The Fund’s role is to provide “grant aid to clubs in the Football League, the Conference and the National League System, down to step 7 and below, that want to improve their facilities for players, officials and spectators.”   The mission of the Football Foundation itself is “to improve facilities, create opportunities and build communities throughout England” (3).  It strikes me that the Trustees of the FSIF were not acting on behalf of the FSIF but rather in the interests of their parent bodies, and I’m unclear as to how the pulling of funding for Supporters Direct, and thus seriously threatening its existence, is in any way creating opportunities and building communities.

What comes across is the convoluted way that football is governed in the UK – by a farrago of committees where ‘conflict of interests’ is a phrase rarely heard.

Which takes us to the ultimate issue – how is Supporters Direct funded?  The case that we actually need such a body is more than adequately expressed in the wealth of evidence submitted to the House of Commons Select Committee on Football Governance (3).  With the clear exception of the Premier League, all in the football garden is not seen as rosy, and a very strong case indeed for the Supporters Trust movement is made.

The FSIF have made clear that “funding would still be available to individual trusts and they should apply directly on a case-by-case basis“, but this conveniently ignores the fact that a primary purpose of Supporters Direct is to help in establishing Supporters Trusts, and that, but for the work of Supporters Direct, many of the Trusts who can still apply for funding would not exist.

If there is a lesson in the whole sorry saga, it is that Supporters Direct needs to be funded not directly through a multi-stakeholder stadia improvement fund (???), or indeed the Premier League.  The Premier League funding Supporters Direct is at least partly like having the Countryside Alliance finance the League Against Cruel Sports in that their objectives are antithetical, and linking them in this way just sets up the likelihood of the car crash we find with Boylergate.

For this reason I am not entirely sympathetic to the Early Day Motion calling ultimately for the resumption of funding of Supporters Direct by the Premier League (4).  In the context of a House of Commons investigation into football governance, it would surely make more sense to move to a more stable funding basis for Supporters Direct, where the ‘hand on the tap’ is the FA, or better still the DCMS.

Posted in Governance, Trusts, Uncategorized | Tagged: , | 2 Comments »

The Big 1, 2, 3 or is it still 4? Or more?

Posted by John Beech on June 9, 2011

Currently I’m working on a joint research project on various European football leagues with colleagues in Austria.  One set of data which we have produced so far casts some light on this perenial debate.  The latest version of the date centres of course on whether Liverpool ‘have fallen out of the Top 4′, and/or whether Manchester City ‘are  making it into a Top 5′, and/or variations on that theme.

We looked at the points scored each season by each club (adding back in any points deducted), going back to the 1995/96 season – an arbitrary choice, as any is, but one which suits our purpose as it is the season when 3-points-for-a-win was widely adopted across Europe (although the Premier League had embraced this system earlier).

The table below shows the percentage each club grabbed of the total points scored, and the percentage of time they spent in the Premier League over the sixteen seasons.

Overall %

95/96 to 10/11

% Presence

1   Manchester United

7.88

100.00

2   Arsenal

7.22

100.00

3   Chelsea

7.08

100.00

4   Liverpool

6.61

100.00

5   Aston Villa

5.31

100.00

6   Tottenham Hotspur

5.12

100.00

7   Everton

5.00

100.00

8   Newcastle United

4.83

93.75

9   Blackburn Rovers

4.18

87.50

10 West Ham

3.98

87.50

11 Middlesbrough

3.56

81.25

12 Bolton Wanderers

3.30

75.00

13 Manchester City

3.27

68.75

14 Fulham

2.76

62.50

15 Leeds United

2.72

50.00

16 Southampton

2.71

62.50

17 Sunderland

2.38

62.50

18 Charlton Athletic

2.17

50.00

19 Leicester City

1.88

43.75

20 Portsmouth

1.82

43.75

21 Birmingham City

1.81

43.75

22 Derby County

1.65

43.75

23 Wigan Athletic

1.52

37.50

24 Coventry City

1.51

40.63

25 Sheffield Wednesday

1.31

31.25

26 Wimbledon

1.30

31.25

27 West Bromwich

1.02

31.25

28 Stoke City

0.83

18.75

29 Nottingham Forest

0.73

18.75

30 Wolverhampton Wanderers

0.67

18.75

31 Ipswich Town

0.61

12.50

32 Reading

0.55

12.50

33 Crystal Palace

0.40

12.50

34 Hull City

0.39

12.50

35 Bradford City

0.37

12.50

36 Watford

0.31

12.50

37 Blackpool

0.23

6.25

38 Sheffield United

0.23

6.25

39 Barnsley

0.21

6.25

40 Norwich City

0.20

6.25

41 Queens Park Rangers

0.20

6.25

42 Burnley

0.18

6.25

Together the top four in the list grabbed a total of 28.79% of the points scored, comparable with the 28.32% that Celtic and Rangers grabbed as the Big 2 in the Scottish Premier League over the same period.  Manchester United, with 7.88%, dominated the Premier League slightly less than Bayern München dominated the German Bundesliga with 8.36% (they were ahead of Bayer Leverkusen with 6.83%).  And, before you ask, no, we haven’t looked at Italy or Spain yet.

What emerges is a fairly predictable picture of the Premier League – continued dominance and presence by a smallish group of clubs, and a long ‘tail’ of clubs who were either relegated and haven’t yet come back, clubs who have yoyoed in and out, and some recent newcomers.

How this relates to the financial state of the individual clubs is certainly food for thought, and indeed further research…

Posted in Governance, History, Premier League, Pyramid movement | Tagged: , , , | 3 Comments »

Sepp Blatter’s already legendary Jim Callaghan impersonation

Posted by John Beech on May 31, 2011

Blatter’s demeanour at last night’s press conference was clearly one of defiance – it seems he really is blind to the mess the world governing body is in.  Mind you, if you watch again withe sound turned down (1), his body language is less self-confident – the ceaseless paper shuffling, and constantly tweaking the pair of microphones in front to him as if a pair of nipples had suddenly been thrust at him in some seedy nightclub.

The chances then of some serious reform of FIFA on his about-to-be-extended-unopposed watch are as remote as ever.  He is only vulnerable to pressure from outside stakeholders such as broadcasters and sponsors.  Broadcasters are unlikely to bother too much – the World Cup will be watched as eagerly by fans whether he or Caligula’s horse is in charge of FIFA.  Sponsors may yet prove more difficult to accommodate however, and there are already mumblings (2).  Sponsoring is not merely a questioning of gaining exposure for your brand – it only works effectively if there are shared brand values.  Interestingly, Coca Cola list their shared company values as ‘Leadership, Passion, Integrity, Accountability, Collaboration, Innovation, and Quality‘ (3).  It’s hard to see that the present circumstances are helping Coca Cola present their values of leadership, integrity and accountability much.  Adidas too will not be particularly happy bunnies this morning – they state on their webpage for Vision and Governance: “But leadership is not only about results, it is also about how success is achieved. We are accountable for the way we do business… We are committed to good governance“.  Not a great deal of brand synergy going on there at the moment either.

The one thing that can be said of Blatter is that he is a survivor.  Allegations that he acted corruptly date back at least to 2002.  As Nick Harris reported in The Independent nine years ago: “Sepp Blatter was yesterday accused by 11 senior Fifa colleagues of trying to buy votes to secure his re-election as president of football’s world governing body. The dramatic move could end the 66-year-old’s long career in the game.  In an unprecedented move in Fifa’s 98-year history, Blatter became the subject of a formal legal complaint filed in the Swiss courts by five Fifa vice-presidents and six other Fifa executive committee members.” (4)  Maybe we can’t expect too much in the way of sponsorship withdrawal as these allegation haven’t stopped them.

Blatter does have an Achilles heel nonetheless.  FIFA remains under investigation by Swiss federal authorities (5), as revealed by Matt Scott of The Guardian.  The Swiss may be more fussy than Adidas and Coca Cola when it comes to seeing their national ‘brand’ under threat.  Exemption from anti-corruption legislation for FIFA may well be lifted, especially as it applies to ‘not for profit’ organisations, an increasingly badly-fitting description for a body with reserves of almost three-quarters of a billion pounds (6).

One way or another, we shouldn’t expect a swift cleaning of the Augean stables, especially as Blatter is no Hercules.

Posted in Corruption, Ethics, FIFA, Governance, Public relations, Sponsorship | Tagged: , , , , , | 3 Comments »

A day of reckoning

Posted by John Beech on May 23, 2011

I managed to follow the great play-off between AFC Wimbledon (to whom, many congratulations) and Luton Town (to whom, commiserations) at least live online.  Football at its most exciting.  I wonder if Andy Burnham chose quite the right words though when he tweeted “Wimbledon back in Football League. Brilliant. A great victory for all football supporters over the money men. Well done to all at AFC.”  I’m sure he wasn’t referring to Luton as ‘the money men‘, although his comment would have been entirely appropriate if Wimbledon had beaten Crawley Town.

Yesterday, with the final day of Premier League games, unfortunately found me in the Tirol in a hotel room, arriving and logging on just after the games had started.  Heady stuff, and probably the most exciting afternoon in the PL all season.  As Alan Hansen was moved to write (1), “The big winner has been the Premier League itself, because this season has shown it to be the most exciting of the lot. ”  I’m not sure that I would enirely agree with his argument.

It struck me, particularly as I was feeling somewhat removed from the action, that it was distinctly odd that all the excitement was over who would or wouldn’t be relegated.  Aston Villa v. Liverpool, Everton v. Chelsea, and Fulham v. Arsenal were attracting very little attention from the twitterati.  Is this the grand scheme of things that the greedy breakaway Chairman of the old First Division envisioned some twenty years ago?  I came to the conclusion that in fact, yes, it was, had they bothered to think their plans through.  To me it is yet another symptom of what is wrong with the governance of English football.  Who is or isn’t relegated is clearly an important part of the general excitment of football, but it surely shoudn’t be the major focus.

The sacking of Ancelotti (2) because “this season’s performances have fallen short of expectations and the club feels the time is right to make this change ahead of next season’s preparations” to me provides yet more evidence of just how dysfunctional the Premier League has become.

Relegation from the Premier League undoubtedly puts serious financial pressure on a club.  When the drop in broadcasting revenues is netted off against the parachute payment, one is looking at a drop of £30m-£25m in revenues.  To this must be added a drop in matchday revenues (reduced attendance and lowered ticket prices) and a drop in merchandising sales, although these will vary from club to club, depending on the loyalty of their fans, in particular how large the core of ’till I die’ fans is.  Clubs may face a contractual drop in sponsorship fees, and may or may not have had the wisdom to include relegation clauses in their players’ contracts.  In other words, any club relegated faces a financial problem, but some may face significantly harder problems than those who had planned for the eventuality.  Clubs will also be in different states of financial health to start with.

Last week I was asked by BBC West Midlands to review the prospects for Wolves and Birmingham City should they be relegated.  On virtually every financial measure Wolves looked far more resilient to facing the drop than Birmingham City.  West Ham will undoubtedly face serious difficulties too, and only Blackppol look reasonably equipped to face the drop.

The Football League season is not quite finished, but further down the pyramid things are clearer with respect to next season.  AFC Wimbledon and Crawley Town are joining the Football league, the epitome of fan ownership and ‘benefactor’-induced financial doping respectively.  At the other end of the Conference National, it’s goodbye to Southport, Altincham (whose luck in benefitting from other clubs’ financial problems finally ran out, Eastbourne Borough, and Histon.  I’m sorry to see Eastbourne Borough go down as they were the most senior English club which is a Community Interest Company (CIC).  As an interesting aside, the Scottish Premier League may well have a CIC as a menber in the coming season – St Mirren (3).  This is a case that is well worth following, as the current owners are seeking to sell the club in a way that was  “making sure it remained sustainable and debt-free” (4).

Lower down the pyramid, the upcoming movements are plotted here.  Good to see resurrection clubs AFC Telford and Farsely on the way up.  It’s interesting to note that Ilkeston are listed as ‘reinstated’, good news for their fans following their resurrection (5), but I wonder what, for example, King’s Lynn fans or Grays Athletic fans will make of the reinstatement decision.

Finally I turn to a football story that is relevant to me in my immediate circumstances, but which does not seem to have well covered by the English-speaking  media, although due credit to Yahoo! Sport (6) for being an exception.  The story quite simply is that a major derby match between Rapid Vienna and Austria Vienna was abandoned after 26 minutes following a major pitch invasion – see here and  here.  Disturbing images that we hope we will not see moving further northwards and westwards.  After thirty minutes of disruption, the police felt unable to guarantee the safety of the players in a resumed match.  We seem to have moved onward from such dark days in England, and it was good to note the Birmingham City fans staying on at White Hart Lane to show what they had in common with Spurs fans (7).

Mind you, I suspect that “Thursday night, Channel Five” is not really going to catch on on the terraces.

Posted in Broadcasting rights, Costs, Economic impact, Fans, Football Conference, Governance, Merchandising, Premier League, Promotion, Pyramid movement, Relegation, Revenues, Sponsorship | Tagged: , , , , , , , , , , , , | 2 Comments »

The points deduction lottery

Posted by John Beech on May 13, 2011

As we move towards the end of the season and the state of ‘ups’ and ‘downs’ begins to harden, I am, as usual (here are my earlier findings on this topic), looking more closely at how the deduction of points impacts on the particular clubs who are promoted or, more typically, relegated.

The impact (or lack of it) can be five-fold:

  • No impact even to a club at the top of the table.  A classic example is that of Arsenal who were still Champions of the old Division 1 in 1990 in spite of having three points deducted.
  • Points deduction results in a club failing to be promoted, as happened to Leeds United in 2008, when a 15 points deduction moved from a guaranteed promotion spot into the play-offs (where they failed to gain promotion).
  • The position of the club is so ‘mid-table’ that the deduction of points is irrelevant other than to their final position.
  • A club is forced into relegation because of the points deduction.
  • The deduction of points is irrelevant because the club was going to be relegated anyway, as was the case when Portsmouth were ‘punished’ with a ten points deduction last year.

You can see where I’m going with the reference to ‘lottery’.

It’s too early yet for a systematic survey, but some examples are all too apparent already.  Plymouth Argyle have been relegated because of their ten points deduction (1), and St Albans have been relegated anyway (2), although by a narrow margin.  Their fans must look enviously north of the border to Dundee, where, in spite of a massive 25 points deduction (3), the club has managed to escape relegation.  Their fans may not necessarily see this as ‘a lucky escape’ however, as, without the deduction, Dundee would have finished a single point behind champions (and automatically promoted) Dunfermline.

The most interesting case is one in which no points have been deducted – that of QPR.  A disgracefully slow investigation finally concluded with a massive fine but no points deducted for 7 alledged breaches of FA financial regulations (4), five of which were found ‘not proven’.  As QPR finished the season as Champions, and 8 points clear of the play-off places, any points deduction would have proved highly contentious to whichever set of fans affected.  The saga may yet continue, as Swansea, who would have been automatically promoted had QPR been deducted nine or more points, are, at the time of writing, undecided as to whether to mount a legal challenge (5), preferring to wait until the full judgement is published.

The use of points deduction as a sanction is unarguably dysfunctional.  The real question is whether it is the ‘least bad’ alternative.  Certainly alternatives need to be explored, and thought given to whether it is possible to distinguish between offences that affect performance on the pitch and more technical financial or administrative offences which have no impact on sporting performance.

Posted in Ethics, Governance, Points deduction, Sanctions | Tagged: , , , | 6 Comments »

The great governance debate

Posted by John Beech on May 13, 2011

The House of Commons Select Committee on Football Governance certainly finished their hearings with a bang.

First up was Mike Lee, ‘strategist behind the 2022 Qatar World Cup bid’, and late of the London 2012 Olympics bid.  His appearance was bound to be confrontational given the submission of new evidence by The Sunday Times (1) regarding the awarding of the World Cup to Qatar.  He was given a bit of a hard time, and, unusually, received an apology for this (2).  Qatar has become such an issue that even the International Olympic Committee have ordered a Qatari bribery investigation (3).

Next up, and the final witness, was Lord Triesman.  His allegations about the bidding process for 2022 were made under parliamentary privilege, and have caused a considerable, and appropriate furore.

Important though the governance of the national is, I was disappointed that the Committee had drifted off what I saw as the main topic – the governance of leagues and clubs.  Judging by the written submissions, this seems to have been the topic that was generally seen as more important.

There is perhaps a different reality, one in which the reform of club and league governance remains centre stage.  On Wednesday Supporters Direct an launched two special briefings put together by Supporters Direct and Substance.  Both concern encouraging supporter community ownership in football; the first is on Developing Public Policy and the second is on Developing Football Regulation.  (I should admit a vested interest at this point – some of my research is quoted in the latter.)  Both are downloadable pdfs, but note their length before you rush to print them.

Dave Boyle (Supporters Direct) and Adam Brown (Substance) at the launch

Far from simply being an advocation of fan ownership, they set out clearly how the current financial model for running football clubs is broken, the specific ways in which it fails, and how a sustainable alternative model would work.  As well as fan ownership, a strong case is made for club licensing along the lines of the systems practised in Germany and in Northern Ireland.  The briefing papers also spell out the role that government should take in driving reform through effective changes in legislation rather than through some more direct intervention.

I found it particularly encouraging at the launch that there were 3 MPs present.  Governance reform is definitely still on the political agenda.  As Dave Boyle of Supporters Direct pointed out, a pile of all the official reports on football is now over a foot high, yet their recommendations have, on the whole, not been implemented.  Such is the current state of football governance that the failure to take action cannot be justified.  In real life, doing nothing is always an option whatever anyone might claim, but doing nothing would have a culpability to the disintegration of professional football attached to it.

Posted in Governance, Law, Politics, Uncategorized | Tagged: , , , | 6 Comments »

 
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