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 ‘History’

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 »

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 »

Shares, not shirts!

Posted by John Beech on August 29, 2011

A couple of postings back (see Chester revisited) I threatened some more thoughts on my revisiting the Report of the Committee on Football, aka The Chester Report, published in 1968.  This is the first of two, and focuses on how the funding of clubs by fans has changed in the past 40+ years.

Today clubs have three main revenue streams – broadcasting rights (effectively non-existent in the sixties), commercial revenues through sponsorship (banned in the sixties, in spite of Jimmy Hill’s attempts to get the Talbot logo onto Coventry City’s shirts) and merchandising (then as unimaginable as being allowed to buy a School First Team or Prefect’s tie if you weren’t entitled to it – shirts were only fit to grace the backs of players), and direct revenues through ticketing, and to a lesser extent matchday programmes.  Among the direct revenues in those days were donations from supporters clubs – a to-a-large-extent, although certainly not entirely, forgotten form of fans financing clubs.

Chester was able to write back then:

The financial position of a club is determined by several factors: gate receipts in relation to operating expenses (players’ wages, administration etc.); contributions from supporters clubs, sweepstakes etc.; transfer fees; and distributions from the Football League and the Football Association.

The order in which the factors are listed is interesting, and to some extent implies their significance.  Under the heading ‘Miscellaneous Income (including Supporters’ Club contribution‘, the Chester Report states (and it’s worth quoting the full text):

Most clubs obtain a good deal of money from the operation of sweepstakes, bingo, raffles, and a variety of “gambling” devices [sic]. These are sometimes run by the club or a body directly under its control, but more often they are run by the Supporters’ club.  From the published accounts (which by no means tell the full story) income of this kind totalled £4¼ million and provided over 90 per cent of all additional funds to League clubs in 1963-1966.  Its significance varied in different leagues.  It was least important, absolutely and relatively, in the First Division.  In the Third Division, however, it compensated for some 80 per cent of gross operating deficits in 1963-1966 and for roughly two thirds of such deficits in the Fourth Division.  Indeed these two lower divisions, where team and administrative expenses and wages alone exceed total gate receipts, could not have been sustained without money from this source.  The total in the Third and Fourth Divisions during these three seasons alone was £2¼ million as against gate receipts of some £5 million.  In other words, Supporters’ clubs, bingo etc. contributed in the ratio of nearly £1 to every £2 taken at the gate.  In addition such clubs may make contributions to the well-being of their football clubs which do not appear in the accounts, e.g. the improving of terracing and ground facilities.

The importance of Supporters’ clubs for the financial survival of the lower division clubs , quite apart from their social role in canalising the deep attachment which many supporters feel for their local clubs, cannot be exaggerated.  It is most disturbing therefore, that these contributions were on a slightly declining trend in Divisions 2, 3 and 4 during 1963-66.  Should this trend ever become more pronounced, the financial viability of many of the lower clubs would be in serious doubt.

(To allow for inflation and look at these figures by today’s standards in terms of changes in average earnings, 1968 figures should be multiplied by a little over 25.)

The importance of donations from Supporters’ Clubs is echoed in another report from the same era.  The Political and Economic Planning (PEP) report English Professional Football of June 1966 notes: “Probably only four or five First Division clubs depend on [donations from Supporters Clubs] to a marked degree, yet in the lower divisions many clubs would be unable to exist unless these funds were forthcoming.  During 1964-5 in at least five League clubs, supporters’ donations represented some 60 per cent of the parent club’s total income.”  I find that staggering, especially when viewed from today’s perspective.  Unfortunately the report does not name the five clubs.

There are of course, especially in lower Leagues, some clubs today where the income directly from fans is a key element in the club’s budget.  What is different from the sixties though is that fans would not be prepared to simply subsidise a club owned by a ‘benefactor’ (or maybe in some cases they would and do) without some say in how the club was run.

Direct financial support of a club by a fan today includes the purchasing of endless variants of shirts.  Does it actually matter if this revenue stream has replaced donations through a Supporters’ Club?  I would argue very strongly that it does.  At least if the donation was through a Supporters’ Club, fans had a strong voice, if no significant power.  By seeing income shift from Supporter’s Club donations to the sale of shirts, the fans’ voice has been effectively individualised and thus virtually silenced.  Well-intentioned though recent boycotts of merchandising have been, they have had relatively little impact on club boards.

To regain a voice, and gain a say in how their club is run, fans need to gain stakeholder power through share ownership.  The next time you contemplate spending £40 on the new alternative away shirt, or for some reason feel embarrassed by wearing a shirt with last year’s sponsor’s logo (personally I’m embarassed at wearing any sponsor’s logo – remember, I’m a Pompey fan, and not so long ago we were, for some inexplicable reason, sponsored by Ty, the manufacturer of Beanie Babies), consider the option of instead donating £40 to your Supporters’ Trust war-chest!

Posted in Cashflow, History, Merchandising, Ownership, Trusts | Tagged: , , , , | 3 Comments »

Cutting your coat to suit the cloth the Pompey way

Posted by John Beech on August 11, 2011

As I write, Portsmouth still only have a squad of 16 (1).  The first two matches of the season have seen just three subs on the bench – shades of last season, when at their opening game against Coventry there were four subs on the bench, and the squad was heavily dependent on youth players.  Things might have been expected to be different with new Russian owners Convers Sports Initiatives (2) as one of the reasons they gave for selecting Portsmouth was “its potential to return to the Premier League“.  Not that they haven’t splashed any cash – Fratton Park is at least to get a desperately needed £100,000 face-lift (3), and a new ‘megastore’ has been opened (4), although perhaps there was an indication of CSI’s propensity to speculate to accumulate in the announcement that “to mark the occasion of its opening, every customer will be given a free water bottle“.

Not that limited squad size is unknown to Portsmouth.  By happenchance I recently came across the following, from 1967!

CUTTING THE COAT TO SUIT THE CLOTH

THE MUCH PUBLICISED FRATTON PARK STAFF REDUCTION TO JUST 18 PROFESSIONALS IS ONLY PART OF THE OVERALL PORTSMOUTH PLAN TO PAY THEIR WAY IN THE FOOTBALL WORLD.

Explains Secretary Mr. R. Mulcock: “It isn’t just the resultant wages saved, but overhead expenses like staff, hotels, travel have all been cut.

“Now we can pay our way from our gates, more or less, and that means that all our ancillary income from fund-raising schemes can go towards improving the team.”

They have a lively Supporters’ Club and new premises adjacent to the club offices at Fratton have just been opened.  “Now our supporters can entertain their visitors in the way they are themselves are entertained away from home”, says Mr. Mulcock.  “That’s the way we are trying to develop.”

“Modern football fans require amenities and we aim to give it to them.”

This comes from the official Football League Review of 18 March 1967, and was one of a series called ‘Club Call’ written by Harry Brown.  The Review was distributed in match programmes for many years, but is sadly now defunct, although Steve Grant has made a sterling effort to revive its spirit online albeit unofficially.

On the opposite page is an interview with the then club manager, George Smith, and again it makes for similarly ironic reading to those who have followed Portsmouth’s ‘progress’ under the multitude of owners in the last fifteen years:

A more selective public will prune the clubs argues George Smith

A much more selective public, and the shortage of players, must inevitably change the face of League football in this country.

That’s the view of Portsmouth FC manager Mr. George Smith who says, frankly: “I can only see the game shrinking.  The League is bound to get smaller”.

He justifies his views in this way: Gates at the top are getting bigger because the public want the big time, they want the drama, and they want comfort.  Only the big boys can give them that.

“There will always be a place for clubs below the top, but some of the gate drops in the Third and Fourth Divisions do suggest that in many smaller towns bread and butter football isn’t enough.  I’d be delighted to be proved wrong, but I can’t see how I will be”.

PLAYER SHORTAGE

There is a second platform to George Smith’s argument.  Shortage of players.  “In the old days there was a saying that if you called down a pit shaft a couple of footballers would come up.  Today you’d get two lead guitarists.”

Mr. Smith argues that the end of the maximum wage, with which he agreed, has also meant that the star players have tended to move into the star clubs.

“These are all factors which make life difficult for the very small clubs, and economics [sic] of it can only mean that there must be a shrinkage in the number of League clubs”, he argues.

At Portsmouth, where they only run one team and the number of professionals employed has been cut to 18 they have already cut their coat to suit the cloth.

“This is no disadvantage”, says Mr. Smith.  “We are taking a highly professional attitude.  We are running a Football League club, and our job is to keep it that way.  Clubs whose aim is to encourage football, no matter the economics of the job are, in my view, not facing realities.”

Some interesting food for thought there, not least its relevance today, and the irony.  For at least a few years Portsmouth practised in part the financial prudence that Messrs. Smith and Mulcock had preached.  They stayed up, in the old Division 2, until 1976, but there had been a change in ownership in 1972 and incoming owner John Deacon was unable to continue supporting the unsustainable business model they had slipped back into.  In 1976 the club had to be rescued from imminent receivership by fans raising £35,000 (roughly £300,000 when adjusted to today in terms of average earnings) in the SOS Pompey scheme.  By 1978 they were in the old Fourth Division.

Certainly any sense of financial prudence had disappeared by the nineties.  Could it just be that CSI will bring a sense of financial prudence and stability back to the club?  And, if they do, can they kiss goodbye to a return to the Premier League?

Posted in History | Tagged: | 3 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 »

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 »

Lessons from Plymouth

Posted by John Beech on January 3, 2011

The car crash that Plymouth Argyle is on the verge of turning into is a strange case, yet many a club might well think that there but for the grace of god go they.

At the beginning of the nineties Dan McCauley had become Chairman, with his predecessor Peter Bloom becoming Vice Chairman.  While the club did not have a particularly stable decade on the pitch (three relegations in eight years; seven managers), the club was run reasonably stably, if unsustainably, on a traditional benefactor model.  Shortly before McCauley finally stood down in 2001, debts were reported to be £2.7m, with £1.8m owed to McCauley’s Rotolok Holdings.  He was also advocating a new stadium, the capacity of which was wound in from 23,000 to 18,000, but with scope to increase capacity.  As McCauley explained “An 18,000 all-seater stadium should be sufficient for us in the short-term. But it’s important to have flexibility in the design to cater for success when Plymouth Argyle move up through the leagues.”  ‘Sufficient’ is an odd choice of word – average seasonal attendances throughout the decade had peaked at just over 9,000 in 1994, but had fallen to around the 5,300 mark.  The sort of figure McCauley was speaking of had not been seen at Home Park on a regular basis since the fifties (1).

Reaching the age of 65 in 2001, McCauley found buyers he felt would be good for the club.  The new board was led by local businessmen Paul Stapleton and Peter Jones, and included the local MP Michael Foot, and two London-based businessmen, Nick Warren and Phil Gill, all Pilgrim fans.

[Sources for the above paragraphs are newspapers, mainly the Western Daily Herald, and are unavailable on the internet]

Under the new regime, stadium redevelopment proceeded, but hit a snag when the Council declined to carry on funding it (2).  Having already spent £2.6m, it felt that it was difficult to justify further expenditure.  Argyle Vice Chairman Peter Jones rather ungraciously argued “People should not forget the council are the freeholder of the stadium. Given the fact that a revamped stadium will bring in more people, more income and more rent, they should be prepared to put in a proportion of the £5m we need.

From a business perspective the early years of the noughties were a success.  In 2004 they announced a profit for the third year running (3), and by 2005 the seasonal average attendance had reached almost 16,500, following a return to Tier 2 for the first time since 1992.  The ground was purchased from the Council in December for £2.7m (4).

How then did things start to go wrong?  The management of players proved problematic. with continuing changes in who was manager.  The club managed to maintain their status in the Championship (until last summer, that is), but the fans started to drift away, attendances falling to just over the 10,000 mark on average.

In February 2008 the club recorded a record annual loss of £715,000 (5).  Not only were revenues down, but the club had locked itself into some rather expensive player contracts.  The wages/revenues ratio, which in 2001/02 had been at a very healthy 43.1%, had by 2007/08 risen to a rather unhealthy 74.4%.

In April 2008 the club announced a surprise new investor – Japan’s K&K Shonan Management Corporation, headed by Yasuaki Kagami who joined the Argyle board (6).

Argyle chairman Paul Stapleton, said: “We are excited about the future possible revenue streams from the Far East in particular and expanding the horizons of Plymouth Argyle. While this agreement has only just been concluded, it demonstrates the considerable appeal that Plymouth Argyle and our region has for companies with a global reach.”  I suspect that few outside Plymouth shared this optimism.

Japanese involvement increased when Yasuhiko Okudera was appointed Argyle’s President (7), and there was talk of Japanese players coming to Home Park (8).

By the summer of 2008 things were beginning to crumble; the transfer budget was reported as overspent (9).  By March 2009 non-playing jobs were at risk (10).

By the summer of that year there was talk of not only further investment from Japan but also of a takeover (11). Phill Gill sold his shares to Kagami (12), and by July Kagami held 38% of the shares, and his colleagues Sir Roy Gardner and Keith Todd joined the board with holdings of 13%, the trio thus holding a small majority.  The appearance of Gardner in particular, a former Chairman of Manchester United, raised hopes for some stabilisation.  Paul Stapleton said of Gardner “He’s going to bring a no-nonsense, common sense approach, and a business attitude to everything we do” (13).  The challenge was certainly there though – they had, for example, inherited a squad of over 30 players (14).

There was to be no magic wand.  In December that year the club was placed under a transfer embargo (15) for what the club dismissed as historic debts, and Kagami rode to the rescue with a loan [sic] of £1.5m (16).  Kagami was meantime being sued for £84,000 by former director Gill (17).

2010 opened badly, with the first of a series of winding-up petitions from HMRC (18).  In March there was the announcement that the club was to ‘sell off the family silverware’, the only recently acquired Home Park (19).  A ‘New World’ was heralded nevertheless (20), involving a 46,000 2018 World Cup stadium – rather than repeat my thoughts on this, see a posting I made at the time called Are we going stark stadium bonkers?.  The year’s financial figures, which featured a loss of £2.9m, were described by Gardner, with the kind of understatement that football club Chairmen specialise in, as ‘disappointing‘ (21).

The relegation to League 1 was a bitter pill to swallow given the already worrying state of finances.  Gardner however insisted that the new stadium was the way forward: “A new stadium is an essential part of our forward-planning and reflects the scale of ambition at the club” (22).  Oh dear, the A-word (ambition).  Perhaps the R-word (reality) might have been more appropriate.

The scale of ambition was certainly enormous – last August the board announced plans for a £150m redevelopment of Home Park (23)!  The following day, it emerged that the club had not paid their long-serving announcer since late in the previous season (24).

Things have just progressed from bad to worse since then, and I will assume that any reader who reached this point is already familiar with the failed 2018 bid, the further winding-up petitions from HMRC, and the worrying appearance of Peter Ridsdale.  I will spare you a repetition of his experiences at Leeds United and at Cardiff City (but see here if you want to read my previous postings on the Spinmeister).  Less well remembered are his days at Barnsley – he took over in October 2003 (25); when he left fourteen months later, new Chairman Gordon Stewart explained Ridsdale’s departure “The club was running into a financial position that was less than comfortable and it was clear cash had to be injected” (26).

For the Spinmeister himself to declare the situation at Plymouth as ‘dire and I can’t even find the words to put into context how bad it is. It is probably worse than you can imagine. This is a race against time‘ (27), one can only assume the situation is considerably worse than dire.

With the exception of bringing in Ridsdale as a ‘saviour’ – all I can offer as hope to the Green Army here is the thought that this might just be a case of fourth time lucky, although I don’t think it actually will be ;-(  – the situation at Argyle is one that could have happened at too many clubs – ‘benefactors’ who couldn’t or wouldn’t stay the course, overpaid players, cashflow insufficient to pay all staff on time, a high turnover of managers, a serious case of ‘stadium envy’, a casual attitude to paying HMRC, absentee investors, an absence of fan power…  It encapsulates most of what is wrong with English football, and offers a very depressing start to 2011.

Posted in 2018, Assets, Benefactors, Cashflow, Debts, History, HMRC, Insolvency, Investors, Ownership, Stadium | Tagged: , , , , , , , , , | 14 Comments »

‘Good Rangers’ v. ‘Evil Rovers’?

Posted by John Beech on December 21, 2010

The top of the Conference table intrigues me.  The top seven clubs come from right across the spectrum of football business models, from clubs whose fans can be rightly proud, through those that have been abused by boards past and/or present, through to clubs that engage in blatant financial doping and whose fans have seen the club become identified with a ‘benefactor’ rather than with a local community.

As I write, the top seven, in order, are

  • Wimbledon
    The exemplar of how fans can run a club successfully.  Their story is so well known it doesn’t need repeating.
  • Crawley Town
    Southern League champions in 2004, and since then they have managed to stay up in spite of several sets of points deductions.  Their recent history off the pitch has been one that you would reluctant to wish upon you deadliest rivals.  A brace of Administrations (in 1999 and 2006), being pursued in court by HMRC as recently as last July (1), and a string of owners.
    The most recent is Bruce Winfield, together with Susan Carter, who has produced a ‘war chest’ for the purchase of new players.  Manager Steve Evans was happily spending money throughout the summer transfer window on a scale virtually unprecedented at the Conference level.  One failed attempt to buy success was a cheeky knocked-back try at purchasing Wimbledon’s captain, Danny Kedwell (2).
    All in all a somewhat colourful history off the pitch.  The mystery surrounding the war chest, and who the investors are, to me puts a measure of uncertainty over the sustainability of their current business model.
  • Luton
    A club much abused by its previous owners.  The new ownership team inherited the massive points deduction, but things seem to have finally bottomed out, and it looks as if it will not be too long before it is back in the Football League.  Its home gates would not be out of place in League 2; in fact, they would be the second best!
  • Newport County
    Not the original club, which disappeared in 1989 thanks to the shenanigans of one Jerry Sherman.  The resurrection club has had to claw its way back up the pyramid, including a period in significant exile and an attempt to have them kicked out of the English pyramid.  The club is now roughly 20% owned by the Supporters Trust.
  • Fleetwood Town
    A club with a very chequered background, and many football fans will still be wondering ‘who?’.  The club is owned by Andy Pilley, also the owner of Commercial Power, who sponsor the club’s shirts.  Commercial Power has some interesting approaches to the conduct of its business – see (3) and (4).
    The club went full-time last summer and a £4m stadium redevelopment is under way. With home gates at just under an average of 1700 this season in spite of the club’s success on the pitch, I fear that, for fans, there may be tears before bedtime.  The financial doping may prove unsustainable.
  • Kidderminster Harriers
    A club in meltdown.  It was reported last month as having debts of £250,000 and has been in and out of court at HMRC’s behest for much of this year.  Although they had a winding-up petition dismissed earlier this month (5), its other debts are only sustainable through handouts from the owners (6), and there seems to be a shortage of those willing to pick up what has become a poisoned chalice (7).  Short of a new local millionaire suddenly riding to the club’s rescue, Administration is looking increasingly likely.
  • Wrexham
    A club which famously had to take its own Chairman to court to regain ownership of its ground.  Even today there are concerns over its future (8).
    There has been talk of the Supporters Trust taking over the club (9), but relations between owners and fans have not always been good.

By the end of the season we will of course have one club as champion and automatically promoted, and four into the playoffs.  The battle to be promoted will be fascinating to follow with its business model overtones, especially if these remain the seven clubs in contention.  Will ‘good’ triumph’ over ‘evil’?  That is of course oversimplifying, but I will find it difficult to remove considerations of their business models from deciding who I want to be promoted.

Posted in Benefactors, Ethics, History, Ownership, Trusts | Tagged: , , , , | 1 Comment »

Nelson the latest to fold?

Posted by John Beech on July 18, 2010

According to a report in The Lancashire Telegraph (1) Nelson “has folded“.  They have resigned from North West Counties Football League, and their website (2) has gone down.  Whether there are things happening behind the scene to allow them to ‘do a Grays’ or if there are plans forn AFC Nelson I don’t know – if anyone with their ear to the ground in the Ribble Valley knows more than the fairly scant information available publically, please share it with us.

Chairman and Managing Director Alan Pickering has said “Over the past few seasons the club has struggled to continue, particularly financially. Combined with a paucity of officials, sponsors, volunteers and spiralling costs, the decision to with draw the team has been made. Attempts to sell the club have been unsuccessful so far, despite many meetings and negotiations, but that position remains.

From the Google cache of the club’s website (3) I have found that on Wednesday it announced that “After the recent loss of his father, who had been connected with the football club for half a century, current chairman Alan Pickering has decided now is the right time to offer someone new the opportunity of taking over this historic East Lancashire Football Club“, which would suggest that ‘folding’ might be a premature term to use.

Certainly the loss of Nelson would be very sad indeed.  This is a club that beat Real Madrid (OK, it was in 1923, but it was in Spain) and played in the Football League from 1921 to 1931.  In the latter year they narrowly failed to be re-elected, and were replaced by Chester City.

[On the subject of requests for help from readers, I'm still hoping someone can advise what has happened to Richard Rundle's excellent Football Club History Database Mk.2Do any readers know?]

Posted in History, Insolvency | Tagged: , | 3 Comments »

Farewell to Preston

Posted by John Beech on May 9, 2010

Without a great deal of publicity, at the end of April the National Football Museum closed its doors at the Deepdale Stadium in Preston. Anyone wishing to pay an act of homage to the great history and heritage of English football will now have to wait until Autumn of next year when it will reopen in Manchester.

I’ve no wish to reopen debate on why this move is taking place, and in any case it is too late to change the plans, other than to say that I thought a move to London, as proposed by Brian Mawhinney (1), was a non-starter – the Ribble Valley and Preston in particular is to me, a born and bred Southerner, the spiritual home of professional football, and still the home of the Football League.  I would however offer some thoughts on what is happening.

To any visitor, the site at Deepdale struck as sub-optimal.  The layout of the Museum was quirky, resulting from it being wedged into a Championship stadium, and space was cramped, resulting in a high ratio of reserve material to material on display.

A move to London would certainly have been inappropriate, but I’m not 100% convinced that Manchester is the right location.  Is it any more appropriate than say Liverpool, with all the talk of a new ‘Football Quarter‘?  Personally I would have preferred it stay in Preston but in a new custom-built centre.

Apart from the fact that the Museum is now closed for over a year – surely to goodness this could have been avoided – there is a second negative impact as a result of the move.  The National Football Museum has established a strong partnership with the University of Central Lancashire’s International Football Institute, a synergy which has already generated some very useful research and publications.  Although this synergy should in theory continue unabated, I can’t help feeling that the Museum and the research activity will tend to drift apart and that work for my colleagues at UCLan will be just that bit more problematic, neither of which is a positive step.

I suppose we should just be grateful that the Premier League haven’t stepped in with an utterly selfless gesture to house it in a cellar in Gloucester Place.

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

The last League club to fold

Posted by John Beech on January 12, 2010

As things look grim down South (and to a lesser extent to the West), there has been some memory-scratching going on – which was the last League club to fold?

I’ve heard this dubious distinction being awarded to Accrington Stanley with respect to Football League clubs.  Stanley resigned from the old Division 4 in March 1962, finally folding while in the Lancashire Combination in 1966.  The replacement team reappeared in the Lancashire Combination in 1970.

Bradford Park Avenue, who failed in seeking re-election to the Football League in 1970, folded in May 1974 while playing in the Northern Premier League.

Next to go was Gateshead, who folded in August 1977.  Having lost their Football League status in 1960, they were then playing in the Midland League.

In 1988 Newport County were relegated from the Football League to the Conference, and folded shortly afterwards.

Next to go was Aldershot in March 1992, while playing in the old Division 4.

Another notable, and just more recent, casualty was Maidstone United.  They folded in August 1992 while also in the old Division 4.

Thus any claim that ‘Accrington Stanley was the last League club to fold’ is wrong on two counts – they were no longer in the Football League when they finally folded, whereas both Aldershot and Maidstone United were, and folded much more recently.

For a club folding in the top flight, it is much harder to find any precedent, and I’d be pleased to hear from any football historian who can suggest one.

Posted in History, Insolvency | Tagged: , | 3 Comments »

 
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