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 ‘Premier League’

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 »

The ins and outs of the transfer window

Posted by John Beech on September 3, 2011

So, the transfer window finally slammed shut, to use the mandatory cliché, amid the predictable hype.  In one respect this was hardly surprising – of the 289 August deals reported by the BBC (1), no fewer than 93, or 32%, had taken place on the final day.  In total 141 (49%) had taken place in the final week.  One was almost left wondering whether a whole month was needed.

A noticeable feature of the BBC data is that of the 289 deals, 69 involved players described as unattached, 110 were loans, and 10 were free transfers, leaving only 100 (35%) that were full-blown fee-paying transfers.  Given the main reason for having a transfer window – to prevent clubs buying in extra talent in a burst to achieve promotion or a Champions League place – the question must surely arise as to whether it is necessary to apply any transfer window at all to non-fee-paying transfers, now the clear majority.  After all, no club is going to loan another club a player willingly if it feels that will upset competitive balance and/or give the receiving club a somehow unfair advantage.

It’s difficult to analyse the spending by individual clubs – the BBC data records the figure for a mere 17 deals:

Samir Nasri Arsenal – Man City £25m
Juan Mata Valencia – Chelsea £23.5m
Bryan Ruiz Twente – Fulham £10.6m
Mikel Arteta Everton – Arsenal £10m
Peter Crouch Tottenham – Stoke £10m
Andre Santos Fenerbahce – Arsenal £6.2m
Scott Parker West Ham – Tottenham £5m
Oriol Romeu Barcelona – Chelsea £4.35m
Jermaine Beckford Everton – Leicester £3m
Emmanuel Eboue Arsenal – Galatasaray £3m
Ishmael Miller West Brom – Nottingham Forest £1.2m
Leroy Lita Middlesbrough – Swansea £1.75m
Shaun Maloney Celtic – Wigan £1m
James McClean Derry City – Sunderland £350,000
Darnel Situ Lens – Swansea £250,000
Shaun MacDonald Swansea – Bournemouth £80,000
Chris Lines Bristol Rovers – Sheffield Wednesday £50,000

There seems to be a consensus that spending has peaked again following a couple of years decline.  Which is bad news in my book.  I would have hoped that Financial Fair Play and capped squad sizes would have reined in the crazy levels of spending.  It may be that they have outside the Big 5, but that in itself is dysfunctional – these are the five clubs most likely to qualify for Europe and therefore find themselves under scrutiny from UEFA.

It’s also clear from the limited data available that there is no sign of the vertical disparity in terms of spending power  up and down the football pyramid declining.  Again, I can only greet this with disappointment.  When will they ever learn?

Posted in Costs, Globetrotterisation, Premier League, Transfers, Uncategorized | 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 »

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 »

Open season on interns?

Posted by John Beech on March 10, 2011

Yes, it’s the Gunfight at the Cobham Coral saga.

For those of you not up-to-date with the jargon of Higher Education, an intern is someone who, in Old Speak, was on an industrial placement from a sandwich course.  Typically this would be the third year of a four year undergraduate degree programme.  The thinking is that such a placement, or internship, gives a broader education and enhances the student’s employment prospects once he or she has graduated.

Reports that no charges are likely to be brought, and that the police investigation was so thorough that, it is reported, they didn’t even include speaking to either Ashley Cole or the shot intern, Tom Cowan, (1) simply beggar belief.

Chelsea are really sorting this one out though – Cole might be fined up to two weeks’ pay (2) and Ancelotti’s reaction is reported as “I am angry, obviously, but to read that [the training ground at] Cobham is out of control is totally wrong. I’ve been a manager for 20 years and one of the most important things is discipline. Players have to observe the rules.  Ashley made a mistake. When he said sorry he was really disappointed [with himself]. But what do we have to do now? Kill him?” (3)  Ancelotti ‘angry’?  Cole ‘disappointed with himself’?  For God’s sake get real guys – someone was shot in the workplace!

Imagine for one moment that the situation had been reversed – that Cowan had brought the air rifle to work and accidentally shot Cole.  Would everyone have been quite so laid back about it?  I would suggest they wouldn’t.

The incident, or more specifically its aftermath, bring shame on the club.  The silence so far (at least so far as I’ve been able to trace) of the Premier League and the Football Association speak volumes about the power of the club and the indifference of the governing bodies to such an incident.  What would it take to get them to condemn Chelsea – the death of an intern?

I find it staggering that the club hasn’t even bothered to make public more detail of what precisely happened, or what their internal investigation has shown.  After all, this incident took place two and a half weeks ago.  In the Ancelotti world of chronic understatement, I’m ‘disappointed with Chelsea’.

UPDATE – 12 March 2011

The police have said that they will not be taking any action (A).  There are two impediments – the incident took place on private property (in which case, the law is an ass; this is, in my opinion, utterly absurd – the incident happened in a place of employment, and employees should be legally protected), and Tom Cowan has declined to file a criminal complaint.  Make of the latter what you will.

The same report suggests that the club can fine Cole up to £250,000 (two weeks salary).  Have they?  The silence from the club remains deafening.

UPDATE – 29 March 2011

Latest ‘jolly jape’ involves a dart and a youth player (see here).  What sort of injury is it going to take before clubs take this kind of behaviour seriously?

Posted in Ethics, Football Association, Governance, Health & Safety, Human Resource Management, Organisational culture, Premier League, Public relations | Tagged: , , , , , , , | Leave a Comment »

A fish rots from the head down

Posted by John Beech on February 4, 2011

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

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

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

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

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

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

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

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

The Olympic stadium, the small matter of distance, and the Premier League

Posted by John Beech on January 21, 2011

By the time you read this, it may well be that the post-2012 fate of the Olympic stadium has been decided, with the decision going to one contentious bid rather than the other (I won’t rehearse the pros and cons of Tottenham and West Ham, taking a detour via Crystal Palace – they have been very well summarised by Paul Kelso in The Daily Telegraph).  What does interest me is how either can in fact move there without breaking Premier League rules.

West Ham are currently the closer of the two to the Olympic Stadium, although not as close as Leyton Orient – see Google Maps and enter ‘football stadium London'; Spurs are pin G and West Ham pin F; Orient are the red dot just above Leyton; a scale of distance is shown at the bottom left).

If West Ham or Spurs are to make the move, it’s worth looking at the Premier League rules (the Premier League handbook 2010/11 is downloadable here) on club moves.  In the section on Ground Criteria on page 152 you will find the following:

Ground Registration

5. Each Club shall register its ground with the Secretary and no Club shall remove to another ground without first obtaining the written consent of the Board, such consent not to be unreasonably withheld.

6. In considering whether to give any such consent, the Board shall have regard to all the circumstances of the case and shall not consent unless reasonably satisfied that such consent:

6.1 would be consistent with the objects of the Company as set out in the Memorandum;

6.2 would be appropriate having in mind the relationship (if any) between the locality with which by its name or otherwise the applicant Club is traditionally associated and that in which such Club proposes to establish its ground;

6.3 would not adversely affect such Club’s Officials, Players, supporters, shareholders,sponsors and others having an interest in its activities;

6.4 would not have an adverse effect on Visiting Clubs;

6.5 would not adversely affect Clubs (or Football League clubs) having their registered grounds in the immediate vicinity of the proposed location; and

6.6 would enhance the reputation of the League and promote the game of association football generally.

(The emboldening of para 6.5 is my own little mischief)

The corresponding Rules of the Football League (thus applicable to Orient, and either currently Premier League club should they be relegated before a move takes place) state:

13.6 Each Club shall register its ground with the Executive and no Club shall remove to another ground without first obtaining the written consent of the Board, such consent not to be unreasonably withheld.

13.7 In considering whether to give any such consent, the Board shall have regard to all the circumstances of the case and shall not grant consent unless it is reasonably satisfied that such consent:

13.7.1 would be consistent with the objects of The League as set out in the Memorandum of Association;

13.7.2 would be appropriate having in mind the relationship (if any) between the locality with which by its name or otherwise the applicant Club is traditionally associated and that in which such Club proposes to establish its ground;

13.7.3 would not adversely affect such Club’s Officials, players, supporters, shareholders, sponsors and others having an interest in its activities;

13.7.4 would not have an adverse effect on visiting Clubs;

13.7.5 would not adversely affect Clubs having their registered grounds in the immediate vicinity of the proposed location; and

13.7.6 would enhance the reputation of The League and promote the game of association football generally.

Virtually the same as it happens.

Now, much would hang on the interpretation of ‘immediate vicinity‘ I grant you, but I would have thought that the average fan on the top of a Clapham, or perhaps even Clapton, omnibus might just see the Olympic stadium as in the immediate vicinity of Brisbane Road.  (Yes, I appreciate they themselves moved from Clapton, but that was in 1937 and I haven’t heard any complaints about this recently).

If either Spurs or West Ham move, it would be a headlong rush towards one another as well as towards Orient.  Currently they are less than seven miles apart as the crow flies.  Orient is just three miles from Upton Park and just under four from White Hart Lane.

Will any of this geography be taken into account?  My guess is that it won’t.  The Premier League will enforce their own rules with their usual opportunistic pragmatism driven by a revenues motive.  Mind you, the same Premier League document states on page 9:

The Chairman’s Charter sets out our commitment to run Premier League football to the highest possible standards and with integrity.

We will ensure that our Clubs:

• Behave with the utmost good faith and honesty to each other, do not unjustly criticise or disparage one another and maintain confidences.
• Will comply with the laws of the game and take all reasonable steps to ensure that the Manager, his staff and Players accept and observe the authority and decisions of Match Officials at all times.
• Follow Premier League and FA Rules not only to the letter but also to their spirit, and will ensure that our Clubs and Officials are fully aware of such rules and that we have effective procedures to implement the same.
• Will respect the contractual obligations and responsibilities of each other’s employees and not seek to breach these or to make illegal approaches.
• Will discharge their financial responsibilities and obligations to each other promptly and fully and not seek to avoid them.
• Will seek to resolve differences between each other without recourse to law.

But of course!


UPDATE 25 January 2012

The Premier League have announced that they would not consider a move by either West Ham or by Tottenham to be a breach of their rules (A).

Posted in Football League, Governance, Premier League, Stadium | Tagged: , , , | 39 Comments »

The Portsmouth verdict…

Posted by John Beech on August 6, 2010

… or the Great Escape thanks to an own goal.

As a Pompey fan, not surprisingly my first reaction to the verdict of Mr Justice Mann was one of relief, a feeling no doubt shared by all Pompey fans, and especially by those members of the club’s non-playing staff for whom the threat of further redundancies will have been eased.  Creditors, I would argue, should at least been not displeased with the result, as the real threat of liquidation would have left them with even less.

The judgment was based, of course, on narrow but precise points of law, the full details of which have yet to be published.  Matt Slater, who was in court, provides an excellent account of the proceedings on the final day here.  He writes of Mr Justice Mann’s pronouncement:

So HMRC’s arguments about the iniquity of football’s millionaires-first repayment rules, the general iffiness of clubs making “tax efficient” image rights payments to players with dubious “brand value” and the serial nature of Pompey’s antics were irrelevant. This case, in Mann’s opinion, boiled down to one key question.

Was the vote to decide how Pompey get out of this mess (with an agreement to pay creditors a reduced amount of the monies they are owed) organised correctly?

The judgement was an unequivocal ‘Yes’.  Mr Justice Mann found that “none of the five heads of attack by HMRC amount to unfair prejudice nor have they been materially affected.  In my view, HMRC will not be worse off by the situation left by the CVA bearing in mind what the alternatives could be for the club… There is no worthwhile way of money coming into the club other than by the CVA (1).  The reasons for his ruling were “This case turned on commercial validity and not the football creditors rule. This is not the right place to decide whether creditors rules are fair or not. There is no way in which any worthwhile solvency can flow into the club other than the CVA” (2).

One way of viewing this is that HMRC’s fight to get the Football Creditors Rule overthrown scored an own goal yesterday.  I had argued a few weeks ago (3) that HMRC were making a tactical mistake in pursuing this line, but it gives me little pleasure to see them beaten.  The Football Creditors Rule is an absurdity.  If I had a pound for every occasion over the last couple of weeks that I’ve been asked to explain it to non-football followers, well, I wouldn’t have been able to make any impact on Pompey’s tax bill, but I could dine out modestly.  Invariably the reaction has been one of shock, disgust and almost disbelief.  ‘Why should football clubs and players not have to pay their taxes like any other business and its employees?’ is the inevitable question that follows.

The argument the leagues put up, and it is of course their rule, not Portsmouth’s, is that without it the integrity of the transfer market could not be sustained.  Without it, it is suggested that the financial collapse of Portsmouth might have brought down Watford.  I have to say that I just do not think this argument stands up to scrutiny.  It is tantamount to saying that as a club you should be guaranteed payment for a when selling a player whether your customer, the club buying your player,  can afford it or not, that the simple expediency of checking credit ratings is not for you.  What it allows is an unnaturally high level of transfer fee, and this at the expense of HMRC.  Of course normal taxpayers can’t see the sense in this!  As for the ‘Watford argument’, I would argue that, had they collapsed as a result of Portsmouth’s collapse, there would have been significant other factors contributing to that collapse.

There is too the issue of image rights, which now have added legitimisation as a means of tax avoidance,  i.e. within the law, as opposed to illegal tax evasion.  Hardly a good result for HMRC.  (Incidentally, an interesting story on image rights here.)

In a nutshell, a good result for Portsmouth, and a bad result for HMRC.  Hurray and boo respectively!  It was, in the bigger football picture, also a bad result for football.  There seems to a creeping myopia that the specificity of sport should somehow place its participants in a special category which avoids paying the taxes which everyone else pays.  Sam Allardyce’s call yesterday, “If Cameron is listening, drop the tax bracket will you? Then we can get the best players in the world to play in the best league in the world.” (x) seems to me to be singularly ill-timed and out of step with public opinion.

The leagues are beginning to address the reform agenda, but I fear it is ‘too little, too late’.  Given that a consultation process is taking place about the collection of taxes from companies (see Bubbling away in the background), and in the context of the ‘Great Deficit’, the leagues are moving towards their last chance to scrap the Football Creditors Rule before they too face HMRC in court.  Let’s hope they have not been buoyed in their intransigence by yesterday’s ruling.

Posted in Debts, Football League, Governance, HMRC, Insolvency, Law, Premier League | Tagged: , , , , , , | 9 Comments »

Who loves fans? Who doesn’t?

Posted by John Beech on July 26, 2010

There’s an interesting pair of stories in the news today.

First comes the news (1) that UEFA have introduced a new requirement in their club licensing requirements – the necessity for a club to appoint an operating supporter liaison officer (SLO).  The purpose of this rather clumsily named role is to “to ensure a proper and constructive dialogue between a club and its fans“.  The need for this is so fundamental and obvious that it is amazing that UEFA have only just come up with it!  In fact, they did so at the prompting of our own Supporters Direct (SD) and its SD Europe arm.  The SD website (2) offers this expansion on what exactly an SLO is:

Supporter Liaison Officers at clubs already exist in a limited number of European countries and primarily help improve the dialogue between the fans and the clubs they support. Most importantly, SLOs must be credible with fans, and therefore should have experience with and contacts to the networks in the fanbase at the club.

They inform the fans about relevant decisions made by the club management board and, in the other direction, communicate the needs of the fans to the board, as well as building relationships – not just with various fan groups and initiatives, but with the police and security officers, They will also engage with fan liaison officers of other clubs before matches to ensure that the fans behave in accordance with security guidelines.

To implement the new requirements, a network of SLO project contacts from each national governing body across Europe will be created and work together with the UEFA club licensing team and Supporters Direct to assist clubs and supporter groups improve communication in each of the 53 UEFA member associations. This year more than 600 clubs applied for a UEFA licence with many more applying for domestic licences based on the same or similar principles. Hence, the broad scope and significance of the SLO project.

Like the licensing system itself, the implementation and development of supporter liaison officers will be a tool to raise minimum standards; a dynamic system changing over time, and focussing on developing and improving the dialogue between the fans and the clubs.

An excellent development – here’s hoping it would be accepted throughout the English football pyramid rather than just by clubs hoping to play in Europe.

On the other hand, there is the news (3) that the vast majority (it appears to be all except Arsenal and Liverpool) of the Premier League clubs are simply ignoring the 2000 Premier League Charter which pledged that replica strips would be released every two seasons at a minimum.  Worst offenders are Tottenham, who have launched three new kits every year for six seasons in a row.  This coming season they will have different sponsors, and hence, it is reported, shirts, for their Cup games, resulting in no fewer than six shirts being offered, although at the time of writing only three shirts are being offered on the club website (4).

It’s not exactly difficult to see which is more pro-fan – UEFA or the Premier League.

Posted in Merchandising, Organisational culture, Premier League, Public relations | Tagged: , , , | Leave a Comment »

HMRC v. The Football Creditors Rule

Posted by John Beech on June 2, 2010

It has emerged that HMRC are to mount a legal challenge against the Premier League and the Football League in an attempt to overthrow the Football Creditors Rule (1).

Until September 2003, the Crown, and hence the Internal Revenue (IR) and Customs & Excise (C&E) who subsequently merged to form Her Majesty’s Revenue and Customs (HMRC), enjoyed the legal status of ‘preferred creditor’ – they got paid in full before any remaining money was divided between the remaining creditors.  Because of football’s Football Creditors rule, there was a clear priority on who had claims against an insolvent company:

  1. The Crown
  2. Football creditors (e.g. other clubs, players)
  3. The rest

With the loss of its legally-enshrined preferred status, the Crown then fell behind football creditors in the pecking order.

Accountancy Age summarises the current situation well:

Currently if a club enters administration they are bound by the football creditors rule, meaning some creditors such as players and managers will be paid in full from the administration and the remaining payments divided between the unsecured creditors including HMRC.

The rationale for having the rule is that football clubs need the certainty that they will receive funds for the sale of a player to another club – without the rule, the transfer market would collapse, with selling clubs losing out to defaulting buying clubs.

You can see their point, but there are plenty of other situations in which failing to pay debts in full is problematic.  An obvious example is St John’s Ambulance, who recently got worse treatment than football creditors from Portsmouth and Crystal Palace (in both cases, fans, to their credit, rallied round and paid the debts).  Small businesses who end up being offered 20p in the pound(at Portsmouth) or even 1p in the pound (at Crystal Palace) by Adminstrators find it hard to stomach that clubs such as Chelsea or Manchester City are guaranteed priority in receiving a full pound in the pound.

According to legal expert David Roberts as reported on the Sporting Intelligence website, HMRC have a good chance of having the Football Creditors rule declared unlawful, citing two principles of insolvency law:

  1. The pari passu principle
    This is the principle is that creditors should be treated on an equal basis, being paid pro rata what they are owed.
  2. The anti-deprivation principle
    This is the principle that a legal entity should not be deprived of its assets by reason of insolvency.
    This seems to my unqualified legal eye to be particularly pertinent in the case of VAT, which already belongs to Crown, having been collected on the Crown’s behalf by the club.

If the case is strong, why has HMRC not tried before?  Back in 2004 they did try, but took action against a club, Wimbledon, rather than the League.  The situation was a complex one, with Wimbledon in Administration and in the process of morphing mysteriously into ‘the Franchise’ (aka MK Dons).  Indeed in his judgement Lord Justice Neuberger in the Court of Appeal refers to “the very unusual facts of this case” (2).

To me this suggests why HMRC should now take action against the Leagues rather than against, say, Portsmouth.  Each club’s CVA might be seen as a unique set of circumstances, requiring HMRC to fight each case individually.  If they can succeed in getting the Leagues’ Football Creditors rule declared unlawful – end of story.

If they do turn out to be successful, it will have a major impact on the way transfers are conducted.  Clubs will actually have to consider whether other clubs they are selling players to are credit-worthy.  Clubs seen as credit risks will find it hard to buy new players.  A bit like every other business sector really.  Now there’s radical.

Posted in Debts, Football League, Governance, HMRC, Insolvency, Law, Premier League | Tagged: , , , , , , | 17 Comments »

A Political Football

Posted by John Beech on May 20, 2010

In the lead up to the general election (and running alongside a large number of local council elections), I blogged on how I thought it significant that the political parties were wooing the fan vote, but did not hold out much prospect for major new initiatives actually happening after polling day.  Well, as many a commentator has pointed out, the public have now spoken, although it’s not entirely clear exactly what they were saying.

Cameron has already come in strong support of the 2018 World Cup bid, indicating that he is happy to comply with whatever is necessary, by implication including the waiving of tax bills (see FIFA’s muscle flexing).  Apparently singing from a different hymn sheet, the new Conservative Minister for Sport, Hugh Robertson, has indicated in no uncertain terms to the football authorities that “they must reform their governance and power structures or face the prospect of external regulation” (1) – something which would not exactly be looked kindly on by FIFA, who tend to suspend national football authorities that suffer from governmental interference.  We shall see.

On the opposition benches, we now have an increasing number of runners for the post of leader of the Labour Party, the most interesting one of which, from a football perspective, is Andy Burnham, former Culture Secretary.

All then is far from clear with respect to future political strategy and the beautiful game/ugly business.  I thought it would be interesting nonetheless to look at how the political representation has changed in the light of the election results, that is, with respect to the changes in constituency representation of clubs.  So far I have only looked at Premier League clubs, but plan to extend this to at least the Championship as time permits.

It would be easy to make far too much of who the local MP is for clubs from a fans perspective.  Clubs draw fans from a much wider area than just the constituency in which their stadium sits.  How many declared Manchester United fans, for example, could tell you that Old Trafford is in the Stretford and Urmston constituency?  How many have even heard of Urmston for that matter?

The local MP is however the natural point of contact for a club to raise its political concerns with, especially if there really is going to be imposed reform.  With regard to Premier League clubs, this comprises a grand total of not twenty MPs, but in fact eighteen.  The stadiums of Aston Villa and Birmingham City are both in the Birmingham Ladywood constituency, and Chelsea and Fulham both find themselves in the appropriately named Chelsea and Fulham constituency.  An interesting thought is that Greg Hands, MP for Chelsea and Fulham, could in theory find Abramovich and Fayed sitting in his surgery waiting to rant on!

A first looks shows the following:

  • Of the 18, 14 are LAB, 2 CON and 2 LibDem.  However, as of June 3rd, when relegations officially take place, both LibDems disappear from the list (they are the MPs for Burnley and Portsmouth) to be replaced by LAB MPs (whatever the outcome of the Play-Off Final).  The two CON MPs are the said Greg Hands, and Paul Uppal, who represents Wolverhampton South West, a CON gain from LAB.
  • In only four constituencies did the swing exceed the average swing in England (5.6% from LAB to CON) – Bolton West, Chelsea & Fulham, Stoke-on-Trent South, and Wigan.  7 swung to CON, 4 to LibDem, and 7 to LA, the most marked case being a 7.7% swing from CON to LAB in East Ham (home of West Ham United).  Other anomolies were swings from LAB to LibDem in Hull West & Hessle (7.9%), where Alan Johnson is still the MP, and Burnley (9.6%).

The overall picture is a tad messy, but in general these Premier League constituencies are now in opposition hands, as they normally have been, largely because the LAB vote held up better than elsewhere in England.

Of more direct relevance to the day-to-day running of clubs, and their planning applications, are local councils. Yesterday alone, for example, I found two news stories involving Premier League clubs and their respective local councils (in both cases, examples of conflict).  Tottenham Hotspur have had to revise their planning application to Haringey Council for their ground development because it has originally proposed the demolition of four Grade II listed buildings (2).  At Stoke, “Furious councillors have slammed a Government watchdog after a long-awaited audit report [on the Britannia stadium] was hit by yet more delays” (3).

In spite of covering numbers of voters than parliamentary constituencies, we are left with eighteen different councils (and exactly the same duplication as with constituencies).  Initial findings are:

  • LAB control eight councils, LibDem 3 (but these are the relegated Burnley, Hull and Portsmouth), CON 2, and 5 with No Overall Control (NOC).  The ‘new boys’ for next season are Newcastle (LibDem) and West Bromwich (LAB), plus either Blackpool (CON) or Cardiff (a coalition of Plaid Cymru and Independents).
  • LAB made three gains, two from LibDem and one from .  Neither CON nor LibDem made a single gain.

As I said above, it is easy to make too much of all of this.  What is clear though is the Premier League clubs find themselves represented in parliament mainly by Labour, now in opposition, and similarly Labour at council level, more typically in control.  This is as it has been historically, except of course that Labour are now in parliamentary opposition.  Generally this would be interpreted as bad news for the Premier League clubs, but perhaps the ‘new politics’ of coalition will see the Conservatives and the Liberal Democrats maintain their apparent impetus to woo the ‘football’ vote.

If they really are to survive a fixed five-year period in power, they will at the very least have to take more considered positions than the two knee-jerk responses I referred to above by Cameron and Robertson.  They will also have to think carefully where they stand as the UEFA Financial Fair Play Protocol comes inevitably into operation.  Will they take a ‘free-marketeer’ approach, placating the Premier League oligarchs and antagonising UEFA, or will they support a growth in fan ownership, an increase in their support of Supporters Direct being an obvious way to show this?

Posted in 2018, Governance, Politics, Premier League | Tagged: , , , | Leave a Comment »

Premier League v. Football League

Posted by John Beech on May 10, 2010

Once again, the Premier League, or ‘the Wild East’ as Arsenal’s Stan Kronke has amusingly christened them (1), have made clear their naked desire to control football down the pyramid.  They have long attempted to distort competition in the Championship by paying parachute payments (as a reward for failure?!) to their unfortunate ‘old boys’ (see Parachute payments, and Rocket payments?) and more recently have started what they outrageously call ‘solidarity payments’.  If Lech Wałęsa was dead, he’d be spinning in his grave at this abuse of language.

If you do not doubt the sincerity of the Premier League, you might reflect on the fact that the Premier League, threatened by the possible restriction on their money printing press of broadcasting rights, trotted out the argument that “grass roots of sport will suffer and be irreparably damaged through loss of funding” (2).  Threat or promise?  Sky, their ‘partners in crime’, claimed that OFCOM’s involvement was an “unwarranted intervention“.  Warranted by Act of Parliament actually, even if unwelcome by Murdoch’s media empire.  ;-)  The intervention follows a three-year enquiry by the way.

In 2007 the Premier League offered the Football League a ‘solidarity package’ of over £90m, in the context of almost £3m windfall for their television deals (both figures covering a three year period) (3).   The latest outburst of Premier League hegemony started at the end of March (4).  The ‘offer’ that was put to the Football League was increased parachute payments to PL relegated clubs of £16m per year for four years, and non-parachute payments offered were £2.2m per season (an increase from the previous £830,000) for Championship clubs, £325,000 for League 1 clubs, and £250,000 for League 2 clubs (5).

Now, on the face of it, this may sound a generous offer.  But there are a couple of obvious problems with it.

First, it would at least be theoretically possible that a club might suffer three consecutive relegations and find itself in the Conference with a PL parachute payment of £16m.  Now that would seem really fair to the other Conference clubs.  It’s an unlikely scenario I grant you – the club would have had to have been really bad to have suffered three consecutive relegations with all that extra money splashing around with which to buy players.  But that is exactly my point – this extra money is precisely designed to distort competition and save the PL old boys from suffering too much in the harsh reality of the Football League.

Secondly the Premier League is giving the money not to the Football League but to its clubs, defining how much, and to whom, and when. Surely those are issues that the Football League should have control over rather than the Premier League.  If you doubt this, consider the logical corollary for the redistribution of wealth between the two – the Football League imposing a levy on clubs promoted to the Premier League, for up to four years.  Of course it’s not going to happen – the difference in affluence and hence power is way too great.

Which brings us to the third point.  The rates at which the Premier League has set the payments to Tiers 2, 3 and 4, is likely to increase the wealth differentials and make it harder for the lower clubs to climb the pyramid.

It was a ‘take-it-or-leave-it’ offer, such is the arrogance of the Premier League, which might perhaps have just nudged the decision to the ‘accept’ decision which the Football League came (6) to at what has been reported as a rather stormy meeting .  Already League 2’s Lincoln City chairman Steff Wright has stuck his head above the parapet:

Wright told BBC Lincolnshire: “It was a take it or leave it deal we were given.

“League One and League Two clubs felt the money should have been more fairly distributed throughout the Football League and that hasn’t happened.”

Wright added: “I think it’s a massive disappointment. Fairness and equality have gone out of the window.”

And he fears the system would create a second-level Premier League by stealth.

“In a few seasons’ time the top of the Championship will be dominated by teams who’ve benefited from these parachute payments”, he said.

“Nobody’s arguing against the idea of more money coming down but it’s the way that that will now distort the Football League.

“Instead of there being a problem between the clubs that have the money in the Premier League and the clubs without in the Championship, you now have that problem moved further down the league.

“It will make it more difficult for clubs like Lincoln to get promoted to League One and eventually find their way into the Championship.” (7)

Well said, Steff.  Let’s hope Spain’s La Liga are listening.  Incredibally they have just announced that they are to form a breakaway copy of the Premier League – “The new system of organisation and development will allow a much more attractive and better-run competition than the current one” they reckon (8).  If only, if only…


PL v. FL UPDATE – 10 May 2010

An interesting example of how the power positions of the governing bodies are viewed – VisitBritain is jumping on the World Cup bandwagon with a series of interviews of players from overseas, getting them to talk about where they like to visit in Britain (1).  To do this, they’ve partnered not with the FA or even the PFA, let alone with governing bodies other than in England, but with the Premier League.

The promotion is online at http://www.visitbritain.com/football, but when you click through the URL you are auto-redirected to betrays how VisitBritain, ‘the official website for travel and tourism in the UK [sic] (2) view, and promote,  ‘Football in the UK’ and ‘Premier League’ as synonyms. Mind you, given that they seem to treat ‘England’, ‘Britain’, and ‘United Kingdom’, theyare at least consistently inaccurate.

Posted in Ethics, Football League, Governance, Premier League, Pyramid movement | Tagged: , , , , | 1 Comment »

Whelan and Wigan

Posted by John Beech on May 4, 2010

With reform of football being part of the current zeitgeist, and political parties showing some interest in the topic at least until Thursday evening (see The Times They Are A-Changin’ 3, it does not come as a complete surprise that the Premier League, in the form of certain of its club Chairmen, should begin to stick their heads above the parapet and start using the R word – that’s as in Reform, rather than Relegation.  Wigan Athletic’s Dave Whelan has made the early running.

He is reported by euFootball.biz as saying on the subject of debt “People say the Premier League has got to be curtailed in what it can do and what it can’t do but it’s no use just saying ‘Don’t interfere’….As a league, you just can’t have clubs going into administration. Let’s get a figure, 20 or 25 per cent, and say that you can’t borrow any more than that percentage of your turnover.” (1).  For the clubs that fail to comply he suggests “If you do that you get penalty points. That would clamp on everything. That gives the bigger clubs greater scope to borrow money and it puts a restriction on smaller clubs like us, Hull and Portsmouth“.

Not only has he failed to spot that Portsmouth’s nine point deduction did not actually punish them by condemning them to relegation – they are relegated already even if the nine points were to be magically restored – but he fails to appreciate that points deduction is essentially dysfunctional as a sanction (see my research on this here if you have any lingering doubts).

He also seems to have conveniently forgotten how Wigan, a Northern Premier league club until 1978, comes to be in the Premier League.  Whelan bought he club in 1995 when they were in the old Division 3, then the fourth tier.  The club’s accounts give an interesting picture of how they have climbed to the top.  The club managed to grow its turnover slowly but steadily, reaching a level of just over £4m in 2004/05, the season in which they won the Championship.  Since then, turnover, having made the obvious initial leap with greatly enhanced broadcasting revenues through PL membership, has continued to rise steadily, reaching £46m for 2008/09. the most recent season for which financial data is currently available.

Has the meteoric rise been financed from revenues, without the acquisition of large debts?  In Whellan’s words “The club owe me something like £50m to £60m and I’m turning that into shares so that if I sell them it doesn’t affect the football club. I’ll never get all my money back” (2).  I’m sure it’s his natural modesty that stops him mentioning in this statement of his own largesse, putting him in the same mold as, well, if not quite Abramovich then almost in the league of Middlesbrough’s Steve Gibson, that it comes entirely coincidentally with his appearance at No.1 in the new Sunday Times Sport Rich List (3).

But what of Wigan’s debts?  Their accounts make no mention of any directors’ loans, suggesting that a more accurate statement would have been that the club owes Whelan’s companies £50m to £60m.

Wigan’s long-term liabilities were £8m in 1999/00, and have grown steadily since, standing at £47m in 2008/09, together with current liabilities of £42m.  With a turnover of £46m for the same period, it’s rather hard to see where he has plucked this figure of 25% of turnover being the upper limit of debt that he is so strongly advocating.

Wigan Athletic is then perhaps not a model of best practice for others to follow.  Neither is it with respect to the other plank of UEFA’s Financial Fair Play Protocol – keeping wages to within 60% of revenues.  For 2008/09 Wigan’s ratio was 81.5%.  In 2004/05 when they won the Championship and gained promotion to the Premier League, they spent over £8m on wages and salaries against revenues of just over £4m – the ratio was actually 204.3%, which makes ‘cheating’ Portsmouth’s profligacy with money it ‘didn’t have’ and a ratio of 109% seem almost modest.

Not that any of this necessarily detracts from the argument Whelan is making; it merely raises questions about the advocate.  Debt is undoubtedly out of control in the majority of Premier League clubs, and some means of reigning in that in, and preventing its recurrence, is sorely needed.

To me however the source of the problem lies not in the principle of debt per se – there is absolutely no sound argument that can be made, for example, against Arsenal borrowing money to finance the Emirates with a sound business model to sustain the debt – but in the source of the money borrowed.  When ‘benefactors’ ‘invest’ in clubs, there is no rigorous examination of whether the debt is sustainable, and the lender is in effect the guarantor of the loan!

A debt cap certainly has its attractions, but until clubs are only allowed to incur debt by borrowing from independent sources who will scrutinise whether there is an effective business model in place to ensure that the debt is repaid, we will continue to see wide-scale financial doping, and the occasional ‘victim’ of ‘benefactors’ who either can’t or won’t continue pouring money into their club.

Posted in Benefactors, Debts, Governance, Premier League, UEFA, Wages | Tagged: , , , , , | Leave a Comment »

The Portsmouth Horror Show

Posted by John Beech on April 24, 2010

It is to the credit of Andrew Andronikou, the Administrator, that with an unexpected transparency that he has published the report (1) to be presented to the creditors at the meeting on 6th May.  That said, there is little more that can be said to deserve the term ‘credit’ in this latest episode of the sorry saga of Pompey’s decline and fall.

The report sets out to the creditors the various options, which are essentially that they agree a Company Voluntary Agreement (CVA) or the club is liquidated in an attempt to pay off the debts.  It is abundantly clear that, while the creditors cannot realistically expect to recover anything like all the monies owed to them (reports have suggested that the crucial figure missing from the report is settling for 23p in the £ [2]), liquidation would be an even less attractive option for the creditors.  Whether the creditors will accept this kind of level of payment remains to be seen, but it is difficult to see why Andronikou is so optimistic that a CVA will be agreed, although the quite what the situation is with prospective new owners, and their willingness or otherwise to contribute to paying off the debt, is, as yet, known only to Andronikou.

Inevitably the richness of financial data in the report provides the entrails to be picked over in order to assign blame for Pompey’s decline and fall.  A good starting point is the fact that wages had risen to the level of 109% of revenues, not exactly a sustainable business model.  It could only be sustainable with a benefactor prepared to keep pouring money into the club – a luxury that Portsmouth has not enjoyed of late.  A major tranche of the club’s debt is to previous owners – £39.2m in the form of unsecured loans and £14.2m secured against the stadium, the better part of half the debts – who are not prepared to write their money off, in effect, as equity in the way that Abramovitch or Gibson have done at Chelsea and Middlesbrough respectively.

Is it as simple then as attributing Pompey’s ills to their involvement with the ‘wrong sort of benefactor’? Well, only at a very simple level.  At the next level down in a hierarchy of causation, there is the issue of how it would have been possible to have avoided the wrong sort of benefactor.  Certainly these benefactors must accept a major part of the blame – after all, they chose to take on the role.

To me the story of Portsmouth since Gaydamak decided to walk away has been a savage indictment of the obvious inadequacies of the benefactor model, offering examples of a benefactor who gave up, a benefactor who simply didn’t have the necessary funding, a benefactor so disinterested that he never visited the club, and a benefactor who ended up in that position by default rather than by plan.

The media have tended to focus more on the mid-size debts, and there are plenty of rich pickings among the entrails here.  The staggering level of debt to agents, for example.  The largest is to Jaques Perais for the sale of Diarra to Real Madrid, a matter of over £2m.  So significant is the debt that Perais is on the Creditors committee (a first perhaps for football Administrations?), other members including two football clubs Stade Rennais and RC Lens (again perhaps a first?).

The small-size debts reveal a particular horror show.  Among is the shameful debt of £2702 to those stalwart supports of the game, St John Ambulance.  Pompey fans have a history of dipping their hands in their pockets – in 1976 SOS Pompey raised £35,000 [which would be of the order of £200,000 today] from fans to save the club (3) – and it is not surprising that fan Tom Purnell established a webpage to raise money to clear the disgraceful debt, something that was achieved in roughly a day (4).  Well done Tom!

Since the publication of the report, it has been suggested that the figure of £119m debts may yet rise further (3).  In particular, there is still some uncertainty over future bonuses and appearance fees for players that will need to be paid.  The Portsmouth Evening News has already uncovered two unlisted debts that are even more shameful (4) – the club owes two cancer charities almost £15,000, money already raised in their names.  The fans have shelled out over St John’s Ambulance, the players have shelled out to keep ground staff in their jobs (5), so isn’t it time that the former owners and/or the former Chief Executive dug deep to stop the club’s name sinking even lower?

I must admit that although I am not often shocked by new stories of appallingly bad management in English football, Andronikou’s report is exceptionally disturbing reading.  Just how many more wake-up calls do we have to have before the game gets itself properly in order? The self-serving Premier League Chief Executive Richard Scudamore is right when he says Pompey’s problems are just that (6), but, unless the process of governance precludes the antics we have seen in the boardroom at Fratton Park of late, English football continues to head remorsely towards a brick wall.

Posted in Benefactors, Ethics, Governance, Insolvency, Ownership, Premier League, Public relations | Tagged: , , , , , , | 8 Comments »

The Premier League Old Boys Club

Posted by John Beech on April 9, 2010

This is the mixed bag of clubs who face the drop from the Premier League.  Likely contenders for membership this year include of course Portsmouth, Hull City and West Ham, all of whom have been hitting the headlines for the wrong reasons with regard to their financial performance as much their on-the-pitch performance.  It’s not a club that you have to pay any membership subscription to belong to; on the contrary, it’s an elite club in receipt of handouts – parachute payments.  And in the case of the aforementioned clubs, the money will come in handy to tackle their existing debt mountains.

Latest development is the proposal to not only increase the payments, which will in any case rise from £12m to £16m per year, to a four-year period rather than the current two years, so each of the dropping clubs would receive up to £64m gratis (1).

However, facing them on the pitch next season will be clubs that include those promoted this summer from League 1, the likes of possibly Millwall and Huddersfield.  And what bonus will they have to compete in the transfer market with given that they are having to ratchet up a gear financially?  Well, precisely nothing, because, while we increasingly reward failure with parachute payments, the clubs that rise the pyramid without recourse to financial doping, do not receive any reward for their success.  Dysfunctional or what?  As regular readers will know, I have long been an advocate of rocket payments rather parachute payments.

To add to the insanity of this, it is worth remembering that the Premier League that is so impressed by its own generosity in paying roughly £30m per year to the Football League in what it calls, without any apparent sense of irony, Solidarity Payments (2).  Will we see any rise in this figure, given that the three  failed Premier League members will be benefitting to the tune of £48m a year?  I’m not holding my breath.  It seems to have become a way of life in football to reward failure rather success.

Posted in Governance, Organisational culture, Premier League, Pyramid movement | Tagged: , , , | 1 Comment »

 
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