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 ‘Pyramid movement’

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 »

The Woking way: Trumping at the Cards

Posted by John Beech on August 24, 2010

Some news from Woking that made even a jaded old observer such as myself sit up in his chair.  It wasn’t the fact that Chairman Shahid Azeem had quit (1) among concerns over the Cards’ losses (reported as £200,000 for last season), or that ‘benefactor’ Chris Ingram had stepped in again (2) to save the club.  These, after all, are not entirely unfamiliar stories at far too many clubs.  But first, a little background.

Woking joined the Conference in 1992, after a little floating around the divisions of the Isthmian League.  This led to a fine series of seasons on the Nineties, with regular appearances in the FA Trophy, which they won three times.

Their first appearance on my radar screen came in February 2002, when they faced a serious financial crisis (3).  Debts were reported thus “Woking’s trading company showed a deficit of £230,000 up to July 31 last year, added to a £325,000 loss already visible on the balance sheet. More crippling losses totalling £204,00 are understood to have been made so far in the current financial year.”  The club issued 1,000 shares for £255,000, Ingram acquiring 510 of them.  Ingram, a life-long fan, had recently sold his company Tempus for more than £400million.  He commented at the time “As I got closer I realised the club needed more business nous. There is a shortage of that at this level, not just here.  I’m going to try to make it a sustainable business so if I’m not here it can still work as that and resist pressure that supporters sometimes put on you to just spend, spend.   There will be much tighter purse strings. The authority to spend money will be narrowed down hugely.”  Again, not a particularly uncommon state of affairs, except perhaps the scale of his personal fortune.

In November that year the club went full-time, the ninth Conference club to do so (4).

In September 2007 the club got the go-ahead for the redevelopment of their stadium.  Ingram promised he would “provide a stadium worthy of our fans, community and town” (5).  In November the same year there was a structural re-organisation – Ingram  stepped back a bit, becoming Chairman of Woking Football Club (Holdings) Limited, while David Taylor became Chairman of the club (6).

Taylor adopted a hard line, sacking manager Frank Gray and his assistant Gerry Murphy (7), and announcing that “nothing will stop me being the chairman that takes this club into the football league” (8).  Furthermore he declared “I place on record, if the next man doesn’t deliver I will go as well” (9).

The following month Kim Grant was appointed manager (10), with Taylor upping the ante thus: “I will go if we do not get promoted in three seasons”.  Grant found himself sacked in September after seven games of the new season (11) after a disappointing start.  Taylor at this point offered to resign, a move rejected by the board (12).

Shortly afterwards Ingram really started to try and distance himself.  He was reported to be underwriting the club to the tune of £350,000 per season, but said that he intended to stop carrying on with his support from May 2009 (13).  Property developers, banks and the recession were to blame for the lack of progress with the stadium redevelopment.

In November, new Commercial Manager Geoff Chapple ‘rubbished plans’ for the club to revert to a part-time employment basis (14).  A share offer was placed via the Supporters Trust (15).  The following month spoke out in favour of regionalisation at the Conference level, commenting that (16).

January saw a slight change in financial strategy.  In an interview Taylor said “The decision we’ve taken is not to go fully part-time but, instead, to focus on getting the best set of players we can within the playing budget, regardless of whether they are full-time or part-time” (17).

By March last year there was talk of local businessman Shahid Azeem becoming involved in the club in some as yet unspecified way (18), although it would probably be at board level.  Shortly afterwards Taylor turned his attention back to the footballing side, sacking the latest manager, Phil Gilchrist (19).  He explained “The team weren’t even sweating [at half time].  That’s not what I want from a club, players who play for Woking will play with pride and give everything.  I got my fellow directors together and asked them their opinion, and as a board we made the decision at the end of the game”.  Ah, the old sweat factor as the determinant of whether to sack someone else.

Less than a fortnight later Taylor announced his intention of sacking himself, as soon as the club’s long-term future was clarified at the end of the season: “It was always my intention at some stage to stand down once the Kim decision happened.  I’ll stay on until something firm is place for this club.” (20).  It had always been his intention to resign after sacking Kim Grant apparently.  He offered three reasons for his decision: “One is that I made a mistake, I have to pay for that mistake and I have paid for that mistake every moment of every day for the whole of the season if anyone is in any doubt about that.  Secondly I can sit and complain or I can actually get up and do something and I am now making sure the future of this club is a lot brighter than it has been for the last 12 years.  I’ve been involved overseas and in this country speaking to potential purchasers and other shareholders.  The third reason is I do have to have some sanity back. I cannot wait to be either just a director or just going back on the terraces.”  The club meantime was moving towards relegation.

Ingram then announced that he was ‘giving the club back to the fans’ (21), a simple matter of him relinquishing his shares and fans buying them.  A current major shareholder, Peter Jordan, who had also helped bankroll the club in the past, offered an interesting insight into how ‘benefactors’ see themselves – “I do it as a hobby. I don’t drink, I don’t smoke, this is how I spend my money. There are lots of people out there who want to put money into the club”.

In June 2009, Taylor finally did stand down, and Shahid Azeem was appointed Chairman (22).

Ingram appears to have carried out his threat of withdrawing funding, as in August it was reported that striker  Craig Watkins had to pay his own transfer fee when joining the club (23).

A year on, and once again the club is in deep financial difficulty.  This year’s loss is reported to be around £200,000, which Ingram has had to step in and underwrite (24).  Azeem, who had put his own money into the club during the past season, had however lost the faith of the board and has gone (25).  He defends himself nonetheless, saying the club is now in a better financial position than when he came in (26).

Perhaps Woking is in no particular way untypical of football clubs.  It certainly shows characteristics that are far from unknown:

  • a ‘sugar-daddy’ whose commitment varies over time;
  • a Chairman who prevaricates over the right choice of manager, but seemingly does know eventually who doesn’t want;
  • a club losing money.

What then prompted me to sit in my chair.  Well, it was a matter-of-fact statement by Azeem in defending himself.  Tucked way in his comments was the following “The club has not made a profit since 1991”.  Let me just run that past you again, with some melodramatic emphasis: “The   club   has   not   made   a   profit   since   1991”, 1991 being a year before promotion to the Conference.

My access to football clubs at Woking’s level is patchy, and certainly doesn’t go back twenty years.  Is Woking, I wonder, unique in its inability to break even, or is it some kind of unfortunate record breaker?  It certainly is addicted to financial doping.  Not in a Pete Docherty wild excess kind of way; more in the way of someone who has become addicted to soft drugs over time and just can’t stop.

Is there any vestige of ‘financial fair play’ when a situation like this just rolls on and on and on?  How can the decision to remain full-time be reasonable if any sense of fair competitive balance is to be maintained?  How much longer can we hear that mantra that ambition leads to promotion, which in turn leads to prosperity?  Why does nobody seem to be too bothered with this situation?

Posted in Benefactors, Ethics, Insolvency, Ownership, Pyramid movement | Tagged: , , , , | 2 Comments »

HMRC v. Sheffield Wednesday

Posted by John Beech on July 24, 2010

Sheffield Wednesday are the latest club to face a winding-up petition from HMRC (1), over a PAYE debt of £550,000.

But Sheffield Wednesday is not your average club.  A founder member of the Premier League, its playing performance has been somewhat variable since.  Relegated in 2000, it faced a further drop to League 1 in 2003, bounced back to the Championship in 2005, only to be relegated again this summer.

In spite of this yoying, which makes financial control a particular change, the club had managed to turn a profit before tax in 2006/07 of £1.5m and in 2007/08 of £2.2m, although worryingly the most recent figures, for 2008/09, show a loss of £3.7m.  Also worrying for the club is that the all important salaries/wages ratio, which for four consecutive seasons had been below the ‘good practice’ mark of 60%, leapt up to 73% on 2008/09.

In the annual report for 2008/09 Chairman Lee Strafford said “…Sheffield Wednesday is a good long-term opportunity for investors who are focused upon developing the strategy that has now been put in place.  There are a number of possible investors looking at the plans and assessing the potential, but your board has drawn up these plans with a view that the continuing support of the Co-operative Bank and the other debt holders the club can be taken forward with or without investment.  This is a credit to the longer-serving and former directors who have ensured that the club continued to remain within its agreed banking facilities, which have been renewed until 31 December 2010.  The Group’s net debt has been reduced by a further £0.3m during the year from cash generated from operating activities and player trading in the prior year.”  This might be decoded as “We want out.  We are beholden to the goodwill of our bank.

And that goodwill is being stretched.  The most recent data I have indicates that the club’s debt to the Co-operative Bank is just over £24m, consisting of an overdraft of over £9m, a loan for the training ground of over £9m, and parked debt of over £5m.  I read reports on fans’ forums that the club’s overall debt is over £30m.  For a club dropping to League 1 this is a very high level.  My research shows that clubs in League 1 generally begin to get into trouble when debt levels reach £1m, and even for those in the Championship the corresponding level is £3m.

If the club fails to pay HMRC before 11 August, the date the winding-up petition is due to be heard, and it is far from clear at this stage that they will manage to, the prospect of Voluntary Administration hoves into view, with the prospect of new owners looking for a bargain price.  Prospective owners there have certainly been of late, the most recent being a long-running and ultimately unsuccessful attempt by Geoff Sheard and a ‘London-based international consortium’ (2).

Key in negotiations is the 10% holding of Wednesdayite, the Sheffield Wednesday Supporters Society (see here), which is good news from the fans’ perspective.  However, if the club were in Administration, this hardly puts them in a position of strength.

The implications of failing to beat, ironically enough, Crystal Palace on the last day of the season, thus being relegated, may prove far-reaching.

One thing I have not mentioned so far is that last October the club won approval for an expansion of Hillsborough from 39,000 to 45,000 seats, due for completion by the end of 2013 and at cost of, wait for it, £22m.  For the record, the average attendance last season when still in the Championship, was just above 23,000.  Comment is superfluous.

Posted in 2018, Debts, HMRC, Pyramid movement, Stadium, Trusts | Tagged: , , , , , | 2 Comments »

The Top 91 Clubs?

Posted by John Beech on May 29, 2010

The uncertainty and overall shambles characterising the allocation of clubs next season in the Non-League divisions (see Appendix E: Tough Love for Salisbury City?) is in danger of spreading to the Football League.

Grimsby Town, together with Darlington, occupied the two bottom slots of League 2 at the end of the season just gone, and are therefore relegated.  Stockport County, who finished bottom of League 1 and are thus destined for League 2 this coming season, remain in Administration, having entered that state back in April 2009.  Football League rules state that a club cannot enter two consecutive seasons in Administration, and, unless Stockport County rapidly get their act together to come out of Administration, they will be ineligible to begin the coming season in League 2.

Perhaps not unsurprisingly, Grimsby Town approached the Football League to enquire whether Stockport County’s failure to come out of Administration would mean they (Grimsby, having finished bottom but one) would then be reprieved.

The answer they received from the Football League is that they would not be reprieved should Stockport fail to come out of Administration, and “according to Football League rules, we would operate with 23 clubs in League Two next season” (1).

Now, some might see Grimsby’s attempt to gain a reprieve as clutching at straws and that they should just quietly accept relegation.  That is a matter for debate.  But what is a matter of fact is that Football League rules, designed to punish a club for financial misdemeanours (in this case, Stockport, who are not even actually in League 2), would result in one League 2 club every Saturday next season sitting twiddling its thumbs and failing to take much needed revenue at the turnstiles.  In other words, the Football League would have contrived to hit every club in League 2 financially as a result of the financial misdemeanours of a previous season’s League 1 club!  It frankly defies belief.

No doubt Grimsby would also point to the case of Forest Green, potentially reprieved in the Conference National if Salisbury City are ejected for financial problems.  But then, consistency never was a strong point of football governance.

Posted in Football League, Governance, Pyramid movement, Relegation | Tagged: , , , | 2 Comments »

The descent of Grays Athletic

Posted by John Beech on May 28, 2010

As I said in my last blog post Appendix E: Tough Love for Salisbury City?, Grays Athletic face a rather worse fate rather than straightforward relegation to the Conference South.  It’s a depressing tale, and one can’t help feeling it was an accident waiting to happen to a club.

The club had faced and survived a crisis at the beginning of the eighties.  In 1981 they seemed to have achieved a significant measure of stability when, as it still says on the club website (1 ) as I write, “the Club Patron, Mr. Ron Billings, ensured the future of Grays Athletic at the Rec by purchasing the ground“.  What it doesn’t mention is that Ron Billings and his family were  property developers (oh dear, you can almost guess at this point the way this is going to go).

Shortly after this, new management came in, and the club started to make progress.  In 1983 however, a fire destroyed the main stand, but again benefactor Ron Billings stepped in, building the Ball Court Complex which included Dressing Rooms, Club Room and Bar (2).

In 1990 a new 20-year lease was signed and all still looked well, but it is the coming to an end of this lease that has precipitated the current crisis.  It needs pointing out though that the club has had twenty years to prepare a ‘plan B’ in case the lease was not renewed.

Ten years ago Micky Woodward appeared on the scene.  He’s a difficult man to summarise – ‘eccentric’ springs to mind, as does ‘inconsistent’.  For example, in 2003 he tried to buy Peterborough United (3), but, having failed, turned Grays into the first club beyond the Conference to be full-time (4).

As Chairman/Director of Football Woodward has had, well, unusual relationships with his managers.  At the end of May 2006 Woodward recruited Frank Gray as manager (5), only to sack him five months later (6) and to take on the managerial role himself (7).  “Why pay someone else to run the club when I can do it?” as he put it.  Three weeks later he seemed to have found the answer to this rhetorical question, appointing Andy King as manager (8).

By the end of 2006 Woodward had started to address the issue of a stadium lease due to run out in 2010.  It was reported that Woodward had an option to buy the New rec from the Billings family, and would sell it fund a new 5,000 capacity stadium nine miles away (9).  Given the density of football clubs, all with strong local identities, it is perhaps not surprising that reaction was at best mixed.  In preparing these plans, Woodward felt that Thurrock Council had not been very supportive (10).

Shortly afterwards Woodward appointed manager Gary Hill as Director of Football (11), only to announce three hours later that Hill had changed his mind (12).  A few days later he had to admit that in fact he had withdrawn the offer to Hill rather than Hill withdrawing his acceptance of the post (13).

Woodward has over the last few years faced opposition and abuse from fans, never courting cheap popularity.  These confrontations led on one occasion to Woodward even threatening to take the club back to the Essex Senior League (14), a threat which has unfortunate resonances today.

By November 2007, sites were still under consideration for a new stadium, but there was talk of temporary ground-sharing (15) as the clock ticked on.

In February 2008 it was again ‘goodbye’ to a manager (Justin Edinburgh this time) and Woodward, obviously forgetting the answer to his previous rhetorical question, took over again as manager (16), even planning a long stay in the post (17).  In September he again reacted to criticism from fans, announcing that he was putting the club up for sale (18).

At the start of the following season players were forced to take a pay cut following the withdrawal of sponsorship (19), and players were allowed to leave (20).   Woodward was reported as saying the club  “would have ceased to exist within six months without drastic financial cutbacks” (21).  Following a succesful Cup run, the wages were however paid (22).  As the season progressed, players were nonetheless released (23).

At the start of this season Woodward stepped down as Chairman and Chief Executive, but remained a director (24), again citing fan abuse, although not offering a considered analysis of the causes of the abuse.  Since then there have been a number of changes at board level, Andy Swallow being progressively described as Deputy Chairman, Chairman and most recently owner.

Attempts at interim ground-sharing all seem to have come to nought, and the club has found itself facing the drop not into the Conference South, and not even into Isthmian League, the Football Association declining to allocate the club a place there.

What will happen remains distinctly unclear.  An appeal has been launched with the FA against the decision to place them in Step 5 (25), but without a ground there seems a very real possibility that no team will be turning out season.  A newly formed Supporters Trust, GAFC 1890, has weighed into the battle, but they have arrived late and face an almighty upward battle.  The Billings family had previously offered to put £700,000 towards the cost of new ground, but time is running out.

Grays Athletic offers not only evidence of the flaws in the benefactor model, but also the dangers of the separation of stadium ownership from club ownership.  Let us hope lessons are learned, and, with a will, and a massive dash of luck, they will not have been learned to late at Grays.

[The situation at Grays is complex and apparently subject to rapid change.  It has not been widely reported other than in the local press.  Any factual input as comments from informed observers on developments would be appreciated.]


GRAYS UPDATE – 18 June 2010

Mixed news for Grays. They have won their appeal against effective demotion to the Essex Premier League, and should now start in the Isthmian Premier League (1). While this solves one problem, it complicates the issue of where they will groundshare (2).

The bad news is that the club has been served with a winding-up petition by HMRC (3).

Posted in Benefactors, Football Association, Football Conference, Governance, Pyramid movement, Relegation, Stadium, Trusts | Tagged: , , , , , , , | 1 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 »

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 »

Ups and Downs 1

Posted by John Beech on April 7, 2010

Like virtually every football fan, there is really only one football result each week that matters to me personally – I have to know it almost as the whistle blows (thankfully possible in the age that we live in).  The rest I could easily wait to read in the Sunday papers. With my particular perspective on the game, it’s perhaps not all together surprising that my focus broadens considerably once we reach that critical point in every season, the appearance of the BBC’s Ups and Downs webpage.  The financial impact of either relegation, or for that matter promotion, on a club which is already struggling can prove critical.

The financial impact of relegation is the more obvious of the two.  Broadcasting rights decrease significantly, matchday revenues (both from falling gates and lower ticket prices) decrease, and any new sponsorship deal will be at a reduced level.  In other words, the club’s budget takes a dramatic hit.  Unless players are on negative performance-related pay, i.e. contractually lower wages in the case of relegation, a demoted club is not well placed to cope in the lower league.  Even when there are parachute payments, these may already be committed to alleviating current debt problems.  If there are already serious debt problems, these will only increase.  Think Bradford or Leeds.

Promotion also puts particular pressures on a promoted club.  To compete effectively at a higher level budgets for player purchases and player wages need to be increased.  Sure, revenues will be increased, but you are hardly on a level playing field since all those clubs already in the higher division have the same order of revenues too.  The apologists for the Premier League like to put it out that the new boys arriving from the Championship have an extra £46m to spend, ignoring the fact that it is not ‘extra’ in the sense that it is over and above thye revenues of your new competitors.  What is needed in this case is rocket payments, a much more equitable idea than parachute payments, which reward failure and give relegated clubs an unfair advantage over clubs already in the division which the club has dropped to.

As with every season, many of the kind of clubs that I blog about feature on the Ups and Downs page, and their results excite me in a way they simply do not in early or mid-season.  Here then are my thoughts on this year’s crop, starting with the Conference Regionals and working our way up.

Conference North and South
Potentially coming up to this level are Nuneaton (now Town), Boston United, and Bradford Park Avenue, all of whom might be seen as rehabilitating themselves from previous financial crises, albeit a rather long rehabilitation in the case of Park Avenue.
At some risk of facing the drop are Hyde United and even Northwich Victoria.  [Club links are to previous postings on the particular club]

Conference National
Potentially coming up from the Conference Regionals are Hinckley United, and definitely coming up are resurrectionist Newport County.
Virtually certain to drop to this level are Darlington, which will only add to their financial woes.

League 2
Among the contenders for promotion for the Conference are Luton (hopefully in a stronger position that reflects the new ownership’s determination to get the club back on an even keel), Rushden & Diamonds (in trouble with HMRC as recently as last summer) and Oxford United (who see themselves as ‘transformed’ [1]).
Dropping down will almost certainly be deeply troubled Stockport, and they could be joined by Southend. Whether that would prompt Chairman Ron Martin to finally wake up and smell the coffee instead of pressing obsessively on with his ten-year preoccupation with a new 22,000 seater stadium (almost as big as Darlington’s when it opened) at Fossett’s Farm remains to be seen. He does of course have the distractions meantime of a winding-up petition from HMRC, due back in court in just a week’s time, and the late payment of wages (2).

League 1
Definitely some interesting clubs vying to gain promotion to League 1.  Notts County and Bournemouth are currently in the top three, the former being one of the most blatant cases of ‘financial doping’ this season and clearly in breach of the spirit of the mandatory salaries cap.  Both have fans who must feel badly let down by the recent run of management they have received.  Bournemouth have managed, in spite of the problems of a crippling transfer embargo, to turn out the results on the pitch, for which their manager and players deserve considerable credit.  In both cases though I would see promotion as a highly risky venture.
Comong down are likely to be Plymouth, who seem to have learned everything they know about football management from Ron Martin.

Championship
Coming up are likely to be Norwich which might encourage their sale.
Coming down are almost certainly Portsmouth, and probably two from Burnley, Hull, and West Ham.  Of these four, only Burnley seems even remotely geared up strategically to face the rigours of the drop, unless of course the mystery owner sniffing round Portsmouth turns out to be the Sultan of Brunei, a scenario which I consider somewhat unlikely.  I would guess that only Burnley’s departure might be mourned by the other Premier League Chairmen.

Premier League
Newcastle are of course already promoted, and this will prove an interesting club to follow off the pitch next season.  How this will impact on Mike Ashley’s personal strategy regarding the club remains uncertain.  Cardiff City still have serious promotion prospects, but off the pitch the focus is very much on the rest of this season – the seemingly forever toted Malaysian investment, a ‘final’ appearance in court against HMRC on 5 May, and the suggested departure of Spinmeister Ridsdale as a condition of investment.
At the top end there will be plenty to follow off the pitch before the start of next season following the generally poor showing in Europe, with Liverpool’s ‘Laurel and Hardy’ under increasing pressure (not to mention the position of their manager – I’ll leave you to think of your own metaphors from the world of entertainment).

I’ve numbered this posting ’1′ as I plan to return to the theme at the end of the season when the certainties of promotion and relegation have been decided.

Posted in Promotion, Pyramid movement, Relegation | Tagged: , , | 6 Comments »

 
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