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Financial Situation in British Football Shows the Need for a New Way of Thinking

rangers ibrox Financial Situation in British Football Shows the Need for a New Way of Thinking

The last few weeks have not been good for the financial side of the beautiful game. We have seen clubs going into administration, others nearly folding and no progress on controlling the wages of top players. Only today Wigan have announced a net loss of £7.2 million and admitted that wages at the club account are 78% of the club’s total revenue, a truly worrying statistic given that that outlay has resulted in nothing more than a perpetual battle for Premier League survival.

The fact that this story has largely been ignored by the media only goes to highlight the terrifying regularity of these happenings. A club in the Premier League, the richest in the world, should not be making consecutive yearly losses. The money is there for clubs to make a profit if they are run correctly; spending two-fifths of your income on wages is not an example of how to do this. However running a club like you would run any other business is also a pretty certain way of avoiding all trophy contention.

Football in this country and across Europe has now found itself in situation where finances are running out of control. More money is pumped in through TV and sponsorship deals with some of the world’s biggest companies and yet losses increase and debts build up. Rangers, the most successful domestic club in the history of world football, is now in administration because it refused to live within its means. Things are going to have to change.

The incoming UEFA Financial Fair Play rules are a good start in that they at least acknowledge there is a problem within the game. However, serious questions remain as to whether the plans go far enough and are fair to clubs that do not already have huge marketing operations. The suspicion is that clubs like Manchester United and Liverpool that generate huge income from merchandise around the world will be in much stronger positions than clubs like Tottenham and Fulham that have less of a global reach.

But still financial reform of a truly significant nature is ignored or at least put on a very distant backburner. Still fans clamour for more money, better signings and still the owners listen and throw more money away with apparently little regard for what might happen a few years down the road.

Football is by its nature not used to looking at the long term. As long as wealthy benefactors are at charge you are not going to hear many fans calling for financial restraint. At a point that one imagines will not be too far in the future however, fans are going to have to realise that the endless spending and exuberant wage bills are not going to be sustainable, that there is going to have to be a serious tightening of the way that clubs are run and that this will mean that as fans they are going to have to lower their demands as well.

Fans are important in the future direction of football. We have already seen an increase in the amount and visibility of fan-owned clubs such as AFC Wimbledon and FC United of Manchester. The current financial perils haunting football are not good but good things can certainly come out of them. A better understanding of how clubs are run, more connection between fans and the financial side of the game and a move back towards the roots of the game with clubs being run by fans for the fans, not as a publicity machine for a rich elite.

That may not be a popular thing to say but if things continue down the path they are on at the moment then it will simply mean a choice between a club living within its means or no club at all.

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20 Responses to Financial Situation in British Football Shows the Need for a New Way of Thinking

  1. Ardwickian says:

    I’ll save everyone the trouble of posting,as we know how it’s going to go,CITY’S entirely to blame for all this.

    • Roy Skillen says:

      Not City’s fault at all this has been going on for years. The price of success is just far to great but a lot of what is now going on starts with impatient fans that demand trophies year after year. The chairmen listen to their demands because lets face it no fans no club. They then try to sign the best players. The players agents then say ok but it will cost you this much money and the chairmen gives in in the hope the player will bring with him more merchandise sale and wins that will increase profits. But all the players already at the club say well if this new guy is getting that much then I want the same and if you don’t give it to me I am will find someone that will. It is a vicious circle that can be hard to get out of. Look at Leeds Utd. It wasn’t too long ago that they made the Champions League Semi Finals. SOMETHING HAS TO CHANGE

      • Why? says:

        You could say look a Huddersfield one time giant of the game. The charm of football used to be any clubs could be these giants thats how it once was. The kings from one time could fall from grace. The problem is more to do with efforts to keep the top teams top. What is wrong with Rangers struggling for the next 10,20,30 years as teams like Aberdeen and Hibs etc have had to? Surely they would only be taking Rangers place. It has had to be ok for their fans for years why not Rangers? These clubs do not disappear they are loved not only by plastic fans who would jump ship but the real ones who will keep them going what ever happens. The advent of the premier league, SKY etc has made the situation worse granted with all the big money going to the top in the big leagues with fans who grew up watching say Huddersfield now following the big clubs its the same in Scotland but the true fans still help keep Huddersfield alive. The premier league, SKY and fickle, plastic fans as well as other things have made any problems far worse but thats life now I suppose. Rangers football club will never die just like Leeds they will do the same as Preston, Huddersfield even Man City to some extent maybe they will come back like City if the fans stay with them or maybe they dont. That is what has and should always happen in football, it’s part of the game like it or not.

  2. David says:

    The nightmare scenario could be that there is a push for some sort of a NFL-style salary cap in the major European leagues by the smaller clubs, which results in a breakaway by the larger clubs to start up a European Super League…

    • Guy says:

      I think a breakaway is easier said than done. Any such teams would immediately lose all sanctioning and all league revenue. To be replaced by what? A rogue league sanctioned by no international body, no sanctioned refs, splintered fan bases, players possibly ruled ineligible by their national FA to play for their national team, problems with EU laws…….

      Anything is possible, but I just don’t see it happening.

  3. Pedro Lombana says:

    With FFP coming in, 3rd Party ownership in which fans buy part of the contract of new signings looks like a good option.

  4. Greater fool theory: As long as there are teams that think they are on the cusp of getting to the UCL or the EPL, there will be overspending

  5. The Gaffer says:

    My two cents is that it’s very possible for clubs to live within their means. Look at Norwich City and Swansea City as two examples of clubs who have built strong teams with no superstars and are in the middle of the table, while money spending sides below them are struggling. It’s not going to win you the Champions League, but teams can still compete.

    The bigger clubs in the Premier League have far more income coming in from sponsorships and ticket sales than Norwich and Swansea, so they can afford to spend more to compete in Europe.

    Also, Premier League clubs should look at supporter’s trusts like the one that Swansea has where the fans own 20% of the club and have a seat on a board. Swansea is the only club in the Premier League with such a model in place.

    Cheers,
    The Gaffer

  6. US Stoke Fan says:

    Better player evaluation would certainly help. Chelsea purchased Fernando Torres for 50 million pounds despite the fact that he struggled to play in more than 26 league games a season through-out his career. An oft-injured player would never be worth that kind of money just due to the fact that you’d need another striker to fill out the other 12-25 league/non-league games of the schedule. Man City throwing 20+ million at guys like Lescott and Millner certainly doesn’t help. Man United paying 19 million for a goaltender is basically insane..

    As the gaffer pointed out.. Norwich and Swansea were successful because they obtained players like Holt(too fat), Morissey(too slow), and Sinclair(too small).. who were just as productive as above average premier league players that would have cost 8-12 million pounds.

    It’d be nice if more money was plowed into the academies and more youth was injected into the league period. While many have noted that they aren’t in favor of a salary cap can we at least have a cap on number of players over “X” in value that can be on a roster.. By that I mean there are players that can help other teams that are rotting on benches at City, Chelsea, and Spurs that would be forced to be sold or go somewhere else if there were a limit to say 15 players worth more than 10 million pounds on a roster? This would allow the heavies the flexibility to sign the best players in the world but would stop the practice of having 20+ million dollar players on the bench. It would also encourage more youth players to come up with from the academies and play in the FA Cup, Europa Cup, and League Cup matches giving the teams that really care about the cup a chance to win and letting the big teams actually develop their youth.

    I hate to say this but most of the American sports already went through this.. they realized that veteran 28-32 year old average player making 5-7 million per year could be replaced by 20-22 year old rookie for 400k per year without a drop-off in production.. This dropped overall wages but allowed the elite players to make more money while encouraging clubs to get younger and focus on development.. the NFL draft is the lifeblood of American Football teams, Major League Baseball teams each have farm systems consisting of foreign academies, 6-7 minor league ‘clubs’ each with 25-30 players, and a draft that brings in 25-30 players each season; not including foreign signings.

    Finally, the ‘League’ needs to be stronger than the teams. American sports franchises in the NFL & MLB, and some extent the NHL have created leagues with guaranteed profits, controlled wage scales, and tremendous parity.. However there has been minimal influx of foreign ownership; primarily because ownership must be approved by the other owners and the commissioner of the sport. This isn’t solely an attack on Glazer City or Dubai United.. how about Venky’s or the joke that is Leeds United ownership. MLB sold the LA Dodgers to a less than well capitalized real estate magnet.. as soon as he started taking money out of the team to pay his debts MLB basically raided his offices and seized the team for the good of the franchise, the market, and the league. Until premier league ownership comes with stewardship so that if it turns out that someone is using the team as their personal piggy-bank and the league can step in; seize the team and depose the owner it will always have financial problems.

  7. R2Dad says:

    The Bundesliga has a couple CL-level teams, is very competitive, and is solvent. Do what they did. No one has to say, “we’re copying the German model” or anything embarrassing like that. It’s possible. It just might not be as much fun to watch, as top players go elsewhere.

  8. Sloth says:

    You make a lot of good points Stoke Fan, but I don’t think you can regulate the numbers of players based on their worth. For one thing, who determines player worth? And once you start doing that, is the transfer market compromised?
    While you point out one of the strengths of US sports, the unity and power to keep the league healthy, the problem with applying that philosophy is that the Premier League isn’t the only top flight football league in the world. While you could get all the teams in the English leagues to agree, it wouldn’t mean much if Spain, Italy, Germany, etc. all keep the possibility of exorbitant wage scales and pluck all the top talent in the Premier League. If that were to happen, I think you would see the power of English football weaken significantly. Therefore, any effort would need to be on a European wide scale, and the chance of that type of US league unity between all UEFA leagues is not likely in my opinion.
    One workable possibility is the idea of a super league of the “big” clubs of Europe that I had seen mentioned before. A theoretical league like that could be the equivalent of the successful US professional leagues and be able to maintain strong unity and cooperation between the league members.

  9. Guy says:

    For those suggesting some kind of salary cap—-a number of our English readers have pointed out that any such regulation would be illegal under EU law. The respective FA’s can regulate their sport in many ways, but can not act unilaterally to implement wage restrictions or limitations on fair trade. Any kind of cap proposal is DOA.

    As for a super league, I think you would need the agreement of all the national FA’s who were going to lose their best teams to it (not likely) and even then you might run into problems with EU regulations to say nothing of the international squabbling about how many of each country’s teams get to be in it. I think we in the States sometimes lose track of how fragmented Europe is and how difficult it can be reaching agreement on anything other than the time of day. And even then……. ;-)

    • Pete says:

      I don’t think EU law would play any point, EU law only really gets involved if a club or league try to discriminate against EU players, like when England wanted to bring in the rule that all Prem teams must field 7 English players , EU law basically said no, you can’t do that. There are cap limits on non-EU players though.
      It is up to the individual club how much they want to pay players and the players would have to take it or find another club. There comes the problem, you would actually have to get a gentlemen’s agreement between every club in Europe that they weren’t going to pay over a certain amount for a player’s wages. That would be impossible, big clubs don’t want to give up their edge and being able to get the best players comes from being able to pay the most in wages.

      • Pete says:

        EU law ART 39 ‘free movement of workers’ which basically says that workers have the right to move and work anywhere within the E.U. One of the sub-sections says that a country can’t put anything in place that would hinder the opportunity to do this. That’s where the EU stepped in and said England couldn’t have a rule that said English clubs must field 7 English players as this would hinder the chance of players from France, Germany and so on playing in England.
        I still don’t think they could stop a club from saying we’re not paying more than this for a player though, a club is basically a company and they have the right to say what they pay their employees as long as it’s more than the minimum wage which I don’t think footballers would have to worry about

        • Guy says:

          A club can do anything it wants, but if the English FA tried to set a salary cap then I think it would be in violation of the EU sub-section you quoted.

          Thanks for your responses. I certainly don’t know much about EU law, just what Brits have posted. (Hope “Brits” isn’t some kind of slur. I didn’t mean it. Honest. I have close personal friends who are Brits…errr…English.) **sigh**

  10. CTBlues says:

    I think the only possible way anything will get done is if FIFA stepped in and made a world wide salary cap that national FAs had to follow and if they don’t they will face sanctions.

    • Guy says:

      It is my understanding that FIFA/UEFA simply can not do that. EU law trumps everything. FIFA/UEFA can not act in contradiction to it. There would have to be some amendment to the charter of the European Union to exempt football from the rules on wage restrictions/free trade. I don’t think the EU would even begin to consider opening that Pandora’s Box, but strange as it may seem, I’ve been wrong before.

  11. Pete says:

    I don’t like your use of the word ‘British’ to describe this disaster. The fact that Scottish football is a joke has no bearing on the English league which is probably the most successful league in the world. English clubs can afford to pay huge sums to players, Scottish clubs can’t

    It’s time for Scottish fans to take up fishing because their league is dead

  12. ToffeeAndy says:

    Everton isnt exactly the picture of financial health, hell, this was the first transfer window in 6 where we paid more than a couple hundred thousand quid for a player.

    British/Scottish/Welsh/English football, whatever you call it, is in trouble.

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