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The FA Cup That Killed Portsmouth


Since 1996, every Championship Trophy and FA Cup has rested in the trophy case of either Manchester United, Arsenal, Chelsea or Liverpool with one singular exception.  All 30 of those pieces of silverware have gone to the Big Four except for the 2008 FA Cup, which has been ensconced in a sacred place at Portsmouth’s Fratton Park.  That is the same Portsmouth that is now all but certain to go into administration and quite possibly obliteration in the coming weeks.  Those two facts are not just a coincidence – they are connected in an inexorable, tragic manner.

The economics of English football are simply perverse.  It is very expensive to lose in England and get relegated, but it is also ridiculously expensive to win.  Owning a sports team, at least in the short run, is usually a break-even investment at best.  Unless you happen to have Russian kleptocrat or Middle Eastern decomposed dinosaur money, it takes an astute, conservative businessman to own a football team and avoid getting wiped out in the process.

From a pure business standpoint, the best model is to be something like what Aston Villa or Tottenham are right now – successful enough to be competitive with the big boys, avoid any relegation issues and get an occasional sniff at European competition but small enough to cash in on an occasional lucrative Gareth Barry or Michael Carrick sale without enduring the ire of your fans.  That is a sweet spot that is very tough to hit, and Portsmouth is a prime example of what can happen when you miss that narrow target.

Since moving up to the EPL for the 2004/2005 season, Portsmouth has flirted with relegation on occasion, but more often has finished in the middle of the pack.  They have been modest dabblers in the transfer market, and several of their biggest purchases (Jermain Defoe, Glen Johnson and Lassana Diarra) have been sold for bigger profit.  David James was a significant purchase, but has been a good servant to the club.  Other purchases (John Utaka and Dave Nugent) have been clunkers, but most of the Portsmouth transfers have been prudent.  Portsmouth seemed comfortable walking that economic tightrope in the world’s most expensive football league.

Then came the triumph/tragedy of the 2008 FA Cup run.  After beating Manchester United at Old Trafford and Middleborough, Portsmouth found itself in the surprising position of being the last premier league team left in the competition.  Their 1-0 victory over Cardiff City at Wembley is one of the great moments in club history.  However, as the players walked up the stairs at Wembley to receive their medals, they were also ecstatic about what this victory meant to them financially – most players had written into their contracts bonuses of over £250,000 for winning the cup, and manager Harry Redknapp was in line to get a cool £1 million.  All told, the bonus bill for winning the FA Cup probably totaled over £15 million.  This is a giant amount for a team that only has about £70 million per year in revenue to begin with. 

Why would Portsmouth agree to such bonuses in the first place?  Those types of performance based bonuses are pretty standard in England, and it seemed like a low-risk situation.  After all, who would bet that Portsmouth would be the first team in a decade to wrestle a major trophy away from the Big Four?  Frankly, if Steven Gerrard’s pile driver had gone slightly wide of the goal in 2006, West Ham would probably be in the same position as Portsmouth is today.

Nevertheless, those bonuses had to be paid, and once a team starts spending beyond its means in the EPL, they are in danger of entering a result-dependent economic death spiral.  The only place to get the type of money Portsmouth needed is in the transfer market (bye-bye Defoe, Diarra and Sulley Ali Muntari), which, of course, hurts the results.  As the results suffer, managers start to come and go, the team starts to sink, gate revenue starts to fall, and the team sinks even more.  More players are sold (Glen Johnson, Peter Crouch) and all of the sudden the 2009/10 season looked over before it began.  Perhaps some of this spiral could have been avoided if the team could get a loan to get over this FA Cup bonus hump, but loans can be a risky business in football (i.e. Leeds), and it was never a real possibility anyway with the collapse of the credit market just as Portsmouth was putting their new trophy on display.

Now Portsmouth is starring at the abyss and have no room to back-peddle.  There is always talk of some sort of shadow investor from some foreign land who can rescue the team, but wealthy people usually did not become wealthy by investing in soon-to-be-relegated financial sinkholes.

For better or worse, the structure of the EPL is that only four teams can afford and absorb the financial consequences that come with success.  Manchester City is trying to break into that crowd, and is set up to afford anything.  Beyond that, winning in England is a curse.  Nearly every team that has broken into the top four over the past decade (Newcastle in 02/03, Leeds in 00/01, Chelsea before the Abramovitch takeover) has seen financial misery.  Portsmouth is just the latest team to realize that losing is lousy, but winning in England can be death.

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  1. Bruce Gottesman

    February 23, 2010 at 1:50 pm

    Have to disagree about Newcastle. The success was not what caused the slide – it was poor management. They went through coaches in rapid succession, the ownership situation has been brutal. The only player who they sold strictly for finances was Woodgate, and they thought they had enough central defenders without him. Several others wanted out or were forced out, like Bellamy, Robert, N’Zogbia etc. They also kept bringing in players, and almost none of them worked out. Bramble, Viana, Kluivert, even Owen. They never stopped spending – even last year, they lost about 8 million pounds by swapping out Abdoulaye Faye with Coloccini.

  2. chuose

    February 23, 2010 at 1:30 am

    Everton has broken into the top 4, twice and they are still going ok. if not strong!

  3. Nick Harris

    February 22, 2010 at 5:49 pm

    Interesting article but either it’s deeply flawed by being based on fiction, or else you’re in possession of a mammoth scoop.
    £15m bonus pot for the FA Cup? It might well have been a few million pounds, but where on earth do you get £15m from?
    Let’s say Harry Redknapp did get £1m (not proved; I think you’re recycling newspaper talk from the British press this weekend). Then let’s say the players got £250k each for winning (not proved, and that’s an awfully big bonus).
    How many players do you need getting 250k each to get £14m? Fifty-six of them; sorry, but that’s just not realistic.
    Bonuses may have played a role but it’s just too simplistic to say the FA Cup caused Portsmouth’s downfall; laughable in fact.
    Pompey’s total wage will grew about 50pc between 2005-06 and 2006-07 (you can check exact amounts by looking at annual reports filed at Companies House). Then up again by about 50pc from 06-07 to 07-08.
    Peter Storrie today has told ESPN player wages (not total bill) are £37m this season 09-10, were £52m (peak) last season and £42m the season before, the season in question.
    The real story of Portsmouth most recent demise (and they’ve been in and out of financial trouble for well over a decade) is high, high basic wages as well as big bonuses since 2005 at least. But a £15m bonus on the 2008 FA Cup is not the story, I’m afraid.
    Prove me wrong with paperwork and I’ll get you a back-page splash in a British newspaper . . .

    • Jon

      February 23, 2010 at 10:13 am


      I fully agree with Nick. The problem at Portsmouth which you have not mentioned in your article is the wages. While you might be right that as a general rule they have made money on the transfer fees of players like Defoe, Johnson, and Diarra, the real blow has come from the wages they paid these players while they were at Portsmouth.

      While there might be some truth in the fact that FA Cup success caused Pompey’s downfall, it is more likely that the link is from having to bring in quality players to win who demand wages that they club couldn’t really sustain long term, but for which they agreed to pay with the hopes of short-term success.



  4. Paul

    February 22, 2010 at 5:17 pm

    Tottenham a financial model to follow? Don’t make me laugh! In less than 12 months they will be in worse than the shape Portsmouth are in now, mark my words.

    • evan

      February 22, 2010 at 5:36 pm

      I agree, Tottenham can’t continue with the way they are going becuase Redkanapp is in charge. They will have the same fate as Portsmouth.

  5. Tom

    February 22, 2010 at 4:56 pm

    How much did Portsmouth profit from winning the FA Cup, before you factor in the amount they had to pay their players/coaches in bonuses?

    • Eric Altshule

      February 22, 2010 at 5:17 pm

      That is a good question and one that I tried to find the answer to. My sense was that it was not very much. Most of the money for the FA Cup goes to (surprise) the FA and the cost of using Wembley. There are some modest additional ticket revenues that Portsmouth probably got (although the ticket allocation to the teams is surprisingly small), but the real profit in throwing live events comes from the ancillary sales – a $5 program, $7 hot dog and $4 soda probably has a great margin – and I don’t think either team sees any of that money. Similarly, gaining the right to play in the UEFA Cup has all the costs associated with European playing without the lucrative Champions League TV contract. All in, winning the FA Cup represents a big drain on revenue without much of a payback.

  6. AtlantaPompey

    February 22, 2010 at 3:24 pm

    Administration is inevitable. Go now. What businessman in their right mind would buy this club with this much debt, no real football assets, and a future as bleak as any club in England?

    What this says to me about the Premier League, and the football financial situation in general, is that something drastic has to change. Germany requires each club to submit a business plan for the year and stick to it. Those clubs aren’t allowed to go into debt. They aren’t allowed majority foreign ownership or corporate ownership. In other words, they are owned by locals and run properly. Sure they haven’t been that competitive in Europe recently, but when was the last time you heard about the skyrocketing debt of the entire top division? Never, and you won’t hear about it either.

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