 The battle over the future of English football hotted up this month as Uefa president Michael Platini threatened to boot Premiership clubs out of the Champions League. Platini would say that all he is aiming for is a level playing field in the competition and it is true that he has other targets such as AC Milan and Real Madrid. Indeed, one is left wondering what the Champions League competition would look like without these two clubs and Liverpool and Manchester United.
Under his plan clubs will be expected to be balance their books within three years or face a range of sanctions from fines, for smaller amounts of debt, to expulsion from the Champions League for the large piles of debt held by the likes of Liverpool and Manchester United. Manchester City would also fall foul of the new rules if they qualified for the competition. Chelsea’s position is more ambivalent as Roman Abramovich has converted some of the debt into equity and has the aim of making the club break even by 2010. Whether that target can be achieved remains to be seen.
The one top four club that would escape any sanctions is Arsenal which coincidentally happens to have a French manager and a following in France. Under Platini’s plan it’s ok to incur debt to build a new stadium. He had to make this concession because in many continental European countries the stadium is paid for by the local or regional authority or is helped in other ways by public funding.
Platini’s view is that clubs should balance their books by paying less for players. This is easier said that done when intense competition for the world’s best players pushes up transfer fees and wages. American sports do, of course, have various mechanisms such as drafts and salary caps for levelling the playing field but whether these really work is a matter for debate.
It is certainly questioned in a major new book by leading football economist Stefan Szymanski and top sports journalist Simon Kuper entitled Why England Lose and other curious football phenomena explained. This is one of the best books on the business side of football I have read for a long time and it’s not all stats or equations, but is packed with interesting stories and anecdotes from the world of football. There are some aspects of their methodology I have a few questions about, but, on the whole it is a major contribution, particularly in terms of the way it questions some conventional orthodoxies about football.
Some of their key conclusions are:
- The loyal football fan or ‘Hornby’ as they call him is the exception rather than the rule. People who watch football live rather than on television are a small minority anyway, but those who change clubs several times over their lifetime (for a variety of reasons) are far more common than the diehard anorak supporter. The ‘Hornby’ is apparently someone from a working class background who has become more prosperous and is searching for authenticity by staying in touch with his (usually his) ‘roots’.
- Fans actually like competitive imbalance. Indeed, if football was even less fair, it might become even more unpopular. The attempt to introduce competitive balance in Major League Soccer in the US has undermined the appeal of the competition. The authors note, ‘Many people resent Manchester United. Few seem to find them boring.’
- What killed off the FA Cup was not the Premiership but television - or rather the lack of it. The authors see it as retro as the Sunday roast and pint at the local.
No doubt many of these conclusions will be controversial. If you want to get a flavour of their arguments go to the long extract published in the Financial Times.
If the takeover of Birmingham City by Hong Kong businessman Carston Yeung goes through, 50 per cent of the Premiership clubs will be in foreign ownership, while others, such as Arsenal, have substantial foreign shareholders. Elsewhere, Portsmouth has finally changed hands and its new owner from Dubai, Sulamain al Fahim, may be able to provide a much needed injection of cash. He was the front man for the takeover of Manchester City by another group of Gulf States investors.
Carston Yeung has to pass the supposedly more stringent Premiership ‘fit and proper person’ test and he was fined after he was convicted of a breach of financial services regulations. However, this is likely to be treated as a relatively minor matter if he can show that he has the necessary cash. There are some more doubts here as his businesses have not been doing too well and he has had to take out a bridging loan to buy the club.
The clubs that are still in domestic ownership tend to be those that would be regarded as the smaller ones such as Blackburn, Bolton, Burnley, Hull, Stoke, Wigan and Wolves. However, being in the top flight can give a major boost to a town as is shown by the example of Burnley which we discuss on www.footballeconomy.com
Wyn Grant is a regular contributor to Albion Road and also the publisher of footballeconomy.com, a website covering the business and economy of the game of football.
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