Last year Downtown hosted two events that looked at the business of football. Two of our speakers, Insolvency Practitioner Dave Acland of Begbies Traynor and football finance expert Professor Tom Cannon from Liverpool University told us that sooner rather than later a Premier League club would go bust.
Throughout this season, there have been an alarming number of revelations about the state of the finances at some of our football clubs. This week, Premiership Portsmouth and Championship side Cardiff City are facing winding up orders. Down the divisions, and things have got so bad for poor old Chester City that they have been unable to pay for either the policing of their matches, nor their players wages.
Arguably the biggest football club on the planet, Manchester United, is in debt to the tune of £700million, whilst their fiercest North West rivals Liverpool are desperately worried about the implications failure to qualify for the Champions League next season will have on their balance sheet.
Surely the Jerusalem that is the Premier League, the most watched football competition in the world, should not have its members facing such difficulties, recession or no recession. With the riches drawn from TV money alone, the financial mess that football is in was wholly avoidable. So, what’s gone wrong?
From the outside looking in, it seems to me that a significant amount of football’s ‘new money’ has been squandered on player’s wages and agents fees. The weekly salaries of Premier League footballers is obscene, and even an average player can command £40,000 plus per week. Without any form of pay restraint, football clubs will continue to offer these ridiculous incentives, striving for the holy grail of success, and being encouraged to do so by its own supporters. Despite the trail of destruction from Leeds through to Pompey, fans will still demand that their club offers its star player the extra £25,000 per week he is demanding because, quite frankly, we are daft.
We are outraged by the fact that an MP claims 58 pence expenses for a Kit Kat, but we are more that happy to see the skipper of our football team earn more in a week than the Prime Minister does in a year.
Its madness and it is a madness that may finally be coming to a stop. Because, the time has come for football clubs to actually start to act like businesses.
The tax man has being doing deals with the football industry for years, allowing delayed payments, staged payments, the sort of arrangements that many ‘ordinary’ businesses have only benefitted from as a ‘special’ HMRC offer during the past twelve months or so.
But now UK PLC has a mountain of debt, and football clubs are no longer immune. It is the HMRC that will be the downfall of a number of football clubs, and they are likely to be even more aggressive in their approach post the General Election.
It would be extremely sad to see the demise of a Portsmouth or a West Ham, but if it helps return sanity to the game, begins to get clubs looking at nurturing and investing in local talent once again, then maybe it will be worth it.
Of course clubs like Manchester United and Liverpool will be okay, come what may. They are world wide brands and fire proof. To suggest that either could go bust is like suggesting that a financial institution like, say Lehmans’, could go down the tubes…
FOOTBALL FINANCE EXPERT PROF. TOM CANNON IS A GUEST ON FRANK’S RADIO PROGRAMME ‘CITY TALKS BUSINESS’ ON SUNDAY MORNING, CITY TALK 105.9FM AT 7A.M. RPEATED AT 8 P.M. SUNDAY EVENING.
Tags: Downtown, Premiership, Preston, Tom Cannon