Every Christmas, a typical family in the UK will get caught up in the same yearly merry go round. They may have all the intention of budgeting for their Christmas presents. Going to do the shopping nice and early in November so it’s out the way so they can sit back and enjoy the special day. Then when it comes to wrapping the presents, panic, ‘we haven’t bought enough’. If they don’t get more new shiny presents, Christmas will be ruined and to avoid this scenario the credit card gets a hammering.
Christmas will come and go like every other year but when the credit card bills lands on the door step on a cold January morning, reality kicks in and you realise that for that one special day you are going to paying for this for a good few months. Forget treats; forget a holiday if you want this paid back before next Christmas. It is pretty depressing stuff really, night in after night in. You don’t have to of course. You could just let the debt mount up and turn a blind eye. But whose fault is it? The education system doesn’t teach you this at school so your left to the advice from the banks who, let’s face it, after the eighteen months they’ve had to say people have lost faith is an understatement. These days’ people give themselves advice; the more presents you get the better Christmas will be, worry about paying it back later.
We all know someone who has used this method to plan for Christmas but yet we will all know someone who will do it again this year.
2nd May 2001, Leeds United played Valencia for a place in the Champions League Final. 2nd May 2010 will be the day after they play Charlton Athletic in the third tier of English football. It will be their final home game of the season and the third consecutive year they have played a final league game of the season at that level.
We all know the story of Leeds by now. They went for broke and despite getting close, never achieved the fairytale ending they dreamed of. 2004 they were relegated to the second tier of English football. 2007 they went into administration and dropped to the third tier of the English game.
So why after this volcano erupted first in 2004 for all to see are clubs still making the same mistakes which are threatening to ruin the game as we know it?
It may be quicker to list the clubs that aren’t in debt than list the clubs that are at this minute in football and as we enter 2010 it is apparent that there may not be as many teams finishing the year that started it.
Portsmouth. As things stand their supporters would welcome administration, the ten point deduction and relegation to the Championship with opened arms. Instead they are left in the dark about the future of their club. The club they have spent thousands on out of their honest earnings. Despite the change in owners Portsmouth have seen come and go in recent years, their Chief Executive Officer Peter Storrie has remained in the helm. But going back to the example of a family overspending at Christmas, unlike them, Mr Storrie has had his fair share of education from the nineteen years he has experienced in different forms of a chief executive capacity at different clubs. He can’t be solely to blame but surely he should have seen the warning signings way before they had to shut down their website for example, in the capacity of the role he is in?
At the other end of the league but whose debts are also well reported, Manchester United. £716.5 million in debt, half that according to Chief Executive David Gill. The facts though on last season’s accounts are that they made £43 million, because they sold Ronaldo. Because they sold their best assist, top goal scorer and World Player of the Year for £80 million. Ok, Ronaldo was always going to go to Real Madrid eventually but if it wasn’t last summer United would have made a loss of £37 million for their last financial year. £67 million is an awful lot considering the size of Manchester United and they played every single world, European and domestic game apart from the FA Cup Final last season, from the Community Shield to the Champions League Final with the add on’s of European Super Cup and World Club Championship. That’s not to mention their pre season programme in Asia in the summer of 2009. All this TV money and revenue these games also make the club in addition to the merchandise they would have profited from the year before when they won double English and European Champions status.
All this and they still had to sell their best player to make a profit.
Does this mean they will have to sell Wayne Rooney this year to make a profit next year?
One big outgoing is of course is the debt to the loans that the Glazer’s used to buy the club and there business model to repay the debt mainly realises on United remaining successful. But with an ageing manager, selling the world’s best player and the rising demands in competing with the bottomless pits of money from Arab owners, the formula doesn’t look ideal. No wonder the United fans are singing ‘green and gold till the club is sold’ they have reason to be worried.
So, what is the Premier League doing about it? Don’t ask a Portsmouth fan what they think of the ‘Fit and Proper’ Test. To say it will be negative is an understatement. But, from 1st March they are launching a new ‘Early Warning System’. This involves every Premier League club submitting independent audit accounts to prove they can finance themselves for next season. The idea is to spot problems such as what Portsmouth have experienced a lot sooner. Consequences could involve fines and possibilities of being refused a UEFA licence, meaning exclusion from European football. Every team has to apply for one of these licenses unlike previous years where it was only those who had aspirations of playing in Europe need apply.
But what about the lower leagues? It’s expected now during the season at least one side from the Coca Cola Leagues will start or fall into administration. Most commonly because of expensive players wages and agent fees. The FA, Premier League and Football Leagues have all agreed on a ‘Football Creditors Rule’. This means all football related debts must be settled before other creditors debts are settled. So eventually the tax man knocks on your door to catch up with you too.
Something dramatic needs to be down. Whether it’s by the FA, the Government or all of the above because in an era where teams are even broke or super rich, something has to give. Football is more than a sport these days and the way that it seems to lose money faster than it makes it, can’t be described as a business. Surely for the sack of honest football fans everywhere, the business men in football have lost their right to handle the financial affairs and to prolong the national game tough new laws such as salary caps, need to put in place.
Salary caps, just a whisper at the moment but discussed all the same. They might save clubs like Crystal Palace, Southend and Chester City but the bigger clubs with the super rich owners won’t stand for that.
With the super rich clubs of Chelsea and Manchester City there is always the danger their investors could just walk away. Dump the debt on the club and watch it pick up the pieces. Manchester City is spending like it’s going out of fashion. Chelsea haven’t made a profit since Abramovich took control, although they now claim to be debt free and plan to invest in their youth system to provide the stars of tomorrow- time will tell.
Around the same sort of time when Leeds where playing Champions League football, talk of a European Super League was strong. EA Sport’s FIFA 2000, the world most popular football computer game, even featured their own version of a European Super League. Since then the G14 have spilt but the way money in football is going, to save the majority of clubs strict new laws will be passed and the super rich teams of Manchester City, Chelsea and whichever club is next to win the lottery over night, are likely to rebel against it.
This points to the direction of a European Super League with the likes of Real Madrid and Barcelona and why? Money.
It is important to understand a European Super League will not just be as a result of the FA introducing salary caps for clubs. There is the possibility it will happening anyway. With what’s happening with Portsmouth the bigger teams will be, or should be, looking over their shoulders as despite being in the richest league in the world, debt will still catch up with them. To cement their place as a football powerhouse and to increase their income to make their outgoings more affordable the opportunities of a European Super League offer increased possibilities.
Clubs rebelling wouldn’t be a first. In the 1950’s Manchester United entered the European Cup without the FA’s backing. They dropped out of the FA Cup in 2000 despite being the holders.
If the big English teams drop out of the domestic English league to form their own league then they won’t be granted a UEFA license so it automatically downgrades the Champions League. The breakaway clubs will want to get the big European teams on board and the money they could all generate through sponsorship and TV deals alone it would be in their interest as who will Real Madrid receive more TV money from, playing against Getafe domestically or Maccabi Haifa in the Champions League or Chelsea one week, Inter Milan the next? With the increase in TV money naturally players at their club will earn even more than they do now and the mere suggestion of a salary cap in such a league is laughable. Clubs abroad are also in debt and like English clubs will welcome ways to increase their revenue, Despite their stadium having a smaller capacity than Real Madrid, Manchester United earn more on match day revenue. Real on the other hand earn more from TV deals. Together, in the same league they can surely find ways to maximise this.
Such a league would be mirrored on the MLS, a franchise league. The MLS has no relegation so as long as the franchise obligation is met, teams don’t have to worry about the financial losses relegation brings. This would protect the teams in the European Super League as they are guaranteed a annual income of TV money for example which would be disrupted between the clubs equally, similar to how the Premier League model is. The difference being they could demand more as the money would stay in the league and not go to the grass roots game or in the form of par shoot payment to relegated clubs.
The MLS formed in 1996 took until 2004 to start making a profit but now is predicting massive increases over the forthcoming years. It did have to start from scratch too, something a European Super League wouldn’t need to do with established clubs. The league would be its own boss. A money making monster that would boast the best football the world has ever seen. When the Premier League agreement for the new league was finally met in 1991 it was after the initial threat of a breakaway from the Football League in 1988. Over that three year period the proposal gathered momentum and it eventually formed in 1992. The main reason for the development of the Premier League was the new league would bring more money in the game overall. A new European Super League would bring more money to clubs. For a club in debt that wants to keep its structure and reputation would it not be worth thinking about?
The league could go one better than the infamous 39th game and have playoffs with games in the Aztec in Mexico to the Telstra Stadium Down Under. People will want to see it, sponsors will want their name linked to it and the franchise could demand what they wanted because people and companies will pay it.
That would leave the domestic game like a wounded lion. The Premier League, La Liga whichever is the best now would be nothing in comparison. UEFA acting would be like a soldier turning up for World War II with a bow and arrow. They don’t want this but with Platini trying to move the variation of participants in the Champions League to more of the mix of the teams when he was playing and to the limit of the teams from bigger nations, it could turn out to backfire. What would they do if sixteen of the best clubs in Europe turned round and said ‘thanks but no thanks, we’ll play our own game this season’?
A power league, untouchable for every club outside of it across Europe would result in ambition being something of a player’s mind not of the minds of domestic clubs. Ambition or false ambition is what will drive to what some would consider a scary nightmare into reality. In a world where reality TV fills our TV Times like stars fill the night sky, it’s time for football to take a reality check as to what the poor handling of money is really doing to the game of tomorrow.
Written By Luke Harrison