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7th March 2010 - Football and Finance We
at Spurs have been well trained in the dark arts of football and finance,
after the intensive tutoring we have received from Scholar, Sugar and Enic
over the years. There is something rotten at the heart of football and it
doesn’t need the analytic skills of a climatologist, given that the majority
of Football League clubs have been insolvent during the life of the Premier
League. It is noteworthy however that it is only when one of the ‘elite’ are
at risk that a problem is seen to exist and action is demanded. The
same problems have been apparent at Man Utd since day one when the Glazers
walked through the door and bought the club by way of a leveraged debt. The
more far-sighted Man Utd fans set up FC United in protest. The majority only
worried about it when the banks asked for some of their money back, and the
club had to sell Ronaldo to tide them over. If they think that waving Norwich
scarves above their heads and shouting a few nasty words at the owners is
likely to make them leave, then I wish them luck. I also suspect that the
Glazers would be just as happy to sell Ipswich scarves to their pro USA
supporters to wave above their heads, whilst they retire to the board room to
dry their tears and count their money. I
would also guess that the ‘Red Knights’ (I suppose the name goes with the
current Power Rangers kit as they all put their underpants on over their
trousers and fly in to save the day) are not the ‘acting on the mood of the
fans’ merchants they portray themselves to be, but rather have been planning
their coup for some time and are rousing the masses for populist support,
much as the candidates for Roman Emperor used to do in their battles with the
senate and each other. I find it ironic that Hedge Fund managers and
corporate lawyers are battling to save the club and market thei platform on a
socialist ‘shared ownership’ platform, but then again may be I am missing
something. Turning
back to the other crisis clubs, to the untrained eye, the level of debt at
Pompey doesn’t make any sense. Portsmouth are facing administration with
reported debts of over £78m. The debts are blamed on the clubs wage and
transfer policy. However if you care to examine the basic figures, the sums
don’t add up. Portsmouth in the period of 2004 to 2009 are reported to have
spent the total sum of £92m on transfers. In the last 18 months they are
reported to have recouped £94m (and that doesn’t include whatever deal it was
for Kaboul) so there is no loss there, or certainly not a loss to lead to a
£78m debt. Furthermore,
Peter Storrie (estimated wage £1.2m a year) is reported to have said that in
the last 3 years, Pompey’s wage bill has amounted to £131m. The club receives
£40-50m in income from being in the premier league- that is before you factor
in the income from ticket sales (estimated £12m a season), sponsorship and
merchandising (estimated £7-8m). Pompey therefore can reasonably be said to
have an income of £60-70m a year. At
no point in the last 3 years is Pompey said to have paid more than 100% of
it’s income on wages. The club would have received around £180m in income
during the period that £131m in wages was spent and is transfer neutral. So
where has this £78m debt materialised from? A
clue to where the money is going can be shown by the Iain Dowie dispute with
Crystal Palace. You may remember that Dowie resigned from Palace in 2006
having told Simon Jordan that he wanted to spend more time with his family in
Oldham, only to end up 8 days later as the boss of Charlton. Jordan sued and
as a result Dowie’s contract became public knowledge. To get to the point, in
addition to his salary Dowie was entitled to receive 5% of any profit on the
sale of players and he claimed Palace still owed him £225,000 when he left. I
don’t imagine that Dowie’s contract is that unusual for a manager and his
contract may have even been less generous than the norm. But looking at the
links between Pompey and Spurs, if hypothetically Harry Redknapp was
contractually entitled to take a substantial percentage of the profit on the
sales of players like Diarra, and Muntari it might go some way to explaining
where that missing money is going. It would also stick in the hypothetical
throat a bit if that same person, having profited to such an extent were to
give press conferences expressing his regret and bewilderment at the state of
his previous employer. It might make me want to question anything that the
particular individual said. Another
clue may be in the campaign by the Inland Revenue to recover the additional
tax due on the payments made to players under ‘image rights’ Judas is
reported to be owed £1.7m by Pompey for these, although I can’t imagine what
image they are hoping to get for their money around N17. I only imagine that
such payments were probably made under the accountants radar and not included
in the ‘wages’ entry in the accounts. Why
is this relevant on a Spurs forum you might ask? One answer could be that if
Pompey fail to complete the season, the points won off them will be expunged.
How would you feel if Spurs finished 4th only to be demoted down to 5th after the Pompey points were wiped
off? Gutted? Wishing that there were rules to ensure that a league season
meant 38 games and not as many games as could be played before another club
goes bust? Another
answer could be that the links between the 2 clubs are strongly intertwined,
and it’s not inconceivable that what happens to Pompey today could happen to
Spurs tomorrow. The business culture in football that has seen the majority
of clubs in deep financial trouble over the last 15 years and poor financial
management and flawed accounting is clearly endemic. It is no good simply
repeating a mantra that ‘it couldn’t happen here’. For those that know their
history, Terry Venables, the man found by the Courts to be dishonest and
untruthful, almost gained control at Spurs. (and I remember the outcry
amongst the Spurs faithful when he was ousted by Sugar at the time). What
state would Spurs have been if he had succeeded. If you want any clues, his
later CV includes stints at Crystal Palace, Leeds United, and to complete the
circle, Portsmouth. What’s to stop the next Venables coming along? Any
reading of the club accounts at Spurs would show that the club debts and
‘intangibles’ have increased significantly under Enic over the last few
years, with little to show for the investment. But there is nothing to worry
about because as we know Spurs are different. There are rules to regulate the
behaviour of clubs and plc’s. Lest
we forget after all is said and done however, the club accounts at Pompey
were audited and signed off with no hint of any significant problems by the
Premier League season after season. The
issues raised by the latest financial crises in football are not new and have
been knocking about for many years. In 1999 the Football Task Force drew up a
list of recommendations to improve the game, which are set out below in
respect of the wish list of the Supporters and the Authorities. Richard
Scudamore, chief executive of the Premier League, said at the time: "There
is a very strong case for the Government taking on what is being willingly
volunteered. We know how
committed we are to change, to delivering what we've said in our report and
to making the game transparent, accountable and responsible. We believe that
a Football Audit Commission is unnecessary and would be cumbersome. It would
be another layer of regulation, it would be an interference and it's not been
clearly thought through." THE
SUPPORTERS' REPORT 1
Establishment of a "Football Audit Commission" to establish
"Football Code", performance criteria for clubs, inspect compliance
with them, and recommend sanctions for failing clubs. 2
Establishment of an "Ombudsfan" to receive and pursue fans'
grievances. 3
Range of ticket prices to be stretched: highest prices to subsidise lower
prices. 4 Concessionary
tickets to be extended, including 10 per cent of grounds at half price for
under-16s and students. 5
Lower priced tickets to increase annually by no more than the Retail Price
Index. 6
Clubs to encourage a supporter representative to sit on the board. 7
Regulation of football plcs. 8
DTI to publish recommendations on media ownership. 9
Consumer protection of merchandise, including "sell-by dates" to
protect against clubs changing their strip. THE
AUTHORITIES' REPORT 1
Establishment of "Independent Scrutiny Panel" to produce report on
compliance with code of practice. 2
Clubs should "promote inclusionary ticketing policies and greater
accessibility", including some concessions. 3
Clubs should publish "Customer Charter", stating policies over
ticketing, merchandising and community activities. 4
Clubs should work to promote "supporter and community liaison". 5
Clubs to publish "kit cycle policy" and proposed changes to kits. Having
rejected the idea of independent auditors in 1999, the Premier League are now
seeking to introduce these next month, and mismanaged clubs will face
sanctions including a ban on transfers and withholding their TV money. As the
existing auditors did such a sterling job at Pompey when signing off their
accounts, I wouldn’t hold your breath that this will make any difference or
provide any protection against meltdown. What
might make a difference is if the league introduced a rule that clubs should
only have a certain percentage level of debt relative to their income, and
any debt above that level would be penalised by the deduction of points.
Straight away however you can foresee that such a rule would only apply to
the Wigans and Burnleys and there would have to be a different rule for the
‘big’ clubs who couldn’t possibly be expected to pay back their millions in
debt because they wouldn’t be competitive anymore…. (incidentally Man Utd owe
more than the entire Bundesliga put together whose clubs enter the same
European competition as the indebted English ones). Whilst
I doubt any real financial reform of football will happen, in the meantime I
live in hope that there is some substance in the talk of shared fans
ownership of football clubs as spearheaded by the Norwich Scarf wearing Man
Utd muppets, and that it may spread to other clubs. Even Spurs. |
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Hypocrite ‘ A person who professes beliefs and
opinions that he or she does not hold in order to conceal his or her real
beliefs or motives’ It is outrageous what a man, his two kids
and his wife have to pay to go and watch a football game. Families used to
sit down and have a serious discussion about whether they could afford to buy
a toaster or a new washing machine, which might be a couple of hundred quid.
Now, in that industry, you can buy toasters for 10 quid or a TV for a £100,
but it costs over £200 to go and watch a football match Lord Alan Sugar
–February 2010 On the way to work this morning I heard the
above tirade from the former Spurs Chairman, now a Lord of the realm. Now there is nothing wrong in what Lord
Sugar says. The cost of football is hideously expensive, and using his words
it is outrageous. The cost has continued to rise and outstrip the rate of
inflation over the PL years despite the growth of interest in the Premier
league and the flow of money into the games coffers. But let us not confuse the opportunity
to give a soundbite with the facts shall we? Sugar took over and became the majority
shareholder of Spurs in 1991 When Sugar was the chairman of Spurs the
season ticket price rose from £299 in 1990 to £384 in one fell swoop and
season ticket prices rose across the board for Spurs fans by an immediate
40%. No doubt at the time this was sold to us as necessary to cope with the
financial problems at the club (I can’t remember after all this time to be
honest). But these are not the actions of a man
who is concerned about the ability of the man in the street to buy a toaster
or a TV. For someone who is so concerned about
the welfare of the man in the street, to recreate the old ‘Hovis’ pictures of
the family attending together in their flat caps and rattles, it is
surprising to recall that season ticket prices continued to rise season on season
until by 2000/01 above and beyond the RPI so that when ENIC came onto the
scene, a seat that cost £299 cost £795. £299 in June 1990 would at the time of
the last season’s ticket renewal have cost around £546 according to the RPI £299 in June 1990 would at the season
Sugar sold his controlling interest to Enic have been worth approximately
£403 according to the RPI Compare this to the actual cost in
2000/01 of £795 for the top tickets (and it was even worse for the man in the
cheap seats) The cheapest season ticket in 1990 was
£120. In today’s money that should cost you £202.11. In 2001 when Sugar sold his controlling
interest, the cost of the season ticket was £430 a rise of 358%. Had it
followed the RPI it would have been around £162. Using the RPI is actually being more
generous to Sugar than using the official rate of inflation. The season ticket that cost £120 in 1990
would have been worth £211 in 2009 and £151 in 2001. So we can safely say that the man who
was this morning railing against the cost of football was the same man who
had no qualms about raising the cost of the season tickets at Spurs far above
the rate of the RPI and inflation, when at the most generous calculations the
actual costs across the country rose around 35% during the period of his
controlling ownership and the cost of the season ticket rose by up to 358%. The tirade continued as Sugar stated his
idea back when the PL was set up was to establish a trust into which money
could be paid from the TV revenue for the good of football and to keep it out
of the hands of the greedy footballers and agents. The basis of this tirade
will be used again and again, and Sugar will no doubt be wheeled out again
and again as part of the well trodden argument that the money is simply flowing
out of football into the hands of agents and players, the high salaries are
to blame, and the game is suffering as a result. Again that is true. But only to an extent. Rarely is it ever mentioned about that
the owners who bought their interest in football clubs for relative peanuts
in the 80’s have all sold their shares for massive profits in the Sky boom
years. David Dein is the best example. He turned a £300k investment in
Arsenal into a £85m return. Lord Sugar didn’t do too badly out of all either.
What he conveniently also forgets to mention is that the fans ultimately also
have to pay for the money that the owners have taken out of football as well
as the players salaries. As demonstrated by the season ticket rises at Spurs,
and by the misguided protests against the Glazers and on Merseyside.
. Season Ticket prices at Spurs (courtesy
of Topspurs) http://www.topspurs.com/thfc-seasontickets.htm
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