The Political Economy of Football V2

A blog on the political economy of football is not normally the place for theatre reviews, but plays on football are rare and especially on non-league football, indeed I cannot recall one. Last night I went to see The Red Lion at the Trafalgar Studios in London about a fictitious Northern League team of that name. One of the strengths of the production derives from the fact that the writer Patrick Marber has been directly involved in non-league football. He was one of a number of people who rescued Lewes FC in Sussex and served on the board for a number of years. There are just three characters in the play. The manager has done the rounds in the non-league game and is involved in various fiddles to augment his salary. The kitman was originally a player for the club and was involved in a FA Cup run which boosted their finances and allowed them to build a new stand. He was later an unsuccessful manager who got them relegated. After living on the streets, he was discovered by suppo...

The Price of Football website attempts to disentangle Blackpool's finances and work out what happened to the substantial sum the club made in its parsimonious one year stay in the Premier League. This is no easy task given the tangle of companies involved. However, it is more than possible that the club might have to be sold for a pittance: Blackpool's season in the sun

The extent to which Premier League clubs are reliant on broadcasting revenue is shown by the 2016/17 accounts for Stoke City. Eighty per cent of the club's revenue came from broadcasting, with just five per cent from gate receipts. Revenue increased by 31 per cent to a record £136m. Broadcasting was up from £79.5m to £108.7m. Commercial revenue was up from £16.3m to £20.1m with over half of that coming from sponsorship and advertising. Gate receipts were down from £8.4m to £7.2m. There was a £3.7m profit on player sales. Profit before tax increased from £2.1m to £4.9m, the fourth consecutive year in which the club has made a profit. The profit was a lot smaller than that of major clubs that have reported to date, but a club of Stoke's size needs to invest all its spare cash to ensure it stays competitive. A failure to do so can lead to the fate of Hull City whose results we reported on last week.

Not much is the short answer from football finance expert Kevin Maguire: How much is Blackpool FC worth? One of the problems is that bundled up with the club and the ground are a Travelodge and a wedding venue. It might be better to sell them separately. Any football purchaser is likely to want the Squires Gate training ground, but that is in a dilapidated state and will require considerable investment. Valuations of the club have ranged from £5m to £60m. However, Maguire reckons that a realistic price for a quick sale that would attract buyers would be under £10m. He points out that the club is losing £35,000 a week. One question is how far revenues can be boosted. Some fans who have boycotted the club will return when the Oystons leave. But there is also the demographic nature of Blackpool and the economic and social challenges it faces as a town, well discussed in a special feature in the Financial Times magazine last weekend. As it noted, Blackpool is one of those coast...

UEFA has asked AC Milan for more information about the club’s financial state before deciding whether to take action for possible breaches of Financial Fair Play (FFP) rules, according to various sources. The club faces a genuine risk of being excluded from playing European competitions next season due to serious doubts UEFA has about spending made last summer after being sold to a Chinese investment group. AC Milan have submitted a proposal to Uefa for a voluntary arrangement to meet their financial fair play obligations, but this looks likely to be rejected: Proposal More than €200 million was spent by Milan and two weeks ago a Milan delegation reportedly travelled to UEFA headquarters to explain the current business plan. But there is uncertainty around AC Milan’s ownership with Li Yonghong, who only took over in April, already looking for new investors to share the burden of the debt at the loss-making club. AC Milan is 99 per cent owned by a Luxembourg-based vehicle, Rossoner...

There has been a change of ownership at North Ferriby United, the bottom club in the National League North known as 'The Villagers'. The club was first put on the market in March 2016. Up to 2015 Steve and Eman Forster injected quarter of a million pounds into the club, but then said it would have to pay its way given the lack of commercial revenue and the small fan base. The Forsters have transferred ownership of the club to Jamie Waltham, leaving the club debt free. Jamie Waltham, previously at Hull United and then East Yorkshire Carnegie, is a former player at the club. he is a local businessman working in areas such as property and gas fitting.

EightyFive points offers a comprehensive analysis of the implications of the end of freedom of movement after Brexit for football: Freedom of movement Of course, a lot depends on the actual terms of exit and the article looks at two contrasting scenarios: a status quo scenario and an end of free movement scenario. It is mor than likely that there would be seem some compromise between these two ends of the spectrum. However, under the end of free movement scenario, 'A significant drop in the number of EU/EEA players does not necessarily imply a return to the pre-Bosman era in terms of the quality of players on show. There would be no artificial quotas, and because of the money and allure of the Premier League, elite players will still want to come to England. The wealthiest clubs would continue to attract the biggest stars; the rest, on the other hand, would be forced to operate in a more restricted transfer market. Champions League places would move even further beyond the hori...

Mike Ashley has turned down a bid for Newcastle United and is holding out for £350m. Amanda Staveley's PCP Capital Partners is considering an increase to its original performance related bid of £260m-£300m. However, it is thought likely to fall well short of Ashley's asking price. Staveley's offer depended on whether the whole payment was made up front or in instalments, and differed according to which party accepted liability for relegation and a potential fine from HMRC. The relegation clause which would have triggered a significant repayment of funds if the club lose their top flight status in May was believed to have been a significant stumbling block. The Price of Football has tweeted, 'Difficult to see how Ashley can justify asking £350m asking price when he only paid £134m ten years ago and has overseen two relegations. Shirt sales and 50,000 crowds in a stadium unused 340 days a year doesn't justify the price. They have come up with a model that ends ...

Newcastle United have received a formal bid of approaching £300m for the club from PCP Capital Partners, the private investment firm fronted by the financier Amanda Staveley. The figure is said to be in the £260m-£300m range, but with an add on for good performance. No other credible bidder has emerged since the club was put up for sale. Her investors include significant funds based in the Middle East with access to around £28bn, particularly in the United Arab Emirates. The Dubai-based businesswoman has a strong track record in football club ownership, having brokered the sale of Manchester City to Sheikh Mansour's group in 2008. The figure offered, reportedly on a 'take it or leave it' basis falls significantly short of the £380m owner Mike Ashley is holding out for, itself a reduced figure from the £400m he originally hoped for. Ashley bought the club for £134.4m in 2007 and has more than doubled that investment in the ensuing decade. Another concern for the bidd...

The 2016-17 accounts for Hull City show a big boost in revenue in their year in the Premier League, but also illustrate the gap between the top clubs and those that are relegated. Revenue increased from £42m to £117m, which is 33 per cent up on their last time in the top flight, but it is still among the lowest in the Premier League. Manchester United earned around five times as much, points out football financial commentator Swiss Ramble in a series of tweets. The wage bill more than doubled from £30m to £61m, but contracts contained a relegation clause imposing cuts of 40 per cent. Clubs have learnt from earlier experiences of relegation when they found themselves locked into contracts that were unaffordable in the Championship, often for under performing players. Players now have to shape up or ship out. The wage bill was only £6m higher than their last time in the Premier League and one of the lowest in the top flight. Their wages to turnover ratio is just 52 per cent, very n...

Oliver Kay had an interesting article in The Times on Saturday about the loss of atmosphere at Premier League grounds. He points out that it is not just a question of crowd noise, but the feel one has when one enters a ground. My sense would be that it is very corporate, as so many things are in so many aspects of life today. There is then an attempt to offset this by marketing measures to create an artificial bond between club and fans (probably seen by the club management as customers). Kay points out that broadcasters all over the world are investing billions in a product they are told is played in a uniquely passionate atmosphere. The fans and the atmosphere they generate are an integral part of 'the show' (itself revealing language) according to Premier League chief executive Richard Scudamore. However, Kay comments that it all feels rather disingenuous when the gap between club and fans is bigger than ever. He notes that the revenue-driven approach of the last dec...

The English Football League and Sky Bet have announced a five year partnership that will see the sports gaming company continue as headline sponsor of the league until 2023/24. The new agreement represents a 20 per cent year-on-year increase from 2019/20 on the current deal and will see the working relationship extended to 11 years, making it one of the longest in professional sport. Given growing criticisms of the close relationship between football and betting companies, there will be a new marketing campaign designed to help Sky Bet customers stay in control and gamble safely.

Cumulative English Football League attendances are up 2.54 per cent, topping the seven million mark, up from 6.82 million at the same stage last year. That number has been growing steadily in recent years, rising from 5.8 million in 2014/15. In 2016/17 clubs recorded their highest cumulative attendance since 1959, although strictly speaking this should be measured against the population growth since then. In 1961 the population of England was 41.2 million and it was just over 53 million in 2011. The Football League are nevertheless clearly nervous about criticisms of their ticket pricing policy, arguing that this is a matter for individual clubs. They point out that ticket revenues underpin EFL clubs and they must be offering value for money if attendances are increasing.

The big six clubs are still chasing a bigger share of overseas television money. They have not been put off by their recent defeat by smaller clubs on the issue. Manchester City chief executive Frank Sorrano thinks that it may be possible to reach a compromise next year as by that stage the clubs will have the security of knowing their income from domestic television for the next three seasons. The Premier League are confident of improving on the £5.1bn they received from the current three year deal. However, one has to ask what incentive there would be for smaller clubs to tilt the playing field in favour of their larger rivals. There is always the implicit threat that they may form a breakaway league, but how feasible or even attractive that would be is open to question.

Chelsea have significantly increased the cost of redeveloping Stamford Bridge to more than £1bn, which would make it the most expensive stadium in Europe. This is double the £500m that was estimated when they received planning permission for the 60,000 capacity stadium. The cost of building Tottenham Hotspur's new ground has almost doubled to £800m. Chelsea attribute the spiralling cost to the length and complexity of the build which will take five to six years compared with two at Tottenham. They will not vacate the stadium until 2020 when they will move to a temporary home for three or four years. Chelsea have to build over the District Line and the Southern main line which pass close to Stamford Bridge. Their 'cathedral of football' will have a lavish external design. Chelsea are talking to several investment banks about funding the project rather than relying solely on funds provided by Roman Abramovich. They will also attempt to sell a naming rights package that ...

The latest BBC Price of Football study has found that while most ticket prices have fallen or been frozen over the last three years, the cost of going to a match is still deterring young adults. The cost of travel is a significant factor: Price of football The BBC found that more than 80 per cent of ticket prices in the Premier League have been either reduced or frozen for the 2017-18 season. Average season ticket prices across English football's top flight are at their lowest levels since 2013, having fallen for the second consecutive year following a record £8.3bn global TV rights deal signed last season. However, replica shirt prices have continued to rise in the Premier League this season, with the average adult shirt now costing more than £50 for the first time, while the average cost of a junior shirt has topped £40. Supporters are also paying more for food and drink at Premier League grounds. More than half of clubs increased the price of their pies, while the average c...

Jim Ratcliffe, the multi-billionaire founder and chairman of the UK petrochemicals company Ineos, is buying Swiss club FC Lausanne Sport for an undisclosed sum. The club plays in the country's top tier Super League. It enjoyed its glory days between the 1930s and 1960s and is currently mid-table. The company has invested over many years in youth and community sports in Canton Vaud where it has headquarters for many of its businesses. The company is not seeking to make a profit out of its acquisition, seeing it as an investment in the community. However, should they sell in the future, they are not anticipating having lost any money. The company insists that it is not a vanity project. David Thompson, the chief executive of Ineos Football, a newly created business within the group, says that the target is to have a team that can qualify for European football in four years' time. The deal requires approval by the Swiss Football League.

The National League North and South divisions offer a similar level of football, but the North attracts far higher attendances. It has ten teams with average attendances of over 1,000 whereas the south divisions has no teams with an attendance above 1,000 (Dartford is top with 909). Part of the explanation must be the presence of former Football League teams in the North division who have managed to hold on to a considerable portion of their core support. Stockport County still manage average attendances of 3,135 (despite Premier and Football League options nearby) while recently relegated York City attract 2,825. Next comes a rather special club, FC United of Manchester with 1,825 while Salford City with its high profile backers attracts 1,643. Then come another two Football League clubs, Kidderminster Harriers (1,533) and Darlington (1,511). A similar pattern can be seen in the National League itself with four former Football League clubs heading the attendance table, headed by...

Blackpool FC has been put up for sale by the Oystons. No price has been specified, but interested bidders are asked to make contact by e-mail: Put on the market The club's statement said that: 'Following the recent high court judgment, legal counsel for the respondents have been instructed to apply for leave to appeal elements of the judgment with immediate effect.'

China's long march into football forms part of a 'soft power' strategy, but it may not pay off and Chinese investment in European clubs may now be past its peak. Chinese tycoons have invested more than $2.5bn in European clubs over the past three years from giants like Manchester City and AC Milan to smaller outfits such as FC Sochaux in France and Northampton Town. The most expensive investment was $797m to buy AC Milan, followed by $400m for a 13 per cent stake in Manchester City and $270m to buy Southampton. For the Chinese government it's part of a wider strategy to increase the country's soft power and earn China its rightful place on the world stage. Powerful leader President Xi Jinping told the Communist Party's five-yearly congress last month that the 'extensive development' of competitive sports had helped boost the appeal of China's 'underlying values', increasing its 'soft power and influence'. However, exporting soft ...

Nottingham Forest owner Evangelos Marinakis has been charged with match fixing in Greece and has been ordered to stand down as chairman of Olympiakos: Match fixing charges The charges are unlikely to affect his freedom to continue his ownership and running of Forest. The Football League’s rules requiring owners and directors to be “fit and proper” people, which are under review, currently bar a person who has been convicted of a criminal offence involving dishonesty. Somebody under criminal investigation, or subject to criminal charges or prosecution, remains free to own a club and is considered fit and proper until conviction. In a statement on the Olympiakos website he said: 'I am certain that my innocence with regard to these remaining charges will be demonstrated by the judicial process that will ensue, thus fully exonerating me'. He previously told the BBC that allegations he was involved in a 'criminal organisation' were invented by 'jealous' opponents...

A new television broadcasting deal helped Manchester City to report record revenues and a third successive year of profitability last season. Revenues in the 13 months to June 30 increased 21 per cent from last year to £473.4m. Only Manchester United have a higher turnover in the Premier League. The club remains debt free. City's rise in revenues represented faster growth than its rival Manchester United. However, City is far less profitable, reporting earnings of just £1m, although this is the third year in succession in which it has recorded a profit. It said that the decline from nearly £20m last year was due to a change in the reporting period to bring it in line with other members of the City Football Group owned by Sheikh Mansour. This includes teams in the US, Australia, Japan, Uruguay and Spain. However, the cost of backing Pep Guardiola was revealed in a 37 per cent increase in the wage bill from £197.58m to £264.13m after several years when it had remained flat. ...

The new domestic television deal for the Premier League is unlikely to see a big increase in the cost of the contract, but there may be changes in what is offered to viewers. Far more than half of all Premier League matches could be shown live from 2019. Three options are up for discussion: 190, 200 or 210 of the 380 top flight games played each season. At present 168 games are aired each season, but the league has promised regulator Ofcom that it will make at least 190 available in the next three year deal which will run to 2022. If the maximum option is chosen with 42 additional matches televised that would mean more matches shown midweek and on bank holidays. The Premier League is considering introducing a prime time late night slot for Premier League matches but will try to protect the practice of not permitting any live broadcasts of 3pm matches on Saturdays. There would also be occasions when two live matches would be screened simultaneously which would dilute the audience....

Blackpool fans are hoping that there will be a regime change at Blackpool after the Oystons lost a High Court battle with Valeri Belokon and have been ordered to buy him out for £31m: Blackpool court case In his ruling, Mr Justice Smith said the Oystons had "abused their majority powers to the detriment" of both Mr Belokon and Blackpool FC. The judge commented, 'Mr Karl Oyston was an argumentative witness, who gave speeches rather than answering questions. I found him generally incapable of answering a question straightforwardly.' Justice Smith ordered the Oystons to pay £10m to Belokon within 28 days; their assets to be frozen while a timetable for the full amount was decided.The Oystons’ £26.77m payments to their own companies was described by the judge as 'illegitimate stripping of Blackpool FC'. Blackpool Supporters' Trust chair Christine Seddon told the Blackpool Gazette : 'It’s a momentous day for the football club. We need to keep calm but...

Dulwich Hamlet have a growing fanbase and are enjoying success on the pitch, but they are increasingly stuck between a rock and a hard place in terms of Southwark Council and their owners Meadow: Dulwich Hamlet statement Southwark Council have refused to approve plans for housing and a new stadium. The club also feels that they lack control over their own affairs. The club has now launched an appeal fund after its backers pulled their funding: Hamlet Appeal

That is the question posed by the BBC in the wake of the Paradise Papers revelations: Who controls Everton? Nothing I have seen convinces me that Premier League rules have been broken, although the Premier League may well want to look at the matter again in the light of these revelations. Whether the rules should be changed is another matter. Farhad Moshiri sold his Arsenal stake in 2016 to buy nearly 50 per cent of Everton. But the leaks suggest his original Arsenal stake was funded by a "gift" from oligarch Alisher Usmanov, who owns 30.4% of Arsenal, raising the question of whether his money is now in Everton. Mr Moshiri strenuously denied the money was a gift. Lawyers acting for him in the Everton deal said any allegation Premier League rules had been violated were wholly false. They say Mr Moshiri is independently wealthy and funded the football investments himself. Mr Usmanov's legal representatives said there were errors in the allegations and that the investi...

Losses at Rangers in the year to June 2017 doubled to £6.7m. Season ticket sales were up and other revenue increased by 55 per cent, but operating expenses increased by £8m to £32.9m: Rangers losses The club has received £15.9m in interest free loans. A further cash injection of around £7.2m will be required this season to maintain the club as a going concern.

Everton's ownership and the alleged involvement of Arsenal shareholder Alisher Usmanov will be scrutinised in a two part BBC Panorama special to be broadcast tomorrow and on Monday. The BBC has obtained documents relating to Usmanov's purchase of a 14.58 per cent stake in Arsenal in 2007 through the Red & White investment vehicle that he jointly owned with Farhad Moshiri, who sold up to his business partner last year to facilitate his 49.9 per cent purchase of Everton. It is understood that the programme will claim that the documents show that Moshiri's initial Arsenal stake was a gift from Usmanov, leading to the suggestion that the billionaire from Uzbekistan was behind the Iranian's purchase of Everton as he was the original source of the funds. Everton and a spokesman for Usmanov deny that he has any involvement at Goodison, which would be a breach of Premier League rules that state that any shareholder with a 10 per cent stake in one club cannot buy into ano...

Success elsewhere in business does not readily translate into football which is a world with own special customs and rules. Tony Fernandes built up low cost airline AirAsia almost from scratch, then spent £200m on Queens Park Rangers only to end up lower in the league than when he started. Big name internationals were brought in on £80,000 a week contracts with no relegation clauses. A wage bill of £75.4m on a turnover of £38.7m in the Championship was the result. Now Fernandes has published a memoir Flying High, My Story from AirAsia to QPR. He admits, 'Pure naivety. I thought every player would run their socks off, because that's always been my character. I never thought there would be guys who would take a salary and do **** all.' Fernandes says that the club now has a wage cap, believed to be about £20,000 a week. They have stopped dealing with certain agents. Work is expected to start next year on a new training ground at Ealing and while plans for a 40,000 c...

Truro City get their fifteen minutes of fame when they play Charlton in the FA Cup tomorrow, but the leading Cornish club faces big challenges, although they are ones that are familiar to many non-league clubs. Chairman Peter Masters says that the club's business model does not stack up: 'We get gates of about 400-500 and 300 on Tuesday nights and we've got to put in £20,000-£25,000 a month just to keep going. If we put in £15,000 a month, you'll end up around the bottom of the league. If you stick in £25,000, you'll stay at the top.' Under the ownership of property developer Keith Heaney Truro won the FA Vase, but the financial crisis pushed him into bankruptcy, and propelled the club towards winding up orders and a filing for administration. Masters heard the club needed a £50,000 bond to stay in the National League and saw an opportunity. He brought in his friend local taxi magnate Philip Perryman. There was a £4.5m debt, but he was able to negotiate t...

Fifteen years ago Grimsby Town were in dire financial trouble with £2m of historic debt and the club's existence threatened. The latest financial results show a profit of £1m after the return to the Football League. Turnover was up £600k to £3.26m: Grimsby Town The club also generated additional income from ‘playing trading activities’ – the most notable of which being Omar Bogle’s move to Wigan Athletic for an undisclosed fee – thought to be around £1-million. The club has cleared an outstanding bank loan of £300,000. A move to a new purpose-built community stadium is seen as key to securing the club's future. Director John Fenty told the Grimsby Telegraph: 'For the long-term future of the club, relocation remains a priority. Our home at Blundell Park is still fit for purpose; we must stress that. We must also point out that we continue to pass all of the necessary checks.' 'But this [financial report] only strengthens what we are trying to work towards, a...

The cost of relegation from the Premier League is emphasised by the financial results for Norwich to 30th June which show a £25m reduction in income from £100.6m to £75.9m, largely because of the loss of broadcasting revenues which fell by £18.6m. Ticket sales were down from £11.5m to £9.2m. Parachute payments were also reduced. 'The reality is that the financial gap between the Premier League and Championship has widened,' said chairman Ed Balls. 'The accounts show how hard it is to be relegated. Even though we tried to have a plan to ensure player wages came down too it wasn’t enough to fill the gap.' However, losses were relatively modest at £2.7m, although they compare with a profit of £9.4m in the previous year. The club is also relatively free of external debt at £1.8m in the form of a bank working capital facility. Wages were reduced by prudent clauses in player contracts. The total bill was down from £62m to £55m. Even so it is the second largest wage bi...