The Political Economy of Football V2

Tottenham Hotspur have applied to switch their Carabao Cup tie against Watford in the week beginning September 24th to Stadium MK. However, their main supporters' group have suggested that fans should not attend. The Tottenham Hotspur Supporters' Trust criticised the choice of Stadium MK because of the controversial way that MK Dons, then called Wimbledon, relocated to Milton Keynes in 2003. Meeting the expressed preferences of supporters, who would like to see the game played within the M25, would not be easy: League cup venue Spurs could have given up home advantage, but their ticket allocation would have been only 10 per cent of the capacity at Vicarage Road. Watford are arguing that moving the fixture to the home of the Franchisees would undermine the integrity of the competition. They are calling for the fixture to be reversed, but the EFL is likely to approve the change of venue: Watford response All the indications are that the rebuild of White Hart Lane is furt...

Brentford have delayed the move to their new 17,250 capacity stadium at Lionel Road until the end of the 2019-20 season. They had originally hoped to make the move in December 2019, but it now looks as if the usual problems associated with any large scale construction project have sensibly led them to delay: Stadium delay The club said in a statement, 'Given the complexity of large-scale building works adjacent to railway lines, the need to anticipate the normal delays and problems that inevitably arise in a complicated construction project, and the operational challenges surrounding a mid-season move, our view is that an end of season move is best.' Tottenham Hotspur may have been too ambitious in setting deadlines for the completion of their new stadium at White Hart Lane. Someone who has been working there told me at the weekend that it will not be ready this year. Griffin Park is to be used in the future by egg chasers.

The fall in the value of the pound against other currencies may hit smaller clubs harder than leading clubs. The biggest football clubs in the Premier League routinely hedge against currency movements, earning euros from playing in European competitions and dollars from international sponsorship deals. Smaller clubs with fewer international revenue streams may be stretched by the drop in the pound. Overseas footballers are seeking to defend their pay packets by hedging against the drop in the pound. Argentex, a boutique currency firm that specialises in services to the sports market, said there had been a 43 per cent increase in the volume of currency being hedged by sporting customers since the Brexit vote. The company, whose clients include Manchester City, allow individuals and companies to lock in the current exchange rate for several months, paying a fee of 1-3 per cent of the total amount hedged. In the Premier League, foreign nationals from 65 countries account for 70 per ...

A good article from the Evening Standard on why Manchester United continue to be a commercial success, even though their performance on the pitch may be lacklustre (by their standards anyway) and fans are unhappy: Is their really a crisis at Old Trafford? The article points out the global market is the real battleground in football: 'United have a magical name around the world. As more and more partners – global and regional – sign up to be associated with that magic, that name is actually becoming more and 'more deeply embedded in the consciousness of billions of fans around the emerging economic world.' Mourinho's brooding sulks and the apparent tensions between him and Ed Woodward all make good media copy and focus more attention on the club. As Ed Woodward recently commented, 'playing performance doesn't really have a meaningful impact on what we can do on the commercial side of the business.' The fans who go to Old Trafford may complain, but the ...

The authoritative Swiss Ramble compares the finances of Tottenham Hotspur and Newcastle United since Mike Ashley bought Newcastle in 2007. Both clubs have focused on profit. Newcastle have essentially broken even during Ashley’s tenure with £4m aggregate profit, while Spurs have reported an impressive £215m. Worth noting that £188m of that came in the last four seasons, when Newcastle had a £47m loss in the Championship. Revenue at Newcastle has fallen by £1m since Ashley’s arrival from £87m to £86m, deflated by the lower money in the Championship. In the same period, Tottenham Hotspur's revenue has tripled, rising £203m from £103m to £306m. In fairness, Newcastle's 2018 revenue will be much higher (£175-180m estimate). In the last 11 seasons Newcastle received a hefty £627m from central Premier League distributions, but this is £231m less than the £858m Spurs received. The two relegations to the Championship during Ashley’s reign have really hit revenue, accounting for £142...

Roman Abramovich is putting Chelsea on the market. It is not a great surprise after the cancellation of the stadium rebuilding project and the recent difficulties over his UK work visa. The asking price is over £2bn which would be a world record for a football club. Manchester City and Arsenal are valued at around £1.8bn to £1.9bn. Only someone who is super rich need apply. Abramovich turned down a £2bn bid earlier this year from Sir Jim Ratcliffe, the chemicals tycoon and Britain's richest man with the Russian holding out for £2.5bn. US private equity firm Silver Lake wanted to buy a minority stake in Chelsea, but were turned away. Liverpool rejected a £2bn bid from an Abu Dhabi Sheikh in January. Abramovich has hired the same specialist US investment bank, Raine Group, that helped Manchester City sell a 13 per cent stake to Chinese businesses in 2015. They are likely to look for buyers in the US, China and the Middle East. Premier League clubs remain attractive to overse...

The English Football League has issued a statement on Charlton: 'The EFL continues to note the various comments emanating from multiple sources in regard to matters relating to the day-to-day operations at Charlton Athletic Football Club. Following a number of discussions dating back a number of weeks, the EFL plans to meet with both Charlton Athletic and the Charlton Athletic Supporters’ Trust to gain a full understanding of the current situation that surrounds the club.' 'In the intervening period, as we do with all our clubs, we will continue to monitor developments, offer any practical assistance that is available to us as we seek to protect the integrity and reputation of our competitions. In the context of any debate relating to operational decisions taken by a club, it is important to make the point that these matters are determined by the individual Boards and Executive teams at each our 72 member clubs. We will offer support as required to assist clubs in complyi...

A cousin of Manchester City owner Sheik Mansour has failed in a £2 billion proposal to buy Liverpool: Liverpool bid Sheik Khaled Bin Zayed Al Nehayan, an Emirati member of the family who govern Abu Dhabi, approached representatives of Liverpool's owners over the course of several months in late 2017 and into early 2018. It is, however, clear that Liverpool's owners, Fenway Sports Group, are actively seeking investment to transform the club into a superpower capable of rivalling the world's richest both commercially and in the transfer market. FSG have instructed the American firm Allan & Co to attract investment.

The authoritative Swiss Ramble looks at how Arsenal's finances have developed since the arrival of Ivan Gazidis in 2009 amid speculation that he may join AC Milan. Revenue has grown by an impressive £198m under Gazidis, only outpaced by Manchester City £366m and Manchester United £303m in absolute terms. However, this was the second smallest percentage growth of the Big Six. Furthermore, 2017/18 revenue is likely to be £40-50m lower, due to not qualifying for Champions League. Of £198m revenue growth under Gazidis, most (£125m) is from TV, due to central Premier League deals. Commercial revenue was up £69m, but the Swiss Ramble reckons this was a slam dunk after long-term sponsorships linked to stadium funding expired. It was the second lowest growth rate of the Big Six over the period. Arsenal's ability to outspend others has diminished. In 2012 they had almost as much cash (£154m) as the rest of the Premier League combined (£181m), but in 2017 other clubs have seen their ...

West Ham's fractious relationship with the London Stadium has led to a new row, this time over the club's honours board. The venue's owners have refused to reinstate the club's honours board after it was removed during the summer for athletics events (whether it would have offended athletes is open to question). Instead of being reinstated it has been replaced by a London Stadium branded board in what West Ham fans sees as provocative blue and white colours similar to those of rivals Tottenham Hotspur. The London Legacy Development Corporation (LLDC) is demanding that West Ham pay tens of thousands of pounds to cover maintenance costs for the big screen inside the venue. West Ham believe they are being held to ransom and that there is nothing in their tenancy agreement saying they should meet their costs.

Charlton staff have been told by Belgian owner Roland Duchatelet they will not receive bonuses because the club is losing £10m a year: No bonuses Many Charlton fans think that the scale of the losses are the result of the Belgian's policies which have driven fans away from The Valley and left interim manager Lee Bowyer with a threadbare squad reliant on Academy players. Staff are meeting this afternoon and there is a talk of a strike on Saturday when the Addicks are due to play Fleetwood Town at home. Fan group Campaign Against Roland Duchatelet (CARD) are planning a protest before the game if it goes ahead.

Parachute payments were intended to cushion the blow of relegation from the Premier League and prevent clubs getting into financial difficulties. However, they have been criticised for distorting the competitive balance in the Championship. Clubs relegated from the Premier League now receive £91m over three years. The authoritative Swiss Ramble looks at how they work. It is evident that parachutes have a major impact on the competitive balance in the Championship, as the six clubs with the highest revenue in 2016/17 all benefited from these payments, most notably the three relegated the previous season (Aston Villa, Norwich City and Newcastle United). Eight Championship clubs received Premier League parachute payments in 2016/17 with Villa, Newcastle and Norwich getting £41m (up from £26m in 2015/16 thanks to the new TV deal), followed by QPR £31m, then Cardiff City, Fulham, Reading and Wigan all £16m. If parachute payments were excluded, the same three clubs would still have the ...

Clubs in League One and League Two are aggrieved about the rising costs that Premier League clubs impose on them when they send out players on loan. The clubs feel that they are providing opportunities to develop players for the top sides but are also expected to pay increasing amounts to do it. Liverpool are one of a number of leading clubs who impose clauses in their loan agreements that can lead to financial penalties of up to hundreds of thousands of pounds if the player does not appear in three-quarters of the matches for the club where he is on loan. One suggestion is that there should be a cap of £1,000 a week paid for a loan player in League One and £500 a week for a player in League Two. Feeder clubs are not permitted in English football, but they work well elsewhere. Chelsea has a relationship with Vitesse Arnhem through which 23 players have gone on loan there since 2010. Manchester United have had a long relationship with Royal Antwerp. Manchester City recently bough...

An unfulfilled ambition of the Premier League was to stage some matches abroad. However, now La Liga have stolen a march on them by arranging to stage matches in the US. The undoubted intention is to challenge the popularity of the Premier League in another step towards the globalisation of football. The overseas games form part of a joint venture between La Liga and Relevent Sports, a US promoter backed by Stephen Ross, the billionaire owner of NFL team the Miami Dolphins. The intention is to build La Liga as a consumer brand in the US which in turn would lead to greater income from media rights. The games could be particularly attractive to Hispanics in the US, but it is not yet known how many will be played or where they will be staged. Moreover, Major League Soccer is raising objections to the plan and could block it. If the scheme is a financial success, the Premier League may revive their plan to play games abroad.

West Ham United are in dispute with their London Stadium landlord over the colour of the material that surrounds the pitch. They are worried that it will resemble the navy blue of their rivals Tottenham Hotspur. The athletics track round the stadium is covered with a green material. West Ham have successfully lobbied to have this removed as it is too similar to the colour of the grass. The club want it to be claret to match their colours and have offered to pay the cost of £200,000 and maintenance. The dispute to get the colour altered is one of four cases West Ham have won after the club took legal action. The cases were referred to an independent legal expert by an 'expert determination' process. The others were about who should pick up the bill for a series of costs including providing draught beer, televisions and hospitality staff. The expert ruling did not cover the colour of the surround and the London Legacy Development Corporation says it wants to get the best ...

The gap between top and bottom in the Premier League is exemplified by the fact that Arsenal made seven times as much per supporter as Sunderland in the Black Cats last season in the top flight: Money per fan Sunderland generated £217 from each match-going fan during the season, which works out as £10.12 per game. In contrast, Arsenal’s brought in £1,668. However, this season, with unpopular owner Ellis Short out of the way, Sunderland have managed over 22,000 season ticket sales.

Facebook has won the rights to screen La Liga matches across the Indian sub-continent. They will be free to view. The deal covers the next three seasons in India, Afghanistan, Bangladesh, Pakistan, Sri Lanka, Bhutan, Nepal and the Maldives. La Liga hailed the deal as giving it greater reach in the sub-continent and in particular to Facebook's estimated 270m users in India. Facebook displaces Sony who reportedly paid a total of $32m between 2014 and 2018. It is thought that Facebook would pay between $10m and $20m. Facebook has recruited Peter Hutton from Eurosport to lead its live sports strategy. Facebook subsequently won a three year contract to show Champions League matches in Spanish speaking South America.

The financial gap between the Premier League and the Football League has widened to £133m since the new broadcast deal: Mind the gap Championship clubs are now tending towards a 'two-year gamble' to attempt promotion and avoid breaching spending rules, according to Kieran Maguire of the Price of Football. Sustainability rules which allow clubs to make up to a £39m loss over a rolling three-year period meant clubs were buying players and paying high wages to win promotion, he added. That approach included the need for a third year of retrenchment, with the focus on cutting wages and generating income from player sales to avoid exceeding permitted losses set out in the spending rules. Maguire identified five clubs he believed were taking a 'two-year gamble'. 'The most noticeable clubs that appear to have taken this approach and "twisted on 2017" are Aston Villa, Birmingham City, Derby County and Sheffield Wednesday,' he said. 'Wolves also took ...

Shares in some publicly quoted teams in Europe have managed to beat the wider stock market over the past few years as revenues at top clubs have surged, largely thanks to rapidly growing broadcast revenues. Shares in Juventus, controlled by the Agenlli family's listed Exor vehicle and Italy's most decorated club, have risen fourfold over the past five years. The value of Arsenal has doubled over the same period. Scotland's Celtic and Portugal's Porto have also performed strongly. Manchester United shares, listed in New York, have not enjoyed the same success, generating a small return over the last five years. Clubs with global appeal are likely to be beneficiaries of the battle between rival online streaming services bidding aggressively for exclusive content.

Spurs will not move into their new stadium until mid-October due to issues with 'critical safety systems', thought to relate to electrical systems and fire alarms. Such difficulties are not unusual with large and complex construction projects, but they leave the club with some difficult choices about future games. They must tell Uefa within a fortnight where they will play their home group games in the Champions League. Although the stadium could be ready for their second and third group games, the first of which is October 23rd, Uefa demand certainty. The safe option would be to play all three games at Wembley. Spurs have asked for the Premier League games on September 15 against Liverpool and October 6 against Cardiff to be moved to Wembley. The game against Manchester City on October 28 cannot be moved to Wembley because the stadium is hosting a NFL game which is sold out. They could ask Manchester City and the Premier League to reverse the fixture, but this would nee...

Half of the Premier League clubs could have made a profit in the first year of the new broadcast deal without any matchday revenue: Fans not needed In the most extreme case Bournemouth generated just 4p in every pound from matchday revenue. However, fans create the atmosphere which makes the Premier League such an attractive product across the globe.

At one time clubs were sponsored by local businesses such as brewers and builders merchants. Of course, that still happens with non-league clubs. In 1995 10 Premier League clubs had technology backers. At one time it was Japanese hardware groups such as photocopier makers. Then came home computers. By the mid 1990s mobile phone companies switched on to sponsorship. Arsenal signed a five year deal with O2 and Manchester United were sponsored by Vodafone. Financial companies then followed. Newcastle were sponsored by Northern Rock before its collapse. Liverpool are still sponsored by Standard Chartered. Starting with Fulham in 2002, gambling companies became involved. They now sponsor half the Premier League clubs.

QPR need to leave Loftus Road if the club is to be sustainable according to their chief executive Lee Hoos. He says that a proposed move to the Linford Christie Athletics Stadium is the last chance to stay in the Shepherds Bush area: Must seize last chance

David Conn observes that the transfer window has seen big signings of overseas players with England's participation in the World Cup a distant memory: Premier League financial power Conn notes, 'The Premier League is so financially dominant now, its £8.4bn 2016-19 TV deals are double those of the next richest league, the Bundesliga, and a similar bounty is all but sealed up to 2022. So its clubs can buy and pay seductive wages to almost any player they fancy, apart from the topmost stars still residing at the rich handful of clubs in Madrid, Barcelona, Munich, Paris and Turin.' Everton, Fulham and Leicester all made big-money signings as the earliest transfer deadline in Premier League history came to life late in the day. However, the amount spent in the window by Premier League clubs fell for the first time in eight years, to £1.2bn. Tottenham and Manchester United made no signings on 9 August. Spurs became the first Premier League club to not make a summer signing si...

This article from The Guardian considers the cases of Blackburn Rovers, Blackpool, Charlton Athletic and Coventry City: The Agony and the Ecstasy Two of these teams enjoyed promotion last season, but it's not just about results.

Matthew Seyd argues in The Times yesterday that Stan Kroenke securing complete control of Arsenal is another step towards a European Super League. In 2005, there were no American owners in the Premier League. Now Americans fully or partially own seven clubs. American sports franchise owners are used to competitions where there is no relegation, offering protection for their investments. They are also able to impose wage caps, enabling them to take a bigger share of revenues. The idea of a European Super League has been around for a long time, but so far has come to nothing. However, it has been reported that last year representatives of Liverpool, Chelsea, Manchester United and Arsenal met to discuss it. The threat of a breakaway was used by top clubs to leverage a bigger share of overseas television rights this year. As it is, the Glazers have done well out of their purchase of Manchester United. They have turned their debt financed purchase into a paper profit of around £2....

The authoritative Swiss Ramble has been taking a look at League One finances based on the 2016/17 accounts. In some cases clubs publish only abbreviated accounts so the information available is limited. 11 of the 24 clubs in League One made money, though the amounts are very small – the highest were Swindon Town and Rochdale £1.4m. The largest reported losses were Millwall £5.8m, Sheffield United £5.7m and Scunthorpe United £5.6m. Profit on player sales was below £3m for all but two clubs in League One. The exceptions were relegated from the Championship: Charlton £16.2m (Lookman to Everton, Gudmundsson and Pope to Burnley, Cousins to QPR) and Bolton Wanderers £5.6m (Holding to Arsenal, Clough to Forest). The three clubs promoted from League One in 2016/17 had the highest revenue: Bolton Wanderers £14.7m (though this includes £6.5m from the Whites Hotel), Sheffield United £11.4m and Millwall £10.0m. Next highest were Charlton £7.6m, Oxford £7.0m, Walsall £6.6m and MK Dons £6.6m. A...

Last September the Premier League voted to close the transfer window before the start of the season. There were a number of good reasons for doing this. The transfer scramble distracted attention from the actual start of the season. It prevents the kind of distracted saga that can destabilise players and clubs. However, it does put Premier League clubs at a disadvantage compared with European rivals. Premier League clubs cannot augment their squads after Thursday, but European clubs have another three weeks to sign players. Real Madrid have another three weeks to sign Thibaut Courtois, currently skulking in Teneriffe, but Chelsea cannot even sign a loan replacement after Thursday. Some clubs have adjusted to the change more effectively than others with clubs that have a practice of being proactive finding themselves in a better place than those that are reactive. Clubs such as Newcastle and Tottenham, that operate on a sell to buy basis, have found themselves on the back foot. ...

Stan Kroenke has bought out Alisher Usmanov's 30 per cent stake in Arsenal for £550m in cash. The sale, which values the shares in the club at £1.8bn, marks only a small step up from the £525m offer rejected by Mr Usmanov last October. Mr Kroenke will now have sole control of the club as he will be able to buy up other shares and delist it. 'Silent Stan' is unpopular with Arsenal fans who would prefer a plurality of ownership and are concerned about reduced transparency. Kroenke insists that the buyout will not be leveraged against the club: Kroenke's plans Using an implied market value of £1.8bn, the deal is valued at 16 times last year's ebidta, a cash earnings measure. That is more than a quarter above Manchester United's valuation and double that of Juventus.

The authoritative Swiss Ramble has taken a look at the finances of the Championship. Of course, the figures are a year out of date, but they still tell us something. In contrast to the Premier League, only six clubs in the Championship made money, led by Nottingham Forest £32m and Barnsley £13m. Why Barnsley made a profit is unclear, as they only publish abbreviated accounts, but it is most likely to do with player sales. In this very competitive division most clubs over-extend in a bid to reach the lucrative top flight. Largest losses were at two promoted clubs: Newcastle United £47m and Brighton £39m. Profit on player sales is on low side in the Championship: below £20m for all but two clubs (and 15 of those were less than £10m). The two clubs to show a significant profit were Aston Villa and Newcastle United. Newcastle United's £86m revenue was the highest in the Championship in 2016/17 (a record for the division), ahead of the other two relegated clubs (Norwich City £75m ...

Getting a naming deal was an important part of Tottenham Hotspur's plans for their new stadium at White Hart Lane. However, just like West Ham United at the London Stadium they have found that the appetite for such deals has declined. Talks with HSBC collapsed after it did not prove possible to agree a figure. HSBC chairman Mike Tucker was keen on a deal. He was formerly chief executive at AIA group when the Asian insurance group became shirt sponsors at Spurs in 2013. However, others at HSBC thought it was more suited to its existing sponsorships in golf and rugby union than football.

Birmingham City could face a points deduction for breaching financial fair play rules. Nevertheless, the Football League have permitted the club to register Kristian Pedersen despite expressing 'exceptional disappointment; that he was signed. Leeds fans went on to social media to point out that their club was docked 15 points for breaching insolvency rules 11 years ago. The matter is being referred to a disciplinary commission. The club's directors could be banned from football if there is a continuing breach of profitability and sustaianability rules.

Sean Dyche is concerned about how constrained finances will affect Burnley's future: Finances In a sense Burnley are running hard to stand still, and even that may not be possible as clubs below them splash the cash. He said, 'The system runs away faster than this club can keep up with. The numbers run away that fast, no matter how much we bring in.' Some clubs, he observed, do not need a business model because their owners are so wealthy.

Aston Villa is the fifth European football club in which a big Chinese investor has sold all or some of its stake following the introduction of last year's investment restrictions by the Chinese authorities. Others include AC Milan, Atletico Madrid, Slavia Prague and Northampton Town. The Chinese government set out new criteria for overseas investment last August, placing sports clubs on a list of 'restricted' sectors. The investment curbs made it more difficult for Chinese owners to pump money into their often lossmaking clubs. The Financial Times notes that investment trends in China 'are often driven by a combination of opaque elite politics, corporate opportunism and a genuine search for new opportunities.' Sports lawyer Trevor Watkins told the Pink 'Un that the initial deluge of Chinese money had led to a 'Wild West' environment in which some investors were significantly overpaying for clubs, and adviserss were cashing in. Chinese investors pum...