The Political Economy of Football V2

The chairman of Bury FC, Steven Dale, is unhappy with the conduct of the English Football League and has issued a long statement on the matter: Statement He comments, '[The EFL] 'felt it prudent to ignore the facts and send out the incendiary statement for no gain to anybody other than to discredit Bury FC and its Board. The effect of that to our Club has been unrest in players thinking there would be no Club, loss of players, sponsors pulling out and 5 months of hard work being destroyed by them, then you have the subsequent media garbage inciting unrest and the trolls rearing their sorry heads again, all based on ill truths or at best negative spin, for what?' He concludes, 'I am unsure at this juncture where Bury go when the body that should be there to help us works against us, however, I felt it important to set the record straight and hope the EFL try to be reasonable. We, as a Club, promise you that we will challenge this injustice in whatever forum necessary....

Controversial Charlton Athletic owner Roland Duchatelet has blamed the English Football League and their 'stupid system' for his failure to sell the club: Bitter Belgian There is a lot wrong with the EFL, but it is hardly their fault that Duchatelet is, to use his words, 'stuck' with the club. Rather than what he calls the EFL's 'stupid system', it surely has more to do with the unrealistic price and adds on he has asked for from prospective purchasers. They fully understand how much it costs to run a club in the Championship - and the rewards to be obtained from promotion to the Premier League. It is Charlton fans who are stuck with the Belgian rather than the other way round. Going on about how much it costs to run a Championship club is hardly likely to encourage buyers. Financial fair play has not had the impact that Duchatelet unrealistically hoped for, but its implementation has been constrained by competition law considerations.

Blackpool FC have at last published their accounts and Kieran Maguire of the PriceofFootball comments, 'Blackpool have made profits of nearly £46 million since 2011, of which £17 million has come from player sales. This is an unprecedented level of profit for a club of its size. Where has that money gone?' He adds, 'the best news for fans is seeing the list of directors names & those who’ve resigned.' Blackpool paid £128 in wages for every £100 of income in 2017/18. The operating loss to June 2018 was £3.2m. Gate receipts were down from £660k in 2017 to £376k in 2018, although surprisingly season ticket sales were up. The biggest stream of income was from the Premier League and Football League distributions (£1.57m). There was a £1.8m profit on player transfers. Maguire notes, 'the impact of a year in the Premier League and subsequent parachute payments highlighted in the revenue totals': £51.6m in 2011; £28.7m in 2012; £3.3m in 2018.

The English Football League has issued a portmanteau statement om Bolton Wanderers and Bury. If they do not supply certain evidence by 5 pm today, their opening fixtures may be suspended: EFL statement Wycombe Wanderers have suspended ticket sales for their home fixture against Bolton on Saturday. Bolton's match is now going ahead, but Bury's will not take place, a bleak prospect for the club.

Both the BBC and ITV are reporting that the takeover of Notts County by a Danish consortium has been completed, although there is no official confirmation yet: Done deal The new owners were reported to have been at the club today. Staff have not received their wages for a second month. A number of trialists waiting to see if they will be offered deals once the takeover is concluded. Once that happens, the outstanding tax bill can be paid and the club's transfer embargo lifted.

Professional football has been added to the EU’s money-laundering risk watchlist. The European Commission said this week that the complex structure and lack of transparency in the game 'created a fertile ground for the use of illegal resources'. They added that 'questionable sums of money with no apparent or explicable financial return or gain are being invested in the sport'. The Commission’s report into money-laundering identified football, along with 47 other goods and services, as an area that could be exploited by criminals. The decision follows a scandal in Belgium last year when federal prosecutors started an investigation into allegations of illicit fees paid to players and referees.

The administrators' report for Bolton Wanderers has now been published online and can be accessed here: Companies House Turnover fell from £24.3m in the year ended June 2016 to £8.2m in the year ended June 2017. A loss of £10.1m was made in the year ended June 2015. There was a profit in 2016 due to one off events totalling £200m including the writing off of a debt owed to Burnden Leisure Limited. The loss in the year ended June 2017 was £8.3m. The report notes, 'In its history, the Club has featured in the highest divisions of English football for a total of 73 seasons.' The list of 294 creditors in Appendix 5 makes sobering reading in terms of how many small businesses are adversely affected by the collapse of a football club.

Almost a fifth of the money owed to investors in collapsed peer-to-peer lending platform Lendy was involved in troubled property development schemes spearheaded by former Bury FC owner Stewart Day. £27m was borrowed by Mr Day's company to build student flats. Investors face losing up to 95 per cent of their money. Mr Day oversaw losses of £8.3m at Bury between 2014 and 2017. Mr Day sold his stake in Bury to Steven Dale in September. Mr Day also relied on other P2P lenders to fund Bury FC. Capital Bridging Finance Solutions, a Liverpool-based P2P lender, holds a £1.6m mortgage over Bury's ground that was arranged during Mr Day's tenure. On last Thursday Bury agreed a company voluntary arrangement with creditors to stave off insolvency.

There has been no breakthrough at Notts County where it is hoped that a Danish consortium will save the club. Unsurprisingly, the football authorities have done nothing, even though the plight of the club was raised at prime minister's questions last week: Threat of extinction The club's membership scheme 'Lifeline' has donated £25,000 to help employees who have not been paid their wages for June. The independent fund-raising organisation has contributed £211,000 to the club since 2017.

Leading football finance expert Kieran Maguire explains what Fenway Sports Group have done for Liverpool. The club was technically insolvent and on financial life support when they stepped in, but now they have overtaken Manchester United: Liverpool's finances

Kieran Maguire of the PriceofFootball takes an in depth look at the recently published accounts of Sheffield Wednesday: When the sun goes down Maguire comments, '[Owls fans] are lucky in a way to have an owner who is willing to empty his pockets (or rather those of his successful family) into Wednesday but at the same time his lack of football knowledge means he’s open to be taken advantage of by those who see the game purely as a commission making vehicle and a lot of money ( admittedly his) is wasted in the process.'

Sheffield Wednesday have at last published their accounts. I am grateful to Kieran Maguire of the PriceofFootball for tweeting these figures and comments as I have not had time yet to look at the figures in any detail myself. As a result of the increased player costs Wednesday operating losses increased by 77% to £37.7m, but this too was exceeded by seven other clubs as the Championship lost over £11 million a week. Sheffield Wednesday income was up 8% in 2017/18 but covers a 14 month period compared to 12 in 2016/17. Chansiri lent the club a further £40 million in 2018 on top of the £20 million in 2017. He has also put in £2 million in shares in 2017 and £21 million in 2018/19, so his total investment since acquiring club is pumping in over £100m and owes the club £60m for the stadium. Maguire notes, 'The only ways to cover those losses is to sell players, others assets or rely on the owner. Wednesday sold Hillsborough for £60m, booking a £38m profit in the process and players...

Kieran Maguire of the PriceofFootball comments, 'Has financial fair play been a success in the Championship? Now that Sheffield Wednesday have published their figures can summarise totals. In the last five years Championship clubs' income up 53%, Wages up 55% and losses up 106% (now losing £1,560,910 a day).' Of course, the financial and prestige lure of the Premier League is considerable and encourages clubs to take risks. Given that some clubs in any one year are in a relegation battle, they have a 6-1 chance of success, although no doubt each club thinks it can beat those odds. Financial fair play has not been as effective as some hope because clubs keep finding loopholes, the most recent being the sale and lease back of the ground as at Aston Villa and Derby County. The EFL also knows that it is on dubious legal ground with FFP as it is possibly in breach of competition law: lawyers disagree about this, but that is how they make their money.

The takeover of Bury FC last season by Steve Dale for £1 was not approved under Football League regulations: Bury takeover An offer to settle 25p in the pound of the club’s non-football and unsecured debts – HMRC was owed £1m at that point – but the creditors’ voluntary arrangement (CVA) proposal was adjourned this week. The administrators of Mederco, one of Day’s collapsed property companies, has claimed since the proposal was made that it is owed approximately £7m in loans made to Bury while Day owned the club. Bury Supporters' Trust have sent an open letter to the chairman expressing their concerns and saying that the heart and soul has been ripped out of the club over the last few weeks: Open letter

Liverpool are succeeding off the pitch as well as on the pitch with commercial deals booming. This week the club signed a new global betting partner: Liverpool finances Their current New Balance agreement is worth around £45 million per season but is up for renewal at the end of the coming season. The European champions feel their earnings should be closer to the £75m Manchester United receive from Adidas.

Kieran Maguire of the PriceofFootball comments, 'Boro paid an average wage of £23,400 a week in 2017/18. Would expect this to fall this season as otherwise would only be able to afford 19 players (and no managers, coaches or support staff) before the money runs out . Boro had 237 staff in 2017/18.' 'As a result Middlesbrough had the highest costing squad in the Championship by summer 2018, but that has come back to bite them as parachute payments stop in 2019/20. Boro spent more on players in 2017/18 than any other club [in the Championship], twice as much as the next club, as it bought players for £66 million.' Staff at the stadium and the training complex have been invited to apply for voluntary redundancy: Job cuts

The three years that Ken Anderson was in charge at Bolton Wanderers have left a trail of debt all round the area according to a report from the administrators: Complex finances Nearly £25million is owed to businesses large and small, including a whopping £1,748,724 to Bolton Council for rates and other services. If the 35p dividend forecast by the administrators is correct, they would stand to lose out on just over £1.1m of the money outstanding. HMRC will also be hit significantly. They are owed £2,470,461 but stand to recoup £864,661.

The High Court have given Notts County until July 31st to complete the sale of the club. Owner Alan Hardy says that he hopes to reach a deal within the next few days: Notts County update Understandably fed up Notts County fans say that the whole saga needs to end. One who has followed the club for 49 years says he has seen 13 good years: Fans go to court hearing

The uncertainty surrounding Brexit affects Manchester City like any other business: Brexit and City But they also have more specific concerns. 'On the football side, the biggest single problem posed by leaving the EU will be the fact that European players will have the same status as players from the rest of the world when it comes to getting work permits.' 'City’s policy of recruiting the brightest teenage talent from the continent, once they reach 16, will be ended by Brexit – so importing young players like Aro Muric, Brahim Diaz, Eric Garcia, and Adrian Bernabe would simply not be allowed. The work permit problems would give European rivals like Barcelona, Real Madrid, and Paris St Germain a distinct advantage in terms of picking up young non-English talent.'

AFC Wimbledon are hoping to raise £7m towards the cost of their new stadium by crowdfunding from their supporters. Crowdfunding is become increasingly popular with football clubs: New Plough Lane stadium The club has a relatively affluent group of supporters and are offering some novel incentives, so they may well succeed, reducing the loan burden.

A comparison of the Bundesliga with other top European leagues. The conclusions are not very surprising, but there it is an in depth analysis and there is some interesting data: The state of the league It is noted, 'The Premier League’s spending balloons from around 2010 onwards, while the rest start to rise together about 5 years later. Incredibly, the Championship is competing with some of the Big 5 for transfer spending'. Of course, it is in many ways a de facto Premier League 2.

A Danish consortium has been pictured have talks with beleaguered Notts County owner Alan Hardy: Can these men save County? A High Court hearing is scheduled for tomorrow and unless there is evidence of progress towards a deal, the judge could issue a winding up order. The club is under a transfer embargo and the new kit has not arrived.

Notts County are the oldest Football League club. They have won the FA Cup, spent 30 seasons in the top flight and just missed out on being founder members of the Premier League. On Wednesday they face a hearing over their unpaid tax bill which could well see them going into administration and a 12 point deduction to accompany the start of their campaign in non-league football. Hapless chairman Alan Hardy has asked for more extensions than Brexit. The National League is not an easy division to get out of which just one automatic promotion place as former league clubs like Chesterfield have found. Indeed, eight former league clubs such as York City have ended up in second tier the National League North. Stockport County only got back to the National League for this season, as did Torquay United from the National League South. Hardy is seen as the chief cause of the club's troubles, but they have been in a downward spiral for some time. There have been 16 managers this decade...

The authoritative Swiss Ramble takes a look at the impact of the new three-year TV deal on clubs’ revenue, particularly the changes in the distribution system for the overseas TV deals. My observations are in square brackets,. In 2018/19 each club received equal shares for 50% of domestic TV £34m, overseas TV £43m and commercial income £5m. Each league position was worth £1.9m (merit payment), while each match broadcast live was worth £1.1m (on top of £12.2m for a minimum of 10 games). Each club received a total of £82m from equal payments with the only differences in Premier League TV distribution due to: (a) league position, ranging from Manchester City £38m to Huddersfield £2m; (b) live TV games, Liverpool £33m to £12m for four clubs [somewhat surprising to find Watford in this group]. Total Premier League TV rights for 2019-22 cycle rose 8% (£0.7 bn) from £8.5 bn to £9.2 bn. UK domestic rights actually dropped 7% (£0.4 bn) from £5.4 bn to £5.0 bn, but this decrease was more tha...

Coventry City is celebrating the centenary of its admission to the Football League. Unfortunately, this happening against the backcloth of the club playing its home games this season at Birmingham City. A hundred years ago what would people have made of a 'hedge fund' owning the club? Or how would they have interpreted the banner I saw at this afternoon's pre-season friendly at Leamington, 'London Wasps not welcome in Coventry.'? (The Sky Blues won 4-0). Here is a contemporary account of a meeting held 100 years ago in Coventry to celebrate the club's admission to the Football League (I wrote it for the Leamington programme): A well-attended and enthusiastic meeting was held at St. Mary’s Hall in Coventry on 3rd May 1919 to re-launch Coventry City after the war and to celebrate their admission to the Football League. The Coventry Evening Telegraph noted, ‘the club have the city behind them in their endeavours to maintain for Coventry its rightful place ...

Football is increasingly seen as an investment opportunity: Changing investment landscape There has been an influx of private equity which drives up prices. Examples of US private equity investors buying into European clubs include Jason Levien and Steve Kaplan (Swansea City), John Henry (Liverpool), Harris Blitzer Sports & Entertainment (Crystal Palace), The Tornante Company (Portsmouth), Joe DaGrosa (Bordeaux), and James Pallotta (AS Roma). This might lead to a focus on short-term returns and exits increasing instability at clubs. Kieran Maguire of the PriceofFootball commented, 'Football is being seen more and more as an opportunity to make money. That trend is likely to accelerate over the next few years. If only ‘investors’ could reduce or eliminate relegation they could lock in profits...'

Oxford United have made a loss in six out of their last seven seasons, and faced three winding up petitions last season. However, their Thai owner has said that he is committed to the club and they are hoping for better things: A more sustainable future It's challenging financially for clubs in League One, hoping to avoid relegation whilst building for promotion.

Bury face a 12-point deduction for their return to the third tier of English football after owner Steve Dale put forward a proposal to help clear some of the club's debts. Unsecured creditors, including HM Revenue & Customs, will be paid 25% of what they are owed. If approved, the company voluntary arrangement would qualify as an insolvency event under English Football rules, which would see Bury deducted points. Bury are to evicted from Manchester City's old training ground at Carrington. City consider that Bury failed to keep their side of a rent free deal, which saved them £350,000, by failing to keep buildings and pitches maintained to a satisfactory standard: Eviction

Peruvian born American businessman Robert Gordon has taken over Hibernian after looking at several clubs in England and Spain: Takoever He doesn't sound as if he is going to splash the cash: 'Money is not always the answer. Obviously you need resources, but I think creative thinking and looking at things in a different way and developing ideas and teams that can really flourish is, I think, what made my company successful.' He has made a seven figure cash injection into the Easter Road club which is now debt free: Supporters react A Hibs supporter I spoke to commented, 'It has been known for some time that Tom Farmer was keen to pass the responsibility on to a new owner. Farmer took Hibs on as a good deed when they were at a very low point, partly because he has a long term association with Leith. I understand that he has no particular interest in football, and I'm sure that he never expected Hibs to be a very productive investment - it was more philanthropy th...

The authoritative Swiss Ramble has taken a look at the financial challenges facing Arsenal. He has apologised to the club's fans for such depressing reading, but they are probably well aware of the hurdles they face under the regime of 'silent' Stan Kroenke. The Swiss Ramble notes, 'The challenges could probably be simplified to Arsenal needing to get back into the Champions League as soon as possible. However, this is by no means an easy task, especially when their rivals are outpacing them off the pitch.' On the face of it, Arsenal are doing fine, having reported profits for 16 consecutive years, adding up to a grand total of £393m, averaging £25m a year. Furthermore, Arsenal’s profits in the last two years were a healthy £70m in 2017/18 and £45m in 2016/17. In fact, the club's £70m profit before tax in 2017/18 was actually the fifth highest ever registered in the Premier League, though it is worth noting that this was comfortably surpassed by two rivals t...

Everton have joined the list of clubs borrowing from banks and securing the loan based on Premier League TV money. The club appears to have rolled over the arrangement with the Industrial and Commercial Bank of China from last season. The deposition with Companies House does not reveal the sum or the interest rate, but there are plenty of references to the Premier League which is required to sign a form of acknowledgement of the terms of the deal. In particular, Everton assigns to the lender its D.29 rule rights and under other relevant rules to the Basic Award Fund, overseas broadcasting money and facility fees. The club has fully disclosed to the lender its liabilities to other clubs and football creditors. For its part, the lender waives any right to make any claim, or take any action in relation to, the Premier League. Given the size of television payments and the fact that they are virtually guaranteed, it can be rational to borrow against them to pursue a club's objectiv...

The sale of Bolton Wanderers to a preferred bidder is nearing completion. The preferred bidder cannot be named until today for legal reasons: Statement by the administrators I hope that this is the beginning of a new era for the staff and fans of this historic club when they can focus on the football instead of having to set up food banks or players having to pay the travel costs of Academy players out of their own pocket. What has happened does not reflect well on the governance of football.

From midnight, a tweak to Premier League Financial Fair Play rules takes effect — increasing the scope for clubs to buy players. Since 2013, clubs have been limited by Short Term Cost Control (STCC) regulations that meant any 12-month increase in player wages of above £7m had to be funded by new commercial deals. The Premier League’s next three-year financial window has now begun, with STCC removed - leaving clubs having to merely adhere to existing FFP strictures by which they must limit any losses to £105m over three years. A summer transfer splurge is now possible without having to worry about a short-term revenue uplift to cover it. This could particularly benefit clubs like Everton and Wolves that are trying to break into the top six.

Kieran Maguire of the PriceofFootball reveals that since the start of the Premier League in 1992 until the end of the financial year for most clubs of 30 June 2019, Premier League clubs have spent gross just under £17,000,000,000 on players. The Top Ten clubs have spent £11.3 billion (66.7%) of the total paid by Premier League clubs on players since its inception. Five clubs have spent over one billion: in order, Chelsea; Manchester City; Manchester United; Liverpool; Arsenal. Apart from Spurs, it is questionable whether the next five have always got value for money: Tottenham Hotspur; Everton (£827m); Newcastle United; West Ham United; Southmampton (although a net figure might put them in a much more favourable light)