The Political Economy of Football V2

Following the sale of a stake in City Football Group to private equity group Silver Spring, CFG have acquired a 65 per cent stake in Mumbai City Football Club. The club plays in the Indian Super League. Mumbai City was owned by actor and producer Ranbir Kapoor and his business partner Bimal Parekh. They will retain a 35 per cent share in the club. Football is eclipsed in popularity in India by cricket, but there is thought to be considerable growth potential. CFG chief executive Ferran Soriano said that the objective was to unleash the power of Indian football: CFG's objective

Unpopular Belgian Charlton owner Roland Duchatelet has sold the club to an Abu Dhabi based consortium East Street Investments: Charlton sold East Street Investments is fronted by Matt Southall, a former football agent and fitness entrepreneur. East Street Investments’ majority shareholder is wealthy businessman Tahnoon Nimer. You can see an interview discussing his business interests here: Tahnoon Nimer In a statement new chairman Matt Southall said: 'We are privileged to take ownership of such an historic club and it is incredibly exciting to be part of the process of building a fresh future for the fans, loyal club staff and players of Charlton Athletic.' 'While we may be the club owners, truly we are only the custodians. The true spirit of this football club rests with the fans, it is nothing without them. Their support throughout some difficult times both recently and in the past has been inspirational and we intend to build on that loyalty. Our priority will be i...

HM Revenue and Customs have lodged a winding up petition against Oldham Athletic in the High Court. It will be heard on December 11th: Notice In January 2018, Moroccan football agent Abdallah Lemsagam agreed a deal with the club's majority shareholder Simon Corney, which ended Corney's 14-year association with Oldham Athletic. He currently owns 97 per cent of the club with the Supporters' Trust retaining a three per cent stake.

The sale of just over 10 per cent of City Football Group to equity firm Silver Lake boosted Manchester United's shares yesterday. United's New York listed shares jumped almost 13 per cent, bringing its market capitalisation to $3.1bn. At first sight this cross city effect might appear to be a paradox. However, it is clear that the value of football clubs is being reassessed as new investors come into the market. Many think that the value of media rights will rise in the long run, despite something of a plateau being reached for broadcasting fees. It is believed that the value of football media rights will increase as viewers increasingly switch to watching online. Whether that will be the case remains to be seen. There may also be a bid for Manchester United. Rumours persist that Saudi Arabia's Crown Prince Mohammed wants to buy the club. It would be way of using the kingdom's financial muscle to project it on to the global stage and reshape perceptions about th...

Manchester City's parent, City Football Group, has sold 10 per cent of the group for £389m to American private equity house Silver Lake in a deal that values City Group at £3.75 billion, more than a billion higher than Manchester United which has a market capitalisation of $2.8bn. CFG has a stake in seven clubs across the world. CFG is now valued at $4.84bn, a record for a sports group. Kieran Maguire of the PriceofFootball comments, 'Valuation seems very high given that City Football Group losing £1m a week over last couple of years. Silver Lake would not be putting in this amount of money unless very confident that City would be subject to avoiding a Champions League ban, but reports suggest that City are on better terms with UEFA.' Silver Lake reckon that even if City were given a Champions League ban for breaches of financial fair play rules, they would still be worth the valuation. Maguire added, 'Reports that money will be used to expand City group globally ...

The authoritative Swiss Ramble looks at Millwall's financial results for 2018/19. They achieved 'the best result for many years' by reducing their loss from £5.0m to just £0.7m, as revenue increased by £2.8m (18%) to £18.4m and profit on player sales and loans rose by £6.9m, partially offset by £5.6m growth in expenses. The loss of £0.7m was one of the better financial performances in the Championship. As Finance Director Mark Fairbrother observed, no club in this division is consistently profitable. No fewer than nine clubs posted losses above £20m. Millwall have lost £61m in the last 10 years, though the losses have been falling – from £12m in 2015 to £1m in 2019. However, this season’s figure will be adversely affected by lower player sales and higher wages, and may not have a financially rewarding cup run like 18/19. Millwall's revenue increase was largely driven by broadcasting income, up £2.4m (32%) to £10.0m, partly reflecting televised cup games, though comm...

Roman Abramovich has no interest in selling Chelsea and remains committed as ever, although he has not attended a match for 43 games after his visa troubles, insists chairman Bruce Buck: Chelsea not for sale It is evident from the report that a few bargain hunters have been sniffing around and have been sent packing. That is not to say that a really good offer would not be considered. However, any purchaser would really need to commit to redeveloping Stamford Bridge, a plan that is currently shelved but comes with a big price tag.

Uefa is looking at developing its own streaming service to show Champions League games as the TV sports rights boom shows signs of flagging. Broadcasters such as Sky are increasingly unwilling to spend even bigger sums as it becomes harder to push costs on to financially stretched viewers. Even big tech groups like Amazon, which have joined the bidding, are not prepared to fork out more. Enders Analysis, a media analysis group, said in a report last month that the 'TV rights boom [in football] is ending. Subscriber growth has slowed or reversed, and retail prices are subject to downward pressure.' A streaming service could be provided by expanding the UefaTV online site. Such a move would represent a radical shift from the current model of selling screening rights to traditional broadcasters in deals worth €3.25bn to Uefa worldwide. Uefa would probably start by experimenting in a few markets outside Europe where broadcasting deals are worth no more than €5m - €10m a year...

Talks are in progress to sell AS Roma which is controlled by a group of American investors. It is believed that the talks are with Daniel Friedkin, an American billionaire whose family own the Gulf States Toyota Distributors franchise. Shares in the club rose four per cent yesterday, and are up 20 per cent since details of the deal began to leak. The US investors who own AS Roma have recently voiced frustration at the Rome local authorities over a perceived failure to help the club move or upgrade the Stadio Olimpico, the stadium that the club shares with local rivals Lazio. In 2011 Thomas DiBenedetto, a US private equity magnate, led a group of US investors to buy a controlling stake in AS Roma, making them at the time the first foreign owners of a top Italian club. At the time Serie A had financially slipped behind other leading European leagues. In 2017 Li Yonghong acquired AC Milan from Silvio Berlusconi. After he defaulted on high interest loans, US hedge fund Elliott Manag...

Financial considerations as well as the desire to secure silverware underpin Tottenham Hotspur's decision to replace Mauricio Pocchettino with José Mourinhio. The club has seen steady growth in revenues from broadcasting and prize money. Over the 2017/18 season Tottenham achieved £380.7m in revenues with pre-tax profits of £138.9m, the largest pre-tax annual profit of any football club. Club chairman Daniel Levy told the Financial Times in September that he had secured the financial future of the club by refinancing £600m of debt related to the building of its new stadium, costing £1 billion. He added there would be no change to the frugal business plan followed during his nearly two decades of running the club. This will surely change under Mourinhio which raises the question of why his predecessor could not be given more money to spend. Things tend to go sour with the Portuguese maestro after three years and that can be expensive. It cost Chelsea £23.1 million to sack him...

The Swiss Ramble blogger applies his forensic skills to the 2018/19 accounts of Bayern Munich. Profit before tax increased from €46m to €75m (profit after tax €52m). Revenue (per Bayern’s definition) rose €93m (14%) to €750m including €90m profit on player sales. The board described the figures as 'outstanding', as both revenue and profit set record highs. Amazingly this is the 27th consecutive year that Bayern have been profitable. In fact, 2019 was the highest profit in the club’s history, both before and after tax. The club has accumulated nearly a quarter of a billion Euros profit in the last 4 years alone (€242m). Excluding player sales, revenue rose €31m (5%) from €629m to €660m, mainly due to TV, up €34m (20%) to €211m, though commercial was also up €8m (2%) to €357m. On the other hand, match day down €11m (11%) to €92m (partly due to staging two fewer Champions League matches). Profit on player sales was €62m higher at €90m. The club benefited from €90m profit on pl...

Manchester City have posted record revenues of £532.2m over the 2018/19 season, while also making a fifth consecutive annual profit of £10.1m. City is the world's fifth richest team by revenues behind FC Barcelona, Real Madrid, Manchester United and Bayern Munich. It was City's 11th successive year of revenue growth and closes the gap on local rivals Manchester United. The figure is projected to rise again next year given City have already qualified for the knockout stages of the Champions League. Payments from a £45m-a-year Puma kit deal will also start to take effect. They could then overhaul Manchester United. The wages to turnover ratio was a healthy 59 per cent, although up from 52 per cent.

The Financial Times Weekend Magazine had a big feature article by Murad Ahmed on the Athletic Club of Bilbao. For more than a century, only those born or raised in the Basque Country are eligible to play for the club, the only one in top flight European football to restrict itself to local players. Nevertheless, the club are one of Spain's most successful, having won the league eight times. Over the past decade they have performed well enough to qualify for European competition on seven occasions, reaching the Europa League final in 2012. They are one of La Liga's wealthiest clubs with revenues of €134m in the 2017/18 season, almost double what they earned five years earlier. However, the move from individual to collective negotiation of TV contracts does not benefit them. Previously, top Spanish sides earned eight times those at the bottom of La Liga. That ratio has become closer to 4:1, allowing lesser teams to afford better players. Athletic club could be seen as an...

Manchester United have reported fiscal first quarter results. Commercial revenue of £80.4m, up 5.9% versus the prior year. Sponsorship revenue was £53.6m, up 8.1%. Broadcasting revenue for the quarter was £32.9m, down 23.1%. Matchday revenue for the quarter was £22.1m, up 35.6%. The operating profit for the quarter was £11m. The fiscal year 2020 is expected to see profits of £560m to £580m. Income was flat at £135m due to lack of Champions League revenue. The majority of the full year revenue impact of non-participation in the UEFA Champions League will occur in Q2. The failure to qualify for the Champions League has seen a drop in wages which are down 8.8 per cent to £70.2m. A £12million profit declared on player sales, mainly Romelu Lukaku's £59million move to Inter Milan in August, steered Manchester United to a £2.5 million pre-tax profit in the quarter. Without the benefit of offloading players, Manchester United would have posted a loss for the three months ended 30 Sep...

The authoritative Swiss Ramble blogger analyses the accounts of Juventus. The pre-tax loss widened from €10m to €27m (€40m after tax), despite revenue growing €83m (20%) from €411m to €494m and profit from player sales rising €33m (35%) to €127m, due to significant cost growth of €130m. Revenue (club definition) up €117m to record €621m. All revenue streams increased. Commercial income rose €41m (28%) to €187m (largely the Ronaldo factor); match day was up €14m (25%) to €71m; broadcasting was €6m (3%) higher at €207m; and player loans shot up €22m to €30m. Revenue has grown by €123m (36%) in three years, mainly on the commercial side €84m, though also growth in match day €27m, player loans €20m and broadcasting €12m. The club's revenue of €494m is by some distance the highest in Italy, around €120m more than the closest challenger, Inter €377m, followed by Roma €236m, Milan €228m, Napoli €185m (2017/18) and Lazio €124m. All other clubs in Serie A have revenue less than €100m. J...

Sheffield Wednesday have been charged with misconduct by the EFL after selling their Hillsborough stadium to their owner to avoid breaking spending rules: Sheffield Wednesday Kieran Maguire of the PriceofFootball discusses the implications of the decision: Does it mean a points deduction and ho long will it all take? Maguire takes an in depth look at the sale of football stadiums to club owners and the implications for financial fair play: Selling your stadium to yourself

Kieran Maguire of the PriceofFootball reveals that overall Premier League clubs only made a collective profit in nine seasons since its inception although the last few years have been much better. Total cumulative losses are £1,008,000,000 since 1992/3. Of the 49 clubs who have played in the Premier League, only 25 have made a profit. Maguire notes that it will come as little surprise that Chelsea and Manchester City have racked up the two largest sets of losses since the Premier League started, but perhaps eyebrows raised that Aston Villa, Bolton Wanderers, Stoke City and Sunderland are also in the top ten. Some surprisingly big losses from clubs that are traditionally thought of as very prudent such as Watford and Everton, the latter in the top ten loss making clubs in Premier League history. In positions 11-20 of the all time Premier League profit table Blackpool fans will be asking 'What happened to all the money' as their team is 13th in the table. Arsenal are the mos...

Kieran Maguire of the PriceofFootball provides figures on total net spend in the Premier League since its inception. Since it began 49 clubs have appeared in the EPL and total net spend to 2018 is £8,150,000,000. Some may be surprised that Newcastle United, Sunderland and Stoke City are in the top 10 and Tottenham Hotspur are not. The top three spenders (the two Manchester clubs and Chelsea) account for 40% of the total since inception. Spurs are at 11th, Crystal Palace are surprisingly bigger spenders than West Ham United and Bournemouth are in the top 20. Outside the top 20 it shows that a single year's spending for the likes of Brighton and Huddersfield (these figures only include the most recent accounts so up to 2017/18) is enough to get 30th and 31st. Of course, as Maguire points out, the quantity of spend is not the same as quality. Maguire has also looked at the wages paid by clubs whilst in the Premier League from 1992/3 to 2018. Chelsea lead the table but Mancheste...

When parachute payments come to an end it can hit a club's finances hard and that is certainly the case at Middlesbrough: Need to rationalise finances Last year's revenues were around £65m. This year it will be around £21m. And the fixed costs of the club remain: with rates, utilities, maintenance and staff at the stadium and the training ground it costs Boro around £15m before a ball is kicked. That leaves the wage-bill to deal with. The first year after relegation the wage-bill was £49m. Last year it was still over £30m. This year it is still north of £20m.

The authoritative Swiss Ramble blogger reviews the recently published accounts of Norwich City. The club went from a £18.5m profit before tax to a £39.4m loss, as revenue dropped by £28m (45%) from £62m to £34m, mainly due to parachute payments coming to an end, and profit on player sales falling from £48m to just £2m. Loss after tax was £33.9m, due to £6.4m tax credit. The decrease in revenue was entirely due to the lack of parachute payments, which meant broadcasting income fell £29.1m (75%) from £38.7m to £9.6m. However, commercial rose £1.3m (10%) to £14.4m, while gate receipts were flat at £9.7m. Despite the significant decrease, the club's £34m revenue was still comfortably in the top ten in the Championship, though only around half the level of clubs benefiting from parachute payments. Revenue has dropped by around two-thirds since relegation from the Premier League from £98m in 2016 to £34m in 2019 (the lowest since 2011), very largely due to lower TV money. This will re...

Kieran Maguire of the Price of Football reviews the financial condition of Celtic and Rangers: Never let me down It is the strongest rivalry in British football and it is often a case of lighting blue touch paper and retiring when commenting on them as a neutral. Maguire concludes: 'Celtic have a noticeable advantage over Rangers in terms of income generation and profitability, partly due to their ability to buy low and sell high in terms of player trading, and this has allowed them to pay higher wages, which is usually, but not always, reflected on the pitch. Even so, Rangers is potentially going to continue to lose money unless a more successful player trading policy and a resolution to ongoing legal disputes is achieved.'

Leeds United owner Andrea Radrizzani was in Paris on Wednesday night for further talks on a takeover by Qatar. Qatar Sports Investment is understood to view Leeds as a potential long-term project and that even if only a minority stake is bought initially. it would be with a view to owning the club outright. QSI is said to value Leeds at between £50m and £70m. Radrizzani is considering two other offers. One is from the owner of an Italian club, and the other a very wealthy Leeds fan based in the United States.

The authoritative Swiss Ramble reflects on ASRoma's 2018/19 accounts which cover a season that the owner James Pallotta harshly described as 'a complete disaster'. They fell from 3rd to 6th in Serie A and exited the Champions League at the last 16 (compared to the semi-finals in 2017/18). The loss before tax improved from €18m to €15m, despite revenue falling €17m (7%) from €253m to €236m & €63m cost growth. Offset by profit on player sales rising €75m to €129m. Revenue fell €17m (7%) to €236m, mainly due to less progress in Champions League: TV down €22m (13%) to €145m, match day down €5m (14%) to €34m. However, commercial was up €10m (21%) to €55m. Despite the decrease in 2018/19, ASRoma's €236m revenue remains the third highest in Italy, but it is now less than half of Juventus’ €495m and a substantial €140m behind Inter €373m. Roma’s revenue mix: broadcasting 61%, commercial 23%, match day 14% and player loans 1%.m. Including player trading, revenue up €61m (1...

Although its inquiry into events at Bury FC has been interrupted by the dissolution of Parliament, the House of Commons Digital, Media and Sport Committee has made a number of recommendations in terms of how practices should change: Inquiry Committee chairman Damian Collins said: 'Systematic and structural problems are responsible for the tragic expulsion of Bury FC from the league this year. These failures were avoidable, and it is essential that the authorities urgently overhaul their framework if they wish to avoid the same fate befalling other clubs.'

With all the controversy over VAR, there is surely room for Fan Assisted Refereeing (FAR) and it is now been tried out on an experimental basis, admittedly in a two team league: First test for new technology

Norwich City have published their 2018/19 accounts. Being champions of the Championship was costly as a combination of income down £28m due to parachute payments expiring and costs constant due to promotion bonuses. Revenue was at its lowest since 2010/11. Turnover in 2018/19 was £33.7m and therefore significantly lower than the prior year (2017/18: £61.7m). Despite positive gains on disposals of player registrations the Group’s results show an operating loss before tax of £39.4m (2017/18: operating profit before tax of £18.5m). Match day income from the gate was £9.7m (29 per cent of total), broadcasting income was £9.3m (28 per cent of total) and commercial income was £8.5m (25 per cent). Catering is listed separately at £4.3m. This is not usual in accounts, but reflects the club's ownership. Player purchase costs amounted to -£10.4m, which included instalment payments on previous transfers, plus the acquisitions of new players such as Emiliano Buendia, Moritz Leitner and P...

The authoritative Swiss Ramble blogger reviews the recently published accounts of Bristol City. The club reported a £11m profit before tax, a significant improvement on the prior season’s £25m loss, mainly thanks to profit on player sales surging from hardly anything in 2017/18 to £38m last season. The £11m profit would have been third highest in the 2017/18 Championship, only behind Norwich City and Derby County £15m (though the latter included £40m stadium sale profit). This is very good, considering most clubs lose money in this ultra-competitive division. However, this great result was only achieved because of the substantial £38m profit on player sales. Player trading has become increasingly important at Bristol City with £52m profits in the last three years, compared to only £6m in the preceding seven years. Lansdown said: 'Without being mean, players are a commodity. They come and go, they have a value and we need to realise that value.' Profits were boosted by selli...

Kieran Maguire of the PriceofFootball reviews Bristol City's financial results: Empty Skies He comments, 'Bristol City are a classic example of life in the Championship finances, loss making, reliant on a benevolent owner and occasional player sales and unable to keep wages under control.'