The Political Economy of Football V2

 Fifa has published a comprehensive report on international transfers over the past decade:  https://www.fifa.com/legal/football-regulatory/stakeholders/fifa-fund-for-players/media-releases/fifa-publishes-report-on-ten-years-of-international-transfers The top thirty clubs by spend were all in Europe, twelve in England and five each in Italy and Spain.  they accounted for 47 per cent of all fees.  The combined loss made by English clubs was £5.2bn with £670m going to agents. The top ten clubs by spending on transfer fees were: Manchester City Chelsea Barcelona PSG Real Madrid Atletico Madrid Manchester United Arsenal Juventus Bayern Munich Clubs outside the top six in England in the top thirty were (in order) Leicester City, Southampton, Wolves, West Ham, Everton and Newcastle.

Can a massive world class signing pay for itself in increased commercial revenue?   The answer is probably not in the short run, although the real dividend may be a longer run one of raising the club's profile in key global markets.    It gives a leading club an edge over its rivals that may attract sponsors. The Athletic has reviewed this question in relation to the signing of Lionel Messi by PSG. In the immediate aftermath of Lionel Messi’s transfer to PSG, the club were at pains to point out that the cost of his deal will, effectively, pay for itself. This, sources argued, would be down to the commercial potential associated with the player. Their confidence echoed statements made earlier this year by Barcelona president Joan Laporta. He said “Messi generates more income than he earns”, before adding that the club conducted a study and found not only that “Messi generates around a third of Barcelona’s total income” but that “all the sponsors demand to have Le...

It’s hard to imagine CVC Capital Partners, the Luxembourg-based private equity firm, lending to any individual club in the Spanish second-division. But Javier Tebas, president of Spain’s La Liga, negotiated a deal this month that will see roughly €2bn from CVC redistributed to clubs across the top two tiers in the form of interest-free loans in exchange for a slice of La Liga’s TV money. In recent months European football leagues have shown that they can borrow on behalf of clubs to obtain finance that smaller teams would struggle to obtain from mainstream lenders. The investment management arm of US insurer  MetLife  was willing to provide a £117.5m borrowing facility to the  English Football League , which runs the  Championship   and two other divisions below the elite  Premier League , allowing clubs to meet certain tax liabilities.   “As a collective, the security within football is a lot stronger...

The Swiss Ramble takes a typically forensic look at wages in the top five European leagues. Wages are by no means the only driver of performance for clubs, but this is clearly one of the most important factors. Money on its own cannot buy success, but it sure helps in the world of football. There have been “exceptions to the rule”, though not many in recent years. In England the highest wage bill in 2019/20 was Manchester City £351m, followed by Liverpool £326m, Manchester United £284m, Chelsea £283m, Arsenal £225m and Tottenham Hotspur £181m. In Spain FC Barcelona £389m and Real Madrid £332m lead the way. There is a significant drop to Athletico Madrid £199m, then another large gap to Sevilla £109m. In Germany the FC Bayern £298m wage bill was by far the highest, over £100m more than the closest challenger BVB £189m, followed by RB Leipzig £129m and Bayer Leverkusen £123m. It’s a similar story in Italy, where the Juventus £249m wage bill is significantly higher than the rest of Serie ...

While the delayed arbitration case between Newcastle and The Premier League is private and behind closed doors, the Competition Appeals Tribunal might try to convince the parties to release the entire award. Historically arbitration disputes are viewed as being favourable to the governing bodies, but one expert says that the current process is seen as much fairer considering how the panel of arbiters are appointed. Proving the claims that that the Premier League bent to pressure put upon them by a big club, to block the takeover, won’t be easy for Newcastle. Legal experts say that it's not enough to convince the arbitration panel that the Premier League’s decision was wrong. ”They need to be able to look at it and come to the conclusion that the decision was so unreasonable that it shouldn't have been made.”

Clubs in Europe's top five leagues took a nearly €2bn hit from loss of matchday revenue in 2020/21 according to a report from KPMG:  https://worldsoccertalk.com/2021/08/24/european-football-giants-to-take-2-billion-euro-covid-hit-kpmg-report/?utm_source=dlvr.it&utm_medium=twitter

The authoritative Swiss Ramble reviews the impact of Covid-19 on Premier League and sounds a warning from his Zurich fastness.   He states: ‘The size of the Premier League losses really should give pause for thought, so I’ll say it again: £1.4 bn over the past two seasons. In that period, six clubs have lost more than £120m. Although losses are smaller outside the Big Six, they are still significant in percentage terms.’ The COVID-19 pandemic has had a significant adverse impact on football clubs, though it is important to distinguish between money that has been completely lost to the game and income that has simply been deferred. All Premier League clubs experienced a decrease in their revenue in 2019/20 – except the three clubs that were promoted from the Championship, who were boosted by the lucrative TV deal in the top flight.    In total, I estimate that Premier League clubs lost £326m revenue due to COVID in 2019/20, split broadcasting PL £160m, match day £...

Football fans are notorious for having excessive expectations for their team, but curiously their expectation level varies by division.   I looked at the Fan File forecasts in Four Four Two and counted how many fans anticipated a top six finish (seven in League Two). League One fans are the most optimistic and Championship fans the most pessimistic.   14 League One fans (58 per cent) forecast a finish at least in the play offs.   The figure for League Two was similar, 13 (54 per cent). However, the Championship figure was just six (25 per cent).  In the Premier League it was also six or 30 per cent.

The Swiss Ramble looks at PSG’s finances following the signing of Lionel Messi and states that they are still likely to be able to meet Uefa’s financial fair play targets Despite a €99m (15%) fall in revenue in 2020, partly due to the COVID pandemic, the wage bill still rose €43m (12%) to €414m, the club’s highest ever. This was more than 3 times as much as the closest challenger in France, Lyon with €132m, representing 29% of Ligue 1 wages. €414m wage bill is the second highest in Europe, only surpassed by Barcelona €443m (before their La Liga salary cap challenges), but more than clubs like Manchester City €401m, RealMadrid €378m, Liverpool €371m, Bayern €340m, Manchester United €324m and Chelsea €323m. PSG have ramped up their transfer spend with a gross outlay of €560m in the 3 years up to 2019/20 season, almost twice as much as the preceding 3-year period. This included the significant acquisitions of Neymar from Barcelona €222m and Kylian Mbappé from Monaco €145m. However...

La Liga is confident that a big majority of its clubs will vote in favour today of its €2.7bn tie up with private equity firm CVC Partners.  Rothschild & Co. have produced a report saying that the deal offers a fair price.   Barcelona and Real Madrid claim that CVC is under paying. Under the deal CVC would buy a minority stake in a company holding La Liga's broadcasting and sponsorship rights for around €100m, giving it a 11 per cent share of revenues for the next 50 years.  It would also contribute €2.5bn to be distributed to clubs as interest free loans, welcome after Covid-19 hit revenues. Real Madrid intends to take legal action to try and stop the deal.

American businessman John Textor has spent nearly £90m on a stake in Crystal Palace.  He had hoped to buy the club outright, having failed in an attempt to buy a 25 per cent stake in Benfica:  https://www.theguardian.com/football/2021/aug/11/crystal-palace-sell-875m-stake-to-us-businessman-john-textor His investment will help to pay down debts and contribute to the stadium redevelopment.

Real Madrid is bringing civil and criminal (!) proceedings against La Liga and CVC Partners over their proposed deal.  It is also fiercely opposed by Barcelona:  https://www.theguardian.com/business/2021/aug/10/real-madrid-to-sue-la-liga-and-cvc-chiefs-over-proposed-27bn-deal

Chelsea have signed a three year deal with Parimatch Tech that provides technical and marketing solutions for the betting industry as well as its own brand:  https://www.sportindustry.biz/news/chelsea-announces-parimatch-official-partner However, the days of betting deals for football clubs may be coming to an end.   However, as crypto currencies seek a higher and more respectable profile, they offer an alternative source of sponsorship.  Pirelli have been Inter Milan's shirt sponsors for more than a quarter of a century, but the shirts will now advertise the crypto exchange Socios.com Among the clubs to partner, not necessarily with shirt sponsorships, with Socios are Arsenal and Manchester City in England; AC Milan and Juventus in Italy; and Barcelona in Spain. Clubs can sell digital tokens to fans which can also be used for promotions and other rewards.  Fans must use Socios's own digital currency Chiliz and like other crypto currencies it can be volatile....

Borussia Dortmund have reported losses of €72m, up from €44m the previous year.   This is one of the biggest losses attributed to Covid-19, although player trading was also a factor:  http://www.insideworldfootball.com/2021/08/10/no-fans-westfalenstadion-pushes-dortmund-e72m-loss/  

The authoritative Swiss Ramble reviews the latest accounts of Newcastle United.  Although the financial picture is relatively healthy, essentially the club is stagnating. The club swung from £41m pre-tax profit to £26m loss, as revenue fell £23.8m (14%) from £176.4m to £152.6m, partly due to COVID, while expenses increased £45m (28%), including an additional month of accounts. Profit on player sales was up £2m to £26m. Loss after tax was £23m. At an operating level (i.e. excluding player sales and interest), Newcastle deteriorated from £15m profit to £54m loss. This is the club’s worst ever performance, but is still in the top half of the Premier League with no fewer than 5 clubs having operating losses above £100m. Main driver of revenue reduction was broadcasting, which fell £18m (14%) from £124m to £106m, while match day dropped £7.4m (30%) from £24.8m to £17.4m. However, commercial rose £1.4m (5%) from £27.7m to £29.1m, including £1.2m from government job retention scheme. ...

Newcastle finances headlines for 13 months to 31/7/20 as reported by Kieran Maguire of the Price of Football: Revenue £153m (down 13%) Matchday £17m (down 30%) Wages £121m (up 20%) Operating loss £43m (£11m profit) Player purchases £76m (£43m) Player sales £30m (£42m) Lee Charnley salary £675k (£267k). Wages up £20m but this included an extra month compared to previous season. Average wage almost £52k a week.   Newcastle wages £79 for every £100 of income. Overall EPL spent £69.30. Newcastle made £26m from player sale profits in 2019/20. Total EPL profits were £400m. Newcastle's squad cost a total of £216m at 31 July 2020, which, whilst a record for the club, is still bottom six by EPL standards. Newcastle’s loans due to Mike Ashley still £107m but now classified as ‘repayable on demand’ instead of due in more than one year.

FC Barcelona is in an acute crisis. But it’s also in a chronic, long-term crisis writes Simom Kuper in the Financial Times. Even if the club can fix the current mess, it’s hard to see how it can retain its spot at the top of football. His new book Barça: The Inside Story of the World’s Greatest Football Club traces a fall from a golden age.  Barça’s gross debt is now about €1.2bn.  La Liga ’s financial rules bar the club from spending money it doesn’t have on registering new players.   This week Barcelona announced that its star player Lionel Messi will be forced to leave the club due to the regulations imposed by La Liga, Spain’s top division. After Messi, help may come from  CVC   Capital Partners ’ proposed injection of €2.7bn into La Liga. Though the money reportedly isn’t supposed to be spent on players, some of it may find its way into Barcelona’s wage bill, easing the acute crisis, although club chief  Joan Laporta   claimed the...

The Swiss Ramble casts his forensic eye over Charlton's 2019/20 accounts.   What is clear is the long-term financial limitations the club has faced. Following promotion to the Championship, Charlton reduced their loss from £10.1m to just £1.1m, as revenue increased £7.5m (95%) from £7.9m to £15.4m and profit on player sales rose £1.5m to £4.4m, partly offset by expenses growing £3.3m (17%). The £1.1m deficit was actually one of the best results in the Championship. Only three clubs made a (small) profit in 2020, while some huge losses were reported: Stoke City £88m, Leeds £62m and Fulham £48m (latter two included promotion bonuses). The operating loss (excluding player sales, exceptional items & interest) improved from £12m to £7m, which was actually one of the best performances in the Championship. Nearly every club in this division posts substantial operating losses, i.e. almost half were above £30m. Charlton are no strangers to a loss, having only reported a profit once...

The consortium trying to buy West Ham is funded by an Azerbaijani millionaire currently embroiled in a “bitter legal dispute” over allegations of corruption in the former Soviet republic. PAI Capital has made a bid of £400 million for the Premier League  side but West Ham chairman and majority shareholder David Sullivan dismissed the offer, describing it as “derisory”, and claimed the London-based group “never produced any proof of funds”. But in a statement issued to  The Athletic  this week, a spokesperson for PAI Capital said: “PAI and our legal counsel did submit a proof of funds to West Ham’s owners, and funds for the purchase are directly accessible, subject to a commercial agreement being reached with the current owners.” This follows an earlier statement from PAI Capital partner and former QPR chief executive Phillip Beard, who said the £400 million offer was “in fact the figure that David Sullivan had initially asked for”. The Athletic , however, und...

League football started in the North of England.   But in recent years it has been tilting towards the south according to an analysis by  The Athletic and there is no sign of 'levelling up'. The most northern-based Premier League season was 2008-09, featuring four north-east sides in Newcastle, Sunderland, Middlesbrough and Hull, with Bolton, Blackburn and Wigan also still knocking around in the north west. Meanwhile, it’s notable that several north-west clubs who competed in the Premier League in recent memory have shown absolutely no sign of bouncing back. Blackburn and Bolton were both relegated in 2012, the former briefly dropped down to League One, the latter as far as League Two — something they share with Blackpool, relegated in 2011. Wigan have been relegated to the third tier three times since they won the FA Cup in 2013. Going back further, Oldham were a Premier League outfit in the 1990s, but have spent the past two seasons near the bottom of League Two. ...

La Liga has agreed a €2.7bn deal with CVC Capital Partners, but Real Madrid are not happy with an arrangement that would bring private equity into a major European league for the first time. The deal values La Liga at €24.2bn and would release €2.5bn for clubs over three years.  CVC would take a minority stake in a newly created entity that would manage broadcast, sponsorship and digital rights for the league.   The aim is to attract a larger international audience and improve technology. The 42 clubs in the two divisions will vote on the deal next week, but Real Madrid is annoyed that it was not included in the negotiations.   The deal does not need unanimous support. Real Madrid and Barcelona are still backing a version of the European Super League. A similar deal between CVC and Serie A stalled after opposition from elite clubs.   Germany's top clubs voted to pull out of talks with private equity firms about a stake in the Bundesliga.

The authoritative Swiss Ramble reviews the finances of the Women's Super League,   Overall the WSL reported a £7.2m pre-tax loss for the division, an improvement on the previous season’s £8.9m. WSL clubs invariably operate at a loss with their parent companies covering the shortfall. Only four clubs made (small profits), led by Manchester United £101k, but eight of the 12 lost money – four above a million: Brighton £1.9m, Chelsea £1.8m, Tottenham £1.3m and Reading £1.2m. Chelsea £3.849m had the highest reported revenue, just ahead of Arsenal £3.763m followed by Manchester City £2.8m, Manchester United £1.7m, Everton £1.7m and Liverpool £1.7m. WSL revenue partly depends on how much income is shared from the parent company in the commercial area. Similar to revenue, Chelsea have the highest expenses in WSL with £5.7m, well ahead of Arsenal and Manchester City, both £3.8m, followed by Brighton £2.2m and Manchester United £2.0m. Relegated Liverpool lagged behind with a budge...