The Political Economy of Football V2

The Swiss Ramble runs the rule over the latest Chelsea accounts from his Zurich fastness. Chelsea’s pre-tax tax loss widened from £36m to £156m (£153m after tax), mainly due to profit on player sales falling £115m from £143m to £28m, though revenue rose £28m (7%) from £407m to £435m, while there was £13m other operating income. The £156m pre-tax loss is the largest reported to date in the 2020/21 Premier League, higher than Spurs £80m and Manchester United £24m. However, there were plenty of big losses already reported in 2019/20 and other clubs will be worse with a full year of the pandemic reflected. The £153m loss after tax is by no means the largest in Europe. In fact, it is “beaten” by Inter £215m, Juventus £184m, Roma £163m and especially Barcelona £422m. The huge loss was partly due to COVID, but was also driven by significant investment in the squad, mitigated by Champions League success. The strategy is very reliant on player trading, which did not deliver as much as n...

The Swiss Ramble provides a forensic analysis of the accounts of Bristol City from Zurich. The pre-tax loss widened from £10m to £38m, as profit from player sales dropped from £26m to £6m and revenue fell £10m (39%) from £27m to £17m, due to COVID. Wages to turnover ratio was 212%, clearly not sustainable,   gross debt £96m.    Unsurprisingly, the £38m loss is one of the worst in the Championship, though other clubs’ figures will also be bad when they publish 2020/21 accounts. The revenue decrease was largely driven by COVID (games played behind closed doors and stadium lockdown), as commercial fell £6.1m (44%) to £7.7m and match day dropped £4.0m (85%) to £0.7m. Broadcasting was also down £0.4m (5%) to £8.2m. Government grants up £1.0m to £1.6m. The Swiss Ramble estimates the club lost around £15m revenue in 2020/21 from a full season of COVID: £6m match day (games behind closed doors) and £9m commercial (conferences and events “heavily restricted”). This takes the...

Football finance guru Kieran Maguire reports on the latest accounts of Chelsea.  Income was up 7% to £435m. Wages were up 17% to £333m.  Amount owed to Roman Abramovich £1.4 billion (loans to parent company Fordstam). As a result of costs rising faster than income Chelsea went from an operating profit of £32m to a loss of £155m. These figures have been very erratic in recent years due to the volatile one off costs and income streams. Chelsea have second highest squad cost in the PL, just behind that of Manchester City. This may have helped those clubs reach the Champions League final earlier this year. Income increased despite season behind closed doors due to more matches taking place as end of 2019/20 season was partially in year to 30 June 2020 following Project Restart. Broadcast income up 69% due to more matches being played and success in winning the Champions League.   Commercial income fell by 19% to £154m due to loss of pre-season tours, non-match day inc...

Boris Johnson’s levelling-up agenda should focus on football as a way of boosting civic pride, a leading strategist has said. James Frayne, a policy research specialist who has worked alongside top Conservatives including Michael Gove, the levelling-up secretary, said that policies to protect football clubs from bad owners would have an “immediate impact on daily life” in towns and cities across the country, in contrast to the longer-term effects of plans to improve skills and infrastructure. Frayne’s consultancy, Public First, conducted two focus groups this month for  The Times  in Derby with fans of Derby County. The participants in the focus groups saw the survival of their club as a vital component of the civic pride that Johnson wants to sit at the core of levelling up. “It’s 100 per cent integral to the city,” one participant, James, said.    Another, Emma, said: “For a city like Derby not to have a football team, it doesn’t even bear thinking about. It’...

Football finance guru Kieran Maguire reviews the latest accounts of Bristol City. Revenue was down 39% to £16.7m.   Wages were   up 6% to £35.3m. Wages were £212 for every £100 of revenue.   Day to day losses up 26% to £44m.   Owner investment up to £214m.    Bristol City have lost £412,000 a week every week for the last ten years from day to day trading.   Bristol City's losses over time have now reached £170 million. Losses can be offset by player sales and owner funding. Player sale profits were down from previous season but still over £6m, and along with furlough helped reduced pre tax losses to 'just' £38m.   Bristol City spent £2m on new players in 2020/21 but had sales of £7m.   Total income has nearly halved in two years as impact of Covid hit last season with matches taking place behind closed doors.    Matchday income down 86% to just £0.7m as only taking were from season ticket holders. Broadcast income similar to p...

AFC Wimbledon's chief executive has called on the EFL to take tough measures against clubs like Charlton and Portsmouth who have been unable to field a matchday squad because of Covid-19, claiming that the Wombles have done a better job of containing Covid.  The 'strongly worded' Wimbledon letter is here:  https://www.afcwimbledon.co.uk/news/2021/december/club-statement2/ The statement has received a mixed reaction from fans:  https://fanbanter.co.uk/afc-wimbledon-receive-mixed-reaction-after-issuing-strong-statement-to-the-efl/?fbclid=IwAR0lVEMX7LsQzW4B2clEtSbrVNyohNvHzCpado9OqdHV3rMnEGqDyrVmOcY

Spartan South Midlands Division One outfit Bedford FC have been bought by a local bitcoin podcaster Peter McCormack and he has announced his ambition to take them all the way from Step 6 to the Premier League. Unfortunately the first response has been for manager Jason Goldman and his coaching team to quit.  He said: 'We wish the new owner all the best in his quest to bring Premier League football to Bedford.' McCormack tried to buy Bedford Town two steps higher up the pyramid, but was rebuffed.  Bedford FC was formed in 2002 from a merger of Bedford United and US Valerio. McCormack says that he intends to use his contacts throughout the cryptocurrency world to generate the funding that would allow the McMullen Park outfit to climb the ten tiers to the top flight.  He aims to change the club's name to Real Bedford at the end of the season. He told BBC local radio: 'I always thought Bedford as a town could support a league club.  We're a population of 134,000 people....

Another Premier League fixture has been postponed today (Everton v. Burnley) making a total of three.  At their Zoom meeting on Monday Premier League clubs considered three options.  Option 1”: play on. “Option 2”: postpone a round of festive fixtures, “Option 3”: halt the season.   The meeting has been widely leaked despite pleas to keep it confidential. The Athletic  understands that Liverpool spoke up most strongly in favour of Option 2 — postponing a round of fixtures. The club’s stance was backed up later in the week by their manager, Jurgen Klopp, and captain, Jordan Henderson, who both spoke out at further meetings on Thursday. Sources say that Arsenal also spoke up in favour of shifting a round of fixtures. But, ultimately, Option 2 remained a minority position with those arguing against it — the clubs who supported Option 1, playing on — claiming there were too many unknowns involved to support the plan. They also argued that such a plan e...

In early August 2021 when it was announced that La Liga had agreed in principle for CVC to inject €2.7 billion into its clubs and the competition itself. This “LaLiga Impulso” money was to be spent mostly to improve infrastructure and off-field business areas. In return, CVC would receive a 10 per cent share of La Liga’s TV revenues in a partnership that was to run for 50 years and valued La Liga at €24.25 billion. The vast majority of the cash injection was to go directly to the clubs. Seventy per cent of the funds would have been ring fenced for long-term investments in physical and professional infrastructure, 15 per cent could pay off or refinance debts, and only 15 per cent could be used for improving squads through player wages or transfer fees. A new holding company was also to be formed to control all of La Liga’s business activities, with CVC Partners having a share in this joint-venture. La Liga kept this share below 10 per cent, while it also would have six of the eight ...

Roman Abramovich, the owner of Chelsea, has settled a libel claim against HarperCollins and the author of a book about President Putin.  This means that the case will not have to go to court, possibly leading to embarrassing revelations. Abramovich disputed claims that Putin ordered his 2003 acquisition of Chelsea along with other allegations. The publisher has apologised and amended the text, including the part about the purchase of Chelsea.  They have included additional comments from Mr Abromovich's spokesman that provide further information about his motivations for the purchase.  A donation to charity has been made in relation to another statement in the book.

Grimsby Town's co-owner has admitted that they could not compete with the amounts being spent by Stockport County, but nor would they want to.  Projected losses are because of the amount being spent on infrastructure:  https://www.grimsbytelegraph.co.uk/sport/football/football-news/grimsby-town-finances-stockport-wrexham-6333937

A number of clubs have got involved with cryptoassets, seeing a new way of making money, but the Advertising Standards Authority has ruled against Arsenal over adverts on 'fan tokens':  https://www.theguardian.com/media/2021/dec/22/arsenal-adverts-for-cryptocurrency-fan-tokens-banned The adverts have been banned for taking advantage of fans' inexperience on cryptocurrencies.   Full ruling here:  https://www.asa.org.uk/rulings/arsenal-football-club-plc-a21-1121873-arsenal-football-club-plc.html The ruling could have big implications in a league which is deepening ties with Socios, with Crystal Palace recently becoming the sixth Premier League club to sign up after Arsenal, Aston Villa, Everton, Leeds and Manchester City, despite fierce opposition from fans’ groups. Earlier this year in a special investigation,  The Athletic  revealed how alongside “fan engagement” in the form of polls and competitions, the Socios ecosyste...

What happened with the failed cryptocurrency bid for Bradford City?  The Athletic  has been finding out. WAGMI United is a decentralised autonomous organisation (DAO), a group governed by computer coding — usually in the form of crypto tokens. Anyone who holds these tokens can vote on matters related to the DAO. The decisions are carried out by automated contracts.  They want to buy a club in League One or League Two, the third and fourth levels of the English football pyramid, and take them to the Premier League. That, believe it or not, is the straightforward bit. They intend to do this by creating club-related NFTs — characters, kits, pictures, videos and so on — that they can sell to the “global community” of crypto traders and NFT enthusiasts. Their NFTs will be better than others already out there, though, as they claim they are offering fans a chance to effectively own a piece of the team.   Remember the web-based Ebbsfleet United MyfFotballClub fiasco? ...

Football fans around the country are uniting to back three Oldham Athletic fans, including the director of the Oldham Athletic Supporters' Foundation, banned for 'disliking' the team or more specifically controversial owner Abraham Lemsagram:  https://www.manchestereveningnews.co.uk/sport/football/football-news/oldham-athletic-ban-fans-lemsagam-22527054 Oldham supporters have said they will not be silenced:  https://www.theoldhamtimes.co.uk/sport/latics/19798134.oldham-athletic-fans-group-responds-supporters-club-ban/ The club cannot ban fans from away games without a court order.

Premier League matches are to go ahead with no special Covid break:  https://www.bbc.co.uk/sport/football/59732905   I have just done an interview for Sky on this.  A short break in matches - 28th to 30th December had been mentioned - would have little impact either on future postponements or revenues.   The underlying problem is that quite a lot of footballers have not been vaccinated making repeated Covid-19 outbreaks likely. The 28th-30th December dates would have been awkward for Amazon who are showing those games.  Amazon has paid £30 million a season to exclusively show two rounds of Premier League matches. Even on Sunday afternoon, Amazon had adverts running on Sky Sports promoting their own upcoming live Premier League action, in which they pledged to deliver 10 games featuring all 20 teams and urging supporters to sign up. The slot is particularly important as a strategy to Amazon as a delivery service, as it runs around the festive-season shop...

The authoritative Swiss Ramble reviews the latest accounts of Millwall. Millwall’s financial results for the 2020/21 season, when their pre-tax loss widened from £10.9m to £13.8m, as revenue fell £3.9m (24%) from £16.4m to £12.5m, due to COVID.    The loss wass covered by £8m share capital from owners and £8m EFL loan.   Profit was “significantly impacted” by COVID with total revenue loss to date estimated as £7m, including £6m in 2020/21, partly offset by iFollow streaming income and £1.4m staff furlough income The pre-tax loss widened from £10.9m to £13.8m, largely due to revenue falling £3.9m (24%) from £16.4m to £12.5m, though operating expenses were up £0.7m (3%). actually one of the best results in the Championship, where most clubs operate at a significant loss.   Partly offset by profit on player sales increasing £0.6m to £0.7m and other income rising £1.2m to £2.1m.    This was the lowest reported in the Championship, far below the likes of Nor...

Liverpool owners Fenway Sports Group are trying to buy Brazilian club Cruzeiro, the first club there to make a switch from a non-profit to corporate entity:  https://www.liverpoolecho.co.uk/sport/football/football-news/fsg-liverpool-buy-club-breaking-22504369

Real Madrid may be at the top of the Spanish league. But off the pitch, the country’s richest and most successful club has suffered a grievous loss.  Last weekend, La Liga signed a €2bn financing deal with private equity group CVC Capital Partners. The fiercest opposition came from  Florentino Pérez , the billionaire president of Real Madrid, who offered up an alternative debt deal. But 37 of 42 Spanish clubs voted in favour of the CVC transaction instead. Real’s defeat is hard to overstate. CVC will invest €2bn to partner with La Liga and be entitled to 8.2 per cent of the Spanish league’s “commercial profits” — meaning its revenues, minus costs from setting up a new commercial entity — for the next 50 years. Opponents, who also include  FC Barcelona  and  Athletic Bilbao , are still seeking to block the deal by filing lawsuits. In the meantime, they have received a carve out. By refusing to take CVC’s cash, they wo...

Bradford City have distanced themselves from reports that they are going to be taken over by a group of American cryptocurrency investors:  https://www.yorkshirepost.co.uk/sport/football/bradford-city/are-bradford-city-the-efl-club-set-to-be-taken-over-by-cryptocurrency-investors-3497798 However, the WAGMI United Group has been in touch with supporters:  https://www.thetelegraphandargus.co.uk/sport/sportlatest/19790734.bradford-city-fan-speaks-talking-wagmi-united-group/ Philadelphia 76ers team president Daryl Morey is reported to be among the group keen on City. It is headed by sports gambling analyst Preston Johnson and co-founder Eben Smith, who has a background in finance. Businessman Gary Vaynerchuk, chairman of communications company VaynerX, and Tik Tok social media figure Bryce Hall have also been named among those involved.

An in depth analysis of the state of the women's game:  https://www.tifosy.com/en/insights/women-s-football-poised-for-major-growth-3520?utm_source=twitter&utm_medium=card&utm_campaign=insights_womensfootball It argues that the game requires additional investment and a review of the current model to grow at a steeper trajectory.   Although commercial growth and interest levels have been positive, infrastructure remains substandard.

As Premier League clubs push back against the idea of an independent regulator, the authoritative Swiss Ramble takes a cold look at their finances from his Zurich fastness. This analysis looks at how football clubs in the top two divisions have fared in the last 10 years up to 2019/20, the last season when all clubs have published accounts. It therefore excludes 2020/21 when COVID had a big adverse impact as matches were played behind closed doors. Just looking at revenue, people might think that there are no problems, as the 44 clubs in the Premier League and Championship have generated an impressive £41 bn in the 10 years 2011-20. That said, there is a clear gap between the Big Six, led by Manchester United £4.7 bn, and the rest. However, a large chunk of this money has simply gone on £28 bn of wages – before clubs pay any other operational expenses, buy players or invest in stadiums, training grounds, etc. Perhaps unsurprisingly, highest wages were paid byManchester City   £...

A proposed takeover of Carlisle United has been called off.  In a long statement the board said that they had given the deal all the time they could:  https://cumbriacrack.com/2021/12/10/carlisle-united-takeover-off-read-the-full-statement-here/  

The investment arm of the San Francisco 49ers has a deal in place to buy Leeds United for more than £400 million,  The Athletic  has revealed. It is understood that there is an option for 100 per cent control of Leeds to pass to 49ers Enterprises by January 2024 — including ownership of the club’s Elland Road stadium. Leeds’ market value has rocketed since Italian businessman Andrea Radrizzani bought them for £45 million in 2017 but 49ers Enterprises — a fund controlled by the NFLfranchise — is set to secure a full buy-out within the next two years. Radrizzani sold an initial 10 per cent of Leeds to 49ers Enterprises in 2018 and that minority shareholding has since risen to 44 per cent, with the most recent increase of seven per cent coming last month. A fixed purchase of more than £400 million was struck during negotiations that saw 49ers Enterprises hike its stake up to 37 per cent in January. Some sources have told  The Athletic  that the deal could b...

Spain's top football clubs have called on their rivals to reject an offer by private equity group €2bn into the Spanish leagues.   Real Madrid, Barcelona and Athletico Bilbao have written to the heads of the other 39 clubs in leagues one and two urging them to back alternative funding. The alternative entails the creation of a special purpose vehicle that would raise €2bn of debt at a cost of 2.5-3 per cent over 25 years.   Bank of America, JP Morgan and HSBC are said to be involved. La Liga has supported CVC ahead of a vote on its deal.  CVC would acquire a share of La Liga's broadcast revenues for the next 50 years.  CVC would provide €2bn to be loaned at zero interest to clubs. La Liga sources argue that the real issue is the continued support of Real and Barcelona for a European Super League. La Liga clubs' revenues dropped to €3.1bn in the 2019/20 season, falling behind the Bundesliga at €3.2bn. Premier League revenues total €5.1bn.

From his Zurich base, the Swiss Ramble has delivered a critical blast at Aston Villa at odds with his usual dispassionate tone.   Some Villa fans have taken offence, and I can see why they might.   Nevertheless, if I was a Villa fan, I would be questioning whether all this money had been well spent. One Villa fan said that they did not need to be reminded of the dark ages.  Another commented: 'Ignoring that in that time we have been promoted pushed top 10 and pushing lots of big teams as well as a dramatic team change and gaining 100m from joe, not to mention the massive academy upgrade and training facilities now know to be some of the best in the country.' In the last 10 years Aston Villa have reported a staggering £455m of pre-tax losses, which is actually highest of the 20 clubs in the Premier League in the 2019/20 season. The last time that the club posted an operating profit was back in 2014 – and that was only £1m. Excluding player sales and except...