The Political Economy of Football V2

The authoritative Swiss Ramble analyses the latest accounts of Reading FC from his Zurich base. This was the fourth season that Reading were under the control of Chinese businessman Dai Yongge (and his sister Dai Xiu Li), who own 96% via Renhe Sports Management Co Ltd. However, in that time the club has struggled both on the pitch and with Financial Fair Play rules. The club’s loss narrowed from £42m to £36m, despite revenue dropping £4.0m (23%) from £17.8m to £13.8m and profit on player sales falling £0.9m to £0.7m, thanks to an £11.2m (18%) reduction in operating expenses from £61.3m to £50.2m. The £36m loss is still one of the worst in the Championship, only surpassed by Bristol City £38m to date in 2020/21. Many clubs post large losses in this division, though some have been relatively low this season, e.g. QPR and Coventry City £5m. The Royals have reported losses in eight of the last 10 years, even managing to lose money in the Premier League in 2013. Their annual losses ...

Since 2012 the Champions League has been sponsored by Gazprom, the Russian state energy giant. Between 2018 and 2021 this was worth €40mn a year to Uefa. The relationship, which was renewed until 2024, is nothing new. But it took the Russian invasion of Ukraine to provoke any real backlash against the Gazprom logo on the advertising boards, hospitality suites and television screens. Gazprom also owns football team  Zenit St Petersburg   and was until this week a mainstay on the shirts of  FC Schalke 04 , which plays in the energy company’s key German market. Football had been “sleepwalking into this situation for the best part of 15 years”,  Simon Chadwick , professor of Eurasian sport at  Emlyon Business School in Paris , told the Financial Times . As he has pointed out, Gazprom isn’t exactly in the business of selling gas to fans during the half-time interval. His interpretation? Sponsorships in high-profile sports come with soft power a...

A statement by Roman Abramovich about handing over the stewardship of Chelsea to the club's charitable trustees has led to considerable confusion:  https://www.chelseafc.com/en/news/2022/02/26/statement-from-club-owner-roman-abramovich Evidently it is an attempt to avoid any damage to the club as a result of sanctions against the Chelsea owner.   However, what it means in practice is far from clear - other than that the club is not for sale. Abramovich is perceived as a close associate of Russian president Putin but regards that as unfair.  One of his daughters has criticised the invasion of Ukraine. It would appear that Abramovich will no longer be involved in club matters on a day-to-day basis and that long-term strategic decision-making powers will reside with the Chelsea Foundation.   The five trustees are Chelsea women's manager Emma Hayes, club chairman Bruce Buck, sports lawyer John Devine, former sports minister and Chelsea fan Hugh Robertson and th...

A certain amount of nonsense is being talked about the future of Chelsea in the context of the Russian invasion of Ukraine.   Chris Bryant MP has stated that the government should take the club over, but the government has enough sense not to want to run a football club, or indeed upset Chelsea's many fans. Roman Abramovich is owed £1.5 billion by Chelsea and could call the loan in if his assets were threatened.  Chelsea is technically owned by Fordstam, a company set up by Abramovich that has underwritten the club's losses. Should Abramovich relinquish ownership, there would be no shortage of buyers.  The club is broadly breaking even in its day-to-day operations.   Redevelopment or replacement of Stamford Bridge would enhance its long-term potential. Potential purchasers include Sir Jim Ratcliffe, the chairman of chemical group Ineos.  He inquired previously after buying the club, but was deterred by the price tag. Bloomberg has suggested that Americ...

The Premier League is looking more and more like an oligopoly of top clubs, but there is little agreement on solutions - or at least ones that would win support from clubs. Promoted clubs struggling in the Premier League is nothing new but the  nature  of the struggle is. Over a quarter of a century, the points total required to survive in the top flight has continued to steadily fall. Yet the paradox is that it has never been harder to carve out the single-figure number of wins and draws required to remain in the division. Finances are at the heart of the issue. Some senior figures find themselves shaking their heads in disbelief at the numbers involved now — unused substitutes earning £7 million per season at mid-table Premier League clubs  If we rewind to the first 38-game Premier League season, 1995-96, and trawl through the years between then and now, two trends emerge. The first is that the top six have been steadily accumulating more points (an average of 75 pe...

Inter Milan are open to the sale of a minority stake, but the Chinese owners would not sell outright.  There have been reports that Saudi Arabia's Public Investment Fund was interested in acquiring the club. Chinese retail conglomerate Suning is under financial pressure as it struggles with weaker losses at its physical stores and steep losses on investments. Inter's chief executive considers that more investment is needed to catch up with the Premier League.  The revenues of Serie A teams fell 21 per cent in the 2020 financial year, double the figure across Europe.

The authoritative Swiss Ramble reviews Leicester City’s 2020/21 accounts, when they reduced their pre-tax loss from £67m to £33m, as revenue rose £76m from £150m to £226m, though wages were also up £35m from £157m to £192m. Although the £33m loss is obviously not great, it’s actually one of the better financial results of the clubs that have reported so far in 2020/21, certainly compared to huge deficits at Chelsea £156m and Tottenham Hotspur £80m, as football counted the cost of the pandemic. The Foxes have now reported three consecutive years of losses, adding up to £121m, which is in stark contrast to the 4 years of profits after promotion to the Premier League in 2014. That included the amazing £92m surplus in 2017, which is actually the 3rd highest profit in PL history. Revenue increase helped by on-pitch success, but also recognition of revenue from delayed 2019/20 season. Broadcasting rose £77m (71%) from £108m to £185m, while commercial grew £12m (41%) from £29m to £41m. ...

The authoritative Swiss Ramble reviews the latest accounts of QPR.   Thrpre-tax loss narrowed from £16.4m to £4.5m, despite revenue falling £3.8m (21%) from £18.3m to £14.5m, as profit on player sales rose £11.7m to £17.6m and there was no repeat of prior year’s £4.5m write-off of previous training ground development. The £4.5m loss is actually one of the better results in the Championship. Even before the full effects of the pandemic were felt in 2020/21, many clubs lost more than £20m, while Bristol City and Millwall lost £38m and £14m respectively last season. Although QPR continue to lose money, their turnaround is emphasised by the 2020/21 £4.5m loss being the lowest since 2006. However, since Tony Fernandes arrived in August 2011, total losses have been £230m – or £290m if we exclude the £60m loan write-off in 2014. The £3.8m revenue reduction was entirely due to the COVID driven £3.8m fall in match day income from £4.0m to just £207k. Broadcasting rose £0.1m (2%) ...

Following Pierre-Emerick Aubameyang’s move to Barcelona, questions have again been asked about Arsenal’s recruitment policy, as the club has once more left a lot of money on the table after the free transfer of an expensive purchase.    The authoritative Swiss Ramble provides an interesting analysis. Looking at players that Arsenal have sold in the last 5 years (2017/18 to 2021/22), we can see that the club has lost £163m (in cash terms) in this period with £136m of that coming from just three acquisitions: Aubameyang £57m, Mesut Ozil £42m and Shkodran Mustafi £37m.    In this period Arsenal have rarely made big money on any transfers with only 3 deals generating gains above £20m. Some of the players recruited are still at the club, which means that the club have over £500m of transfer cost in their squad, including Nicolas Pépé £72m, Alexandre Lacazette £48m and Granit Xhaka £41m. Realistically, it is unlikely that any of these will be sold for a profit. ...

Crewe have gone from a £633k loss in 2020 to a £760k profit in 2021 as income went up and costs went down, reports Kieran Maguire of the PriceofFootball. May be due to player sales and shorter financial year but not enough detail to confirm. Crewe had total outstanding loans of just over £1 million. The club is paying rent of £147,000 in the next year.

 There has been plenty of interest in investing in Tottenham Hotspur in recent years but no would-be investor has received the welcome Forrest Li got in December. Not only was he Daniel Levy’s guest at a home game but Li was put up at the Tottenham training ground afterwards, and introduced to senior staff and players. It was the full red-carpet treatment, more than Levy has put on for any other potential investor before. And it has got people at Tottenham wondering whether Li, one of the richest men in Singapore, could be about to become their new boss. If Li wanted to buy Tottenham outright, the 44-year-old billionaire would have to get very, very close to what the club’s current owners ENIC think it is worth, as the Bahamas-registered investment firm does not need to sell. That price tag is understood to be £3 billion: £2.3 billion for the shares, plus £700 million of debt. While Li is rich enough to do that, he is more likely to start with a minority stak...

Uefa has released its latest landscape report on the state of club finances:  https://www.uefa.com/returntoplay/news/0272-145b1973c53e-73c44f7c7240-1000--uefa-s-new-club-landscape-report/ Top flight clubs made a combined €4m loss, but player wages continue to rise.

Grimsby Town posted a profit in their latest accounts, but football finance guru Kieran Maguire highlights the challenge of balance financial sustainability against success on the pitch:  https://www.grimsbytelegraph.co.uk/sport/football/football-news/grimsby-town-financial-balance-expert-6594759

Raith Rovers are 'technically insolvent' according to football finance guru Kieran Maguire.  They are heavily reliant on the support of benefactors and their financial challenges have worsened because of the David Goodwillie saga which also damaged the reputation of the Kirkcaldy club:  https://www.thecourier.co.uk/fp/sport/football/2977113/raith-rovers-david-goodwillie-finances-john-sim/

With 18 games left and an eight-point gap to safety above them, having lost their last five matches in League Two, it would be one of the EFL’s best survival tales if Scunthorpe managed it now. That they have only won five of their last 47 league matches says it all — they will need the form of a mid-table team to stand any chance of staying up. Fans are furious and one man is bearing the brunt of their ire — owner Peter Swann. An estimated 500 fans are boycotting Glanford Park for each home game. Managers have been hired and fired at a rate of knots — 11 in nine years since Swann took over as owner and chairman — while the playing squad has rarely been the same season after season. Local journalists have been banned from the ground and everything points to the club dropping out of the EFL for the first time in their history. Scunthorpe’s model of finding diamonds in the rough — Hooper was bought from Southend for less than £200,000 before being sold to Celtic two years later i...

The authoritative Swiss Ramble reviews Inter’s latest accounts.   The pre-tax loss widened from €97m to €239m (post-tax €246m), despite revenue increasing €51m (17%) to €354m, as profit on player sales fell €61m to just €246k.   Unsurprisingly, Inter ‘s €246m post-tax loss is the highest in Italy in 2020/21, comfortably ahead of by Juventus €210m, Roma €185m and Milan €96m. In fact, the €246m loss is the highest ever registered in Italy, as COVID has exacerbated underlying financial issues.    It was only exceeded in Europe in 2020/21 by Barcelona’s horrific €481m loss. It is worth noting that Inter are responsible for nine of the 20 worst losses in Serie A. In fact, the big four Italian clubs have lost a staggering €1.3 bn in the last 2 seasons (€591m in 2019/20 and €737m in 2020/21). Inter were second worst in this period with their €348m deficit only surpassed by Roma €389m, but higher than Juventus €300m and Milan €291m. The club have lost an amaz...

La Liga has had considerable success with its internationalisation strategy, seeking to match the Premier League.   Global audiences for its broadcasts have increased by 30 per cent:  https://www.soccerex.com/insight/articles/2021/laligas-record-five-year-growth-through-international-expansion