The Political Economy of Football V2

The authoritative Swiss Ramble looks at where the money goes by analysing the last five years for the Big Six Premier League clubs. Manchester United generated most revenue in the last five years with £2.8 bln, ahead ofManchester City £2.6 bn, and around £900m more than Tottenham Hotspur and Arsenal. United led the way in both match day and commercial income, but were behind Man City and Liverpool in broadcasting revenue. Two of the Big Six received owner funding in the form of share capital injections: Manchester City £81m and Chelsea £50m. This is the best form of owner financing for the club, as it does not need to be repaid. Four of the Big Six spent between £1.4 bn and £1.5 bn on wages in the last five years. Manchester City led the way with £1,545m, just ahead of United £1,498m, followed by Liverpool £1,422m and Chelsea £1,366m. There is then a big gap to Arsenal £1,117m and particularly Spurs £839m. Three of the Big Six account for two-thirds of player purchases in last ...

The authoritative Swiss Ramble reviews the finances of Bayern Munich.  Despite the significant impact of COVID, the club “achieved sound financial results”, once again posting a pre-tax profit, though down from €17m to €5m (€2m after tax). Revenue (club definition) fell €54m (8%) from €698m to €644m, largely offset by €42m cut in expenses. Bayern were one of only three clubs in the Bundesliga to post a profit in 2020/21, due to “sensible management and not spending more than we earn”, though their €5m was just below RB Leipzig’s €8m. Some clubs lost a huge amount of money, especially Hertha €78m.  In fact, the Bavarians have now been profitable for an amazing 29 years in a row, generating €241m pre-tax profit in the 4 years before COVID. For the second year in a row Bayern retained 3rd place in the Deloitte Money League in 2021, with their €611m revenue only surpassed by Manchester City €645m and Real Madrid €641m. At €5m Bayern were one of a small number of European clu...

Following last night’s match between Manchester United and Liverpool, the Swiss Ramble thought it might be interesting to see how the finances of these clubs compare, particularly the direction of travel over the last 10 years (up to most recent accounts for the 2020/21 season). 10 years ago Manchester United’s £320m revenue was nearly twice as much as Liverpool £169m with the difference rising to a peak of £217m in 2017, but since then the gap has almost completely closed to only £7m with United’s £494m just ahead of Liverpool £487m. Liverpool have earned more broadcasting income than United in each of the last four years, due to more success on the pitch, especially in Europe, where Liverpool’s exploits in the Champion League have generated much more TV money. United earned much more match day income than Liverpool in 2013 (£109m vs £45m), but the gap had narrowed to £27m in 2019 (pre-pandemic) following the expansion of Anfield’s Main Stand. Both clubs suffered from games bein...

Arsenal fans will be delighted with the team’s good start to the season, so are probably unconcerned about the financial implications of their player recruitment, but it is maybe worth looking at whether there will be any issues with Financial Fair Play (FFP) regulations.  The analysis is provided by the Swiss Ramble. As it stands, Arsenal have spent a hefty £270m gross on transfers in the last two seasons, only surpassed by Chelsea £288m, but ahead of the other top six clubs.   Even more incredibly, net transfer spend of £218m is the highest of the Big Six in the last two seasons, just ahead of Chelsea £217m. That is a fairly remarkable statistic for a club that has not competed in the lucrative Champions League since 2017. In fact, after many frugal years, Arsenal have been big spenders for a while. In the 5 years to 2021 (most recent published accounts), they had £626m gross transfer spend, which was almost double the preceding 5-year period and 4th highest in the Premi...

Nottingham Forest’s transfer spend this summer is, give or take the odd pound, now up in the region of £140million. Or, put another way, more than the entire expenditure of the Eredivisie, the Dutch top flight, in the same window. Promotion-winning squads have been dismantled and rebuilt before, but rarely at this cost. Forest’s outlay is comfortably more than that of the other two newly promoted clubs - Fulham and Bournemouth — combined. Chelsea (for now, at least) are the only Premier League club to have spent more. The question is how, in an era of financial fair play (FFP) Forest have been able to spend like few others. It is an enormous investment signed off by Evangelos Marinakis, the club’s majority shareholder. Although the club’s turnover will be transformed by the Premier League’s riches, the money committed to signings alone has already accounted for the estimated TV income for 2022-23. A dramatic spike in wages, including the £110,000...

Deloitte's annual review of football finance highlights the way in which the Premier League continues to forge ahead. As the Premier League celebrates 30 years since the start of its first ever season (1992/93), Deloitte has charted its success throughout, tracking remarkable growth in the financial scale and global appeal of the competition. In 2020/21 average revenue per Premier League club exceeded the collective 1992/93 total for the fourth time, with total revenue up over 2,400% at £4.9 billion. Entering its fourth decade, there is an optimistic outlook as Premier League clubs’ revenue is expected to exceed £6 billion in the 2022/23 season as a result of the new broadcast deals, the return to full stadia and improved commercial deals. In 2020/21 the ‘big five’ European leagues generated €15.6 billion in aggregate revenue, up 3% relative to the prior season, but significantly below revenues observed prior to COVID-19 (€17.0 billion in 2018/19). The theme of polarisation...

Sir Jim Ratcliffe, reputedly Britain's richest man, wants to take a stake in Manchester United with a view to eventually taking control.  Ratcliffe already owns Nice and made a bid for Chelsea earlier this year.  He claims to be a childhood United fan. According to Bloomberg, the Glazers are prepared to sell a minority stake in the club.  This could be converted to outright ownership at a later date.   Manchester United shares rose on the news of Ratcliffe's prospective bid. Ratcliffe could fund the infrastructure investment required at Old Trafford.

Manchester United remain in a relatively strong financial position compared to most other clubs, but fans are increasingly angry that their club continues to pay huge sums merely for the privilege of having the Glazers as owners states the Swiss Ramble. United are the only Premier League club to pay dividends to their shareholders, mainly the Glazers. Since 2016 they have paid a hefty £166m, averaging £22m a year. Note: the high £33m payment in 2021/22 included including £11m delayed from 2020/21. Although it has fallen from its (sizeable) peak, the £21m interest payment in 2020/21 was still the highest in the Premier League. United have now paid a staggering three-quarters of a billion pounds (£743m) in interest since the Glazers’ leveraged buy-out in 2005. Focusing on the last 12 years, the £517m interest payment is nearly three times as much as the next highest club, namely Arsenal with £174m. Looked at another way, it is almost as much as the rest of the Premier League combin...

FC Barcelona has raised a further €100 by selling a chunk of its audio-visual studio , as it races to comply with La Liga financial rules before it can register players for the new season.  The club has sold a 24.5 per cent stake in Barca Studios to Orpheus Media, taking the income it has generated from asset sales this summer above €700m. It sold a separate 24.5 per cent stake in the studio business to crypto platform Socios earlier this month, and tool in about €550m in exchange for 25 per cent of its La Liga broadcast rights in a deal with US investment group Sixth Street. Last summer the club had more than €1.3bn of debt and it booked a loss of almost €500m for the previous season.  Players were forced to take pay cuts and defer wages. Although income from the recent asset sales has helped repair the club's balance sheet, much of the money has been committed to new players.   Barcelona has already spent €150m on signings tjhis summer, more than any other club in ...

Chelsea have been spending big in this summer’s transfer window with their outlay likely to be well over £200m by deadline day. The authoritative Swiss Ramble looks at the financial implications and explain how Chelsea can still be in line with Financial Fair Play (FFP) regulations. New owner Todd Boehly is well aware of the challenge: “FFP is starting to get some teeth and that will limit the ability to acquire players at any price. That could mean financial penalties and disqualification from sporting competitions.” Spending ability is limited by the Premier League Profitability and Sustainability (P&S) rules. These allow a £5m loss a year, which can be boosted by £30m equity injection, giving allowable losses of £35m a year. This works out to £105m over the 3-year monitoring period. On the face of it, things don’t look too good for the club, as their pre-tax loss in the last 3 years was a hefty £222m, including £156m in 2020/21 and £102m in 2018/19. This was obviously adve...

When Chelsea’s spending total for the summer is in excess of £160 million, you can understand why some people might be asking how the club can afford all this in an era of Financial Fair Play. So far they have brought in only £6.9 million from the loan fee which saw Romelu Lukaku return to Inter Milan. Chelsea’s last financial results showed they made a loss of £145.6 million for the year up to June 30 2021 and that their wage bill was one of the highest in the game at £333 million. However, football finance expert Kieran Maguire isn’t worried. “I’m actually pretty relaxed about Chelsea,” he tells  The Athletic . “I know they’ve made big losses in the past but they can say COVID had an impact on a couple of the seasons. They have been selling players far more than anyone else, they are the biggest generators of revenue (example of this provided by football business Twitter account Swiss Ramble, who explained that in five years up to 2020, Chelsea made £434 million from sal...

Manchester United's value has slumped by more than £260m in the decade since the Glazer family sold 10 per cent of their shares on the New York Stock Exchange.  It is exactly ten years since the club was listed in New York and the Glazers have taken more than £100m in dividends since then. The share price on Tuesday evening was 19 per cent lower than when it was launched.  On the basis of the value of the shares, United's overall value had dropped from £2.2 billion in 2012 to about $1.88 billion.  (This does not take account of inflation at an average of 1.7 per cent a year in the UK).  In the same period the share price of Juventus has doubled. Football finance guru Kieran Maguire reckons that the low price reflects investors having a negative view about the management of the club from the owners downwards.  'If you are that far below your launch price a decade later then that must be a reflection on how the market perceives the quality of management', he told ...

When the Premier League was launched in 1992, Manchester United and Liverpool had payrolls of £8million each. As the intervening 30 years have passed, the large sums of money spent by broadcasters to secure TV deals to broadcast the competition has transformed England's top flight and played a key role in player wages skyrocketing. Then came greater overseas investment into English clubs, as Premier League owners shifted away from the local-boy-done-good businessman of old to Russian oligarchs, United States-based consortiums and companies linked to nation states, and took footballers' salaries to a new stratosphere. According to recent figures, Manchester City are the Premier League's highest-paying club, spending around £355m ($430m) a year on player wages, with Chelsea’s the second-biggest total at £343m. Manchester United’s annual wage bill is now £323m, and Liverpool’s sits at £314m. The two north London arch-rivals Arsenal (£244m) and Tottenham Hotspur (£205m) are...

When Newcastle United were bought by a consortium led by Saudi Arabia’s Public Investment Fund, the expectation was that they would splash out on players, due to the enormous wealth of the new owners, but that hasn’t really been the case. So why is the club not spending big?   The authoritative Swiss Ramble provides some answers. Things have already changed at, as they have spent more under the new owners, but a combination of FFP restrictions and the desire to act in a sensible manner (until new revenue streams arrive) means that anyone expecting blockbuster signings is likely to be disappointed. Manager Eddie Howe gave this answer: “Financial Fair Play impacts us and will continue to impact us for a number of years. We haven't got the free rein that maybe has been perceived within the media, that we can go and sign who we want and pay extortionate fees and wages.” Spending ability is limited by the Premier League Profitability and Sustainability (P&S) rules. These ...

Has everyone at Barcelona lost their minds asks the Financial Times ? That’s the question the footballing world seems to be asking as the Catalan club outbids Premier League rivals on players just a year after booking a near €500mn loss. At €150mn and counting, no team has spent more on transfers this summer in Europe. The moves have been financed by the sale of long-term broadcast rights and a chunk of Barça’s audiovisual studio. There are some who accuse the club of mortgaging the future in a desperate bid to compete in this summer’s transfer market. High spending is, after all, what got Barça into last year’s financial mess. But there is a counterargument. Having been booted out of the  Champions League  last year in the group stages, the club really had little choice but to act, and act fast. In a pattern seen across sport, the value of the Champions League rights has been rising rapidly. Uefa is aiming to double the revenue from its US broadcast deal ...

Barcelona required loans to ease the pain caused by years of poor decision-making in the transfer market and extravagance on player salaries, all of which was exacerbated by a pandemic that shattered commercial and matchday income.   The idea, therefore, was to apply for a loan from a bank and use anticipated future broadcast revenues from playing in the Champions League as the security for the loan. UEFA’s response was a straightforward “no” and European football’s governing body explained to the Barcelona official that they could not use several years’ worth of future Champions League television money as security because there was no guarantee they would qualify for the tournament in every season. This is because Champions League qualification is secured through sporting merit, rather than a birthright. The Barcelona official was described as genuinely surprised by the rejection. When approached this week, UEFA told  The Athletic  it was unable to comment p...

A US-based group of investors has taken a minority stake in Plymouth Argyle:  https://www.pafc.co.uk/news/club-statement-argylegreen Football finance guru Kieran Maguire commented: ' A minority stake seems to have been the preferred course of action for some time. If money invested into academy and other infrastructure then could see a return on investment over time.'

The hedge fund owner of Coventry City FC is open to offers from a buyer with the clout to capitalise on financial difficulties at Wasps, the rugby team that owns the football club’s shared stadium. Wasps, who play in England’s top rugby division, are in default on a £35 million bond, having failed to repay retail investors who helped to finance the purchase of the Coventry Building Society Arena in 2015. Sisu, a Mayfair-based hedge fund, is considering a sale of Coventry City, believing that Wasps’ distress may present an opportunity for a third party to make an offer for the club and, at the same time, bid to acquire the lease for the arena.  Sisu is thought to be open to the football club changing hands or a part-sale of equity if a third party also manages to acquire the lease for the stadium, which was built by the council in 2005. An anonymous source told The Times that the natural next step for Coventry City was promotion to the Premier League, but that would requi...

The authoritative Swiss Ramble examines the accounts of Salford City.  In the last three years Salford’s had £10.2m negative operating cash flow, having adjusted for non-cash items. They then spent £0.7m on players (purchases £0.9m, sales £0.2m), £1.6m on infrastructure (new stadium) and paid £0.4m interest.  This was funded by £12.7m loans from the owners. Since the Class of ’92 arrived, Salford have lost £15.1m in 7 years, including £14.2m in the last 4 years alone. As the club has progressed up the leagues, the losses have grown, though Gary Neville explained, “It is a lot of money to lose, but we’ve come up from step eight.” Salford’s £3.2m revenue was below quite a few of their rivals in League Two. Six of the clubs that published details had revenue above £4m, namely Bolton £6.2m, Forest Green Rovers £5.8m, Tranmere Rovers £4.9m, Bradford City £4.5m, Leyton Orient £4.3m and Walsall £4.2m.    Salford’s revenue has nearly tripled from £1.2m in 2018 to £3.2m i...