The Political Economy of Football V2

West Ham 21/22 accounts published, figures show income up £60m to a record £253m, reports Kieran Maguire. Wages up £7m. Operating profit £21m compared to loss of £26m. Transfer spend £64m. Borrowings down from £109m to £56m. Total revenue increased by 31% on strength of matches in front of fans and higher league position.   Matchday income was at a record £41m, partly due to increased capacity at the London Stadium. West Ham's total revenue increase now makes them the highest income club outside of the top six. Broadcast income similar to previous financial year, when there were 44 Premier League games on back of Covid. Higher league position meant bigger merit payments & Europa League contributed too. Commercial income record £48m, up 64% on previous season. Major costs for clubs are player related. Wages kept relatively steady and have not increased since 2017. Wages are now just £54 for every £100 of income, well below the UEFA red flag level of £70. As a result of ...

West Bromwich Albion have secured a £20m loan:  https://www.wba.co.uk/news/west-bromwich-albion-group-limited-secures-msd-loan Football finance guru Kieran Maguire comments: ' No interest rate given or repayment schedule. Poor governance, lack of transparency and a contemptuous way to treat minority shareholders if information not communicated. MSD lent to Southampton at 9.14% when interest rates much lower than at present.# 4 31 192

The authoritative Swiss Ramble reviews the accounts of AC Milan:  https://swissramble.substack.com/p/milan-202122-finances Milan have lost an amazing €900m in the last 10 years (pre-tax), but the situation has been improving with the club reducing losses in each of the last two years. Although not one club in Serie A managed to post a profit at the operating level, Milan’s €68m was firmly in the bottom half of the table, albeit considerably better than Juventus €243m and Inter €168m. Based on the most recent accounts, no fewer than 10 clubs reported an operating loss over €50m. The importance of European money to Milan’s business model is very clear. The Swiss Ramble reckons they have earned €61m to date this season with another €11m available if they beat Tottenham Hotspur to reach the quarter-finals. Milan have been very reliant on increases in capital from their owners with over a billion Euros provided since 2010 to cover the club’s substantial losses. That includes €545m...

An accepted bid to buy Sheffield United is timely. A group with deeper pockets should give United a fighting chance next season if promotion is to be won in May. The caveat to any change at the top being positive is that it has to be the right owner. United have already been the subject of one unsuccessful takeover bid this year after American businessman Henry Mauriss failed to deliver on his £115million offer. No one wants a repeat of that drawn-out saga. United have displayed good husbandry under Prince Abdullah, posting sizeable profits in each of the two seasons under the Saudi businessman’s sole control where accounts are available — £17.5million in 2019-20 and £9.5m in 2020-1. Of course, both these years were in the Premier League and it will be interesting to see how the figures for last season compare when released in spring. But United have been sensible since returning to the EFL, with the last two summers both bringing wage reductions for the p...

US property tycoon Brad Galinson has completed the takeover of Gillingham FC.   Long-standing owner Paul Scally will retain a minority shareholding.  Galinson has promised a 'lucrative' transfer window:  https://www.kentonline.co.uk/kent/sport/us-property-tycoon-completes-gillingham-fc-takeover-279421/

Unconfirmed reports have linked American private investment firm Carlisle Capital with a takeover or possibly minority investment at Charlton.  They are based in Portsmouth N.H. and seek long-term value in their investments:  http://www.carlislecapital.com/ The bid is being spearheaded by Adam Binnie - vice president of Carlisle Capital - who wants to add a traditional English club to his company’s portfolio. They regard Charlton as an under performing club with great potential. Their president was born in Scotland and they have interests in media and real estate.    They were involved in an unsuccessful bid to take Derby County out of administration.   They withdrew because of complications over stadium ownership.   This could be an issue at Charlton. Fanzine editor Rick Everitt provides an overview of recent developments here:  https://www.votvonline.com/home/the-2022-23-blogs/23-12-hasty-exit-for-sandgaard-as-new-faces-move-in/

The authoritative Swiss Ramble provides a thorough answer to this question, but at the end of the day, like a house, it is a question of how much a buyer is prepared to pay:  https://swissramble.substack.com/p/how-much-is-manchester-united-worth There are many reasons why investors would be interested in United. There is a scarcity value, as there are very few elite football clubs in the world, and some are effectively unavailable, e.g. member owned Barcelona and Real Madrid. The club’s own statistic that it has 1.1bln followers globally can be taken with a pinch of salt, but there is no doubt that United are one of the best supported clubs in the world with a very loyal fanbase. In marketing terms, they have a very strong brand that some will think they can better monitise and therefore deliver higher commercial revenue. There will be very few opportunities for investors to buy an elite club like Manchester United, who play in the best league in the world’s most popular spor...

Notts County lost £1.7 million in the National League in 2021/22, reports Kieran Maguire of the Price of Football.  Club has total creditors of almost £14 million, is technically insolvent and reliant upon owners to continue trading. No detailed accounts published which is a shame as club takes advantage of small company rules. Notts County bought players for £227k in 2021/22. Notts County borrowed a fresh £2m in 2021/22 from owners taking total owed to almost £12 million. The club is controlled by a company in the Isle of Man.

A bid by Sale Sharks and Salford City to buy the AJ Bell Stadium has fallen through:  https://www.business-live.co.uk/commercial-property/sale-sharks-salford-city-fcs-25798113

There are conflicting stories on social media tonight about Charlton but  ownerThomas Sandgaard has denied that there is any deal with Mansour, although a new manager appointment may be imminent. Richard Cawley of the South London Press states: ‘Thomas Sandgaard has just called me to deny that there is any deal with Mansour. Says he has never spoken to him or ever had any dealings with him. Also adds that Methven [formerly at Sunderland] is not going to be appointed to any role.’    [Rumours that he would become CEO]. Sandgaard also added that there is set to be an announcement tomorrow but "not about investment or change of ownership" but about "a change of personnel". He adds: "I'm hoping the fans will like the appointment." Peter Varney has stated: ‘I have nothing to do with Mansour nor do I know if he has any interest in the club. Please support the team on Wednesday and make it a noisy and positive atmosphere however negative you feel about our cu...

Blackburn parent company Venkys London had £20m loss to year ended 31 March 2022 but profits on sale of Armstrong and property assets to another Venky’s company turned this into a small profit, reports Kieran Maguire. Club issued £17m shares and borrowed £8m in the year to fund the losses. Blackburn income up 35% as crowds returned to Ewood. Interesting that also claimed £762k in grants (possibly furlough) and £562k in insurance claim (COVID?) in the year. Blackburn wages slightly down but still £146 wages for every £100 income. Blackburn bought players for £1.2m and had sales of £10.5m in year to 31 March 2022 Total losses made by Blackburn under the Venkys are almost £184m.

Charlton fanzine editor Rick Everitt has stated:  ' Interesting Charlton have been linked with FC Nordsjaelland as that is a name I’ve heard over many months as possible investors. Does pull together a lot of the strands of the story.' They are a Danish team from North Zealand playing in their country's Super League: https://en.wikipedia.org/wiki/FC_Nordsj%C3%A6lland The club is owned by leading African football academy Right to Dream which has itself seen Egyptian conglomerate Mansour Group acquire a majority shareholding.   Mansour. reportedly worth £2bn, has recently been appointed senior treasurer of the Conservative Party in return for his generous donations and is looking for an English football club to buy:  https://www.cityam.com/right-to-dream-founder-tom-vernon-to-explore-buying-british-football-club-after-securing-e100m-investment-for-pioneering-project/  

A  key legal opinion this week was widely interpreted as a blow to the ambitions of   Real Madrid ,   Barcelona   and   Juventus   to establish a breakaway European Super League. But the battle for the hearts and minds of football clubs isn’t over yet. It all goes back to A22, a Spain-based company that represents the interests of the ESL clubs, and its fight against the incumbent powers that be: Uefa   and Fifa . And don’t forget, A22 isn’t Uefa’s only competitor for the hearts and minds of clubs. The governing bodies might be on the same side of this specific case but on Friday, Fifa set out plans for a 32-team club World Cup in June 2025. Clubs are Uefa territory. A22 had asked the European Court of Justice to judge whether Uefa can continue to act as a regulator with the power to sanction clubs while also organising — and profiting from — tournaments. However, Advocate General Athanasios Rantos, a key adviser to the ECJ, said that EU...

Any club — and there were 416 eligible in 2018 from 63 member associations — that has released a player for the World Cup will be eligible for a payment in return and there is even money to be claimed by former clubs that have had a role in moulding that player’s development since 2020. Broadly speaking a third is paid to whoever held the player’s registration in 2020-21, a third for those in 2021-22 and the remainder to the club paying the player this season. So, for example, Manchester City will get back $280,000 on Kyle Walker after England reached the quarter-finals but only $90,000 for Kalvin Phillips. The remainder will go to former club Leeds United, the club he left in the summer. A World Cup has done little to boost the coffers of Bournemouth ahead of the January window. Just two of their players were called up to feature in Qatar and the compensation due will be negligible after both failed to progress beyond their groups.  They...

Bill Foley has completed his takeover of AFC Bournemouth for a reported £120m from previous owner Maxim Demin after the transaction received all necessary approvals from the Premier League.  It means that the majority of Premier League clubs are now partly or wholly owned by Americans. Foley, 77, also has an extensive background in sports including success as the founder and owner of the National Hockey League’s Vegas Golden Knights. There are also minority investors in the new ownership structure involved in the club, which includes award-winning Hollywood actor Michael B. Jordan. The investment is Jordan’s first foray into professional sports ownership. It is thought there are plans from the would-be new owner to develop the Vitality Stadium, which is the smallest by far in the Premier League, holding just over 11,000 people.

Coventry City have signed a deal with the Fraser group to remain at the CBS Arena until the end of the season.  They are hoping to sign a longer term license:  https://www.bbc.co.uk/sport/football/62970327 Presumably the Fraser Group have secured a higher rental.   It was not in their interests to have the stadium unused, although some thought it was a ploy to facilitate a takeover bid.

The authoritative Swiss Ramble provides a forensic analysis of Middlesbrough's 2021/22 finances:  https://swissramble.substack.com/p/middlesbrough-finances-202122 Middlesbrough’s £19.5m loss was still fairly large, albeit better than the only other Championship club to publish 2021/22 accounts so far, namely Bristol City £28.5m.   That said, Boro’s loss was only surpassed by three other clubs in 2020/21, a year that was more adversely impacted by COVID. Middlesbrough have now posted three consecutive losses, amounting to £86m. In this period, they have been hit by the double whammy of COVID and the end of Premier League parachute payment.   In truth, like most Championship clubs, Boro regularly lose money, e.g. eight times in the last decade. The last time they were in the top flight in 2016/17 they made a £7m profit. One reason that Middlesbrough losses have increased in the last three years is very low profits from player trading. After £60m of gains in the three ye...

The authoritative Swiss Ramble review the latest quarterly accounts of Manchester United:  https://swissramble.substack.com/p/manchester-united-finances-q1-202223?utm_source=substack&publication_id=1203438&post_id=89847265&utm_medium=email&utm_content=share&triggerShare=true&isFreemail=true This is the third year in a row that Manchester United have reported a pre-tax loss in Q1. It is worth noting that last season’s £20m loss in Q1 ultimately became a £150m loss for the full year. The difference in United’s earnings in seasons where they qualify for the Champions League is stark. As an example, they earned £68m in 2021/22 for reaching the last 16 in Europe’s premier tournament, but only £26m in 2019/20 even though they got to the Europa League semi-final. There was clearly scope for a reduction in wages, as United’s £384m in 2021/22 was comfortably the highest in the top flight.   In fact, this was the highest ever wage bill in the Premier League, ...

Manchester United had a pre-tax loss of almost £2.5m a week in the first quarter of 22/23, despite a 7% decrease in wages as pay cuts kicked in following non-qualifying for Champions League. Total net interest paid by Manchester United since being acquired by the Glazer family is £917,000,000 in 2005, which works out as £1.02 million a week The board have scrapped the twice weekly dividend payment.

BBC Coventry and Warwickshire are reporting that the new owners of the CBS Arena have issued Coventry City with an eviction notice.    More here:  https://www.bbc.co.uk/sport/football/63858805

The authoritative Swiss Ramble provides an in depth and forensic analysis of the finances of Arsenal:  https://swissramble.substack.com/p/arsenal-finances-202122 . He notes: ' Although Arsenal managed to significantly reduce their loss to £45.5m, this was still nothing to write home about. On the one hand, it is much better than Manchester United’s £150m loss for 2021/22; on the other hand, it is much worse than Manchester City’s £42m profit.' Arsenal have now lost money four years, adding up to a shortfall of more than a quarter of a billion pounds in this period (£259m).  This has marked a big change from the club’s traditional sustainable model, as evidenced by 16 consecutive profitable seasons up to 2018, during which they had a £393m surplus. Before the recent challenges, the last time Arsenal had posted a loss was way back in 2002. Despite the growth in 2021/22, Arsenal £369m revenue is still £54m (13%) lower than the £423m peak in 2017. There have been big reductions si...

Scunthorpe United, currently bottom of the National League, have been taken over by a local group headed by former director Simon Elliott and Ian Sharp. It was rumoured that a potential dead to sell to a London-based property development company had collapsed.   Local news reports suggested that players and staff had not been paid for November. The deal ensures that Glanford Park will revert to the club after having been transferred to the development company of former owner Peter Swann. The new owners recognise 'we will have to put some investment in.'  It is hoped to get local businesses back on board.

The recent troubles at Juventus raise questions for John Elkann, grandson of Italian statesman-industrialist Gianni Agnelli, the modern-day family leader. The New York-born tycoon has been unafraid to make radical changes at Exor, the vehicle through which the Agnellis control Juve, having already shifted its headquarters from Italy to the Netherlands. The history of the family and the club are deeply intertwined, going back around a century, but will trouble at Juve raise questions about the future? A person close to Exor insisted Juve isn’t up for sale. Despite the financial woes and clashes with authorities, Juve barely registers in the Exor empire. With a net asset value of €29bn, Exor can afford to ride out short-term pain at a football club valued at €710mn on the stock market, even if the headlines in the short-term are unhelpful at best. But European clubs are in high demand. There could be options if Exor is up for a discussion, particularly after  Ger...

Arsenal made a £64 million operating loss in 2021/22, down from £81m the previous year. Player sale profits reduced this a bit but pre-tax losses still almost £42m. Arsenal wage bill down £34m in 21/22, now £150m less than that of Manchester United. Employee numbers down too. The net spend on transfers has been £110m since May 2022.

The authoritative Swiss Ramble analyses the 2021/22 accounts of Inter Milan:  https://swissramble.substack.com/p/inter-finances-202122 Inter have lost an amazing €784m in the last 10 years (pre-tax), including €540m in the 6 years under Suning’s control. In that period they have only reported a profit once. Only two other European clubs have reported larger losses to date for 2021/22 (apart from Juventus), namely Barcelona €178m, after adjusting for their famous economic levers, and PSG €370m. COVID has exacerbated underlying financial issues in Italy, but the amount of money lost is fairly horrific. For example, the big three Italian clubs have lost a staggering €1.4bln in the last three seasons (€387m in 2019/20, €552m in 2020/21 and €461m in 2021/22). The fact remains that Inter face immense financial challenges. Last season the club posted a loss over €100m, despite making a record €105m profits from player sales and reaching the Champions League last 16.