The Political Economy of Football V2

A story in The Guardian claimed Farhad Moshiri is willing to sell Everton for £500million ($620m) and has instructed Deloitte’s sports business arm to handle the process:  https://www.theguardian.com/football/2023/jan/24/everton-for-sale-farhad-moshiri-asking-price-more-than-500m Around 20 minutes later, the club released an interview with Moshiri in conversation with fan advisory board (FAB) chair Jazz Bal, recorded before Saturday’s 2-0 defeat to West Ham United, in which he insisted he does not want to sell. “The club is not for sale but I’ve been talking to top investors, real quality, to bridge a gap on the stadium finance,” Moshiri said. “I can do it (finance the new stadium) myself but the reason I want to do it is to bring top sport investors into Everton — for some of the reasons the fans want: improvement, more talent. “I’m committed to this club, not just the stadium, but to join the elite. We are close to having a deal done. We are very close to stadium fina...

Fair Game have produced a sustainability index for Premier League and Championship clubs.  Liverpool and Norwich City come out on top.  Nottingham Forest are bottom and Bournemouth are secnd bottom:  https://fcbusiness.co.uk/news/liverpool-norwich-city-top-sustainability-index-tables/ Whilst such rankings appear to be objective, they necessarily involve subjective judgments about what is included and how it is weighted.

As Deloitte’s annual rich list suggests, Manchester United are still one of the game’s aristocrats. Their turnover for the 2021-22 season was up almost a quarter on the pandemic-hit season before, with matchday income rebounding from £7million to £111million. Total revenue — broadcast, commercial and matchday — was £583million, up from £494million in 2020-21, which saw United climb from fifth to fourth in the Money League, “A couple of things stand out in relation to Manchester United,” explains football finance guru Kieran Maguire. “The first is that their costs are rising faster than their income. Since Sir Alex Ferguson retired as their manager in 2013, the wage-to-turnover ratio has increased from 50 per cent to 66 per cent. Thanks to Cristiano Ronaldo and other signings, last season’s wage bill went up by more than £60million to £384million — a Premier League record. “The second is that in respect of income generation, the Old Trafford commercial ma...

The authoritative Swiss Ramble reviews the latest Deloitte Money League:  https://swissramble.substack.com/p/money-league-202122 Manchester City retained its spot at the top of the Money League with £619m, once again just ahead of Real Madrid £605m, with Liverpool £594m climbing four places to third, their highest ever position. Four other clubs reported more than half a billion Pounds in revenue: Manchester United £583m, Paris Saint-Germain £554m, Bayern Munich £554m and Barcelona £540m (down three places).  The number of English clubs in the Top 20 increased from 10 to 11, the first time that one country has contributed more than half the teams. English clubs occupy three of the top four places with City, Liverpool and United. There are three London clubs in the Top 10: Chelsea £481m (8th), Tottenham Hotspur £443m (9th) and Arsenal £367m (10th). The Gunners rose from 11th, the first time that a new club has entered the Top 10 since 2018/19, thanks to their high match day i...

The authoritative Swiss Ramble provides an in depth analysis of the accounts of Preston North End:  https://swissramble.substack.com/p/preston-north-end-finances-202122 Preston’s £20.2m loss is still one of the largest in the Championship. It is only surpassed by Bristol City £28.5m to date in 2021/22, though others could obviously be even higher when they publish their accounts.   Many clubs offset their operating losses to some extent via profits from player sales, but Preston only generated £0.3m here, down from prior year £0.7m. The last time Preston reported a profit was in 2018, so they have lost money four years in a row. Not only that, but the losses have been worsening, rising from £14m in 2019 to £20m in 2022. This is the cost of trying to be competitive in the Championship. Not a single club managed to deliver an operating profit in 2020/21 in this ultra-competitive division. Over half of them lost more than £20m from day-to-day business. Since the Hemmings fa...

Preston North End made a £20m loss on revenue of £13.8m in 2021/22, reports Kieran Maguire. Losses were used to reduce taxes of other group companies so post tax loss was £16.8m. Preston total losses over the years almost £69 million, funded by interest free owner loans In cash terms Preston spent over £11m more than it generated in 21/22 on day to day trading. A net £2.5m cash spend on transfers also arose. Owners loans of almost £15m plugged this gap. Biggest contributor to turnover was TV money from Premier League solidarity payments and EFL TV deal.     This brought in 58% of the total. Wages were £178 for every £100 of income, down from £196 in Covid hit 2021. Director pay quadrupled. Preston bought players for £2.2m and had sales of £300k. Maguire says that Preston offer a 'scary example' of Championship finances:  https://www.lep.co.uk/sport/football/preston-north-end/preston-north-end-are-scary-example-of-championship-finances-kept-afloat-by-investm...

The authoritative Swiss Ramble considers whether Chelsea's transfer spending will break financial fair play rules:  https://swissramble.substack.com/p/will-chelseas-transfer-spend-break Total transfer spend to date in 2022/23 of £372m (or £385m if £13m loan fees are included). Total expenditure would increase to a staggering £436m if £51m add-ons are included. Perhaps surprisingly, the net result of Chelsea’s transfer activity over the last two seasons is actually positive, improving net profit by £107m. Big spending is nothing new for Chelsea, who splashed out nearly a billion pounds on gross transfers in the five years up to 2020/21, which was joint highest in the Premier League alongside Manchester City, but far ahead of Manchester United £850m, Arsenal £676m and Liverpool £660m. Chelsea will clearly have to be conscious of Financial Fair Play, but their big spending does not automatically mean that they will fall foul of the regulations, especially if they maintain their ...

The Deloitte Money League for 2023 has been published:  https://www2.deloitte.com/uk/en/pages/sports-business-group/articles/deloitte-football-money-league.html Manchester City retain their position at the top of the Money League and for the second time were the club to generate the highest revenue in world football. This caps off a rapid rise up the rankings, with the club having only broken into the top five for the first time in 2015/16. This growth has been fuelled by an increase in commercial revenue (up €65m to €373m in 2021/22), which is a new Premier League record. Liverpool were the biggest movers among the consistent clubs included in this and last year’s edition of the Money League. The club rose four places (from 7th to 3rd) to achieve its highest position in Money League history, and in doing so overtook Manchester United for the first time, on the back of a run to the UEFA Champions League Final 2022. It was also only one of five clubs to report over €100m in matchday...

Lincoln City have published their 2021/22 accounts, reports Kieran Maguire. The Imps are losing £47k a week (many clubs at that level lose more), which is funded partly by player sales but mainly by owner contributions.  Player sale profits contributed £350k but cannot bank on such a figure as player trading volatile. Income was up to a record £6.9m following return of fans to stadium. Broadcast income down a small amount but impacted by less streaming as fans watch matches at stadium, still noticeably higher than when in League Two. Wages higher as wage cap not in existence and Lincoln now an established League One club. Lincoln’s net debt position was fairly neutral as club mainly funded by share issues.   Share issue generated £2.7m in 2021/22, almost twice as much as previous year. Advantage of shares is that there iare no interest charges and no obligation to repay.

British chemicals billionaire Sir Jim Ratcliffe has formally entered the process to buy Manchester United through his firm Ineos, as the Glazer family looks to sell one of the biggest brands in global sport. Ratcliffe has lodged his interest with Raine Group, the merchant bank advising the English Premier League club, a spokesman for Ratcliffe confirmed on Tuesday:  https://www.bbc.co.uk/sport/football/64310893 The Glazers have owned Manchester United since their £790mn leveraged buyout of the club in 2005. The family has had a difficult relationship with the fanbase ever since. The club’s New York-listed shares were trading up 1.3 per cent at $23.27 each on Tuesday, valuing the company at $4.5bn, including debt. The stock has risen almost 80 per cent since November, when the Glazer family first made public that they were considering selling the club. Any potential buyer will be faced with the task of restoring the team’s fortunes on the pitch, and upgrading the club infrastr...

Questions have been raised about the role of sanctioned oligarch Alisher Usmanov at Everton.  Former managers were interviewed in his presence:  https://www.theguardian.com/football/2023/jan/15/questions-mount-over-alisher-usmanovs-links-with-everton-fc?CMP=Share_iOSApp_Other

The authoritative Swiss Ramble takes an in depth look at what promotion to the Premier League can mean for a club in financial terms:  https://swissramble.substack.com/p/the-impact-of-promotion-to-the-premier Despite the additional expenditure on the squad, other staff and facilities, clubs generally improve their profitability in the Premier League. Clubs invariably post large operating losses in the Championship, but either swing to operating profit or at least reduce their losses in the Premier League. Some clubs saw very chunky improvements in operating profitability, e.g. Newcastle United, Wolves and Leeds United were all at least £70m better. Even in 2020/21, when games were played behind closed doors, Leeds managed to swing from £65m loss to £6m profit (excluding exceptional items). The description of the “£170m match” is a little simplistic in terms of how much a club’s revenue will increase, and also ignores the impact of higher investment on profitability. Money will be...

Qatar Sports Investment has set its sights on the English Premier League. The state-backed fund, which owns Paris Saint-Germain and a slice of Portuguese title challengers SC Braga, wants to get a piece of the richest league in football, and has been eyeing up a potential investment in Tottenham Hotspur. QSI is also talking to outside investors about selling a stake in PSG itself, with a mooted valuation of over €4bn. Which is the better bet, PSG or Spurs? According to Football Benchmark, the two clubs should garner a similar valuation — it gave the French club a roughly 10 per cent premium over the London side in its annual enterprise value estimates last year. Spurs have a few important attributes that PSG lacks. For one, the club owns its new state of the art stadium, which is already bringing in extra revenue through other events, such as hosting some of the NFL’s international fixtures, boxing matches, and some big music acts including Lady Gaga. PSG, meanwh...

Qatar Sports Investment have held talks with Daniel Levy about a possible stake in Spurs, quite likely a minority stake:  https://www.theguardian.com/football/2023/jan/10/qatar-holds-spurs-talks-premier-league-club-portfolio-minority-stakes

The authoritative Swiss Ramble reviews the 2021/22 accounts of Hearts:  https://swissramble.substack.com/p/hearts-finances-202122 Hearts have come a long way since the club was placed into administration in 2013, deducted 15 points and then relegated to the Scottish Championship. Much of the credit is due to Ann Budge, who took ownership in June 2014 in partnership with the Foundation of Hearts, following the misguided Romanov regime. This culminated in Budge signing over 75% of her shareholding to the Foundation in August 2021 , making Hearts the largest fan-owned club in the UK. The club described this as “Heart & Soul Day”. This approach has served the club well, though the model going forward is likely to still require the support of benefactors. Hearts once again posted a pre-tax profit, though this fell slightly from £2.0m to £1.7m. Revenue shot up by 90% from £7.7m to £14.6m, as the club returned to “business as usual” following the significant impact of COVID, fur...

AFC Wimbledon’s 2021/22 accounts show revenue up £3m to £8.1m due to matchday ticket sales and catering/conference returning, reports Kieran Maguire.   Operating losses fell £300k to £850k, would have been closer to breakeven but some costs for stadium.  Player sales of £750k (Cox & Palmer?) cut further losses The club have a strong balance sheet, plenty of property assets, over £2.7m in the bank. Club funded by variety of loans, including Plough Lane bond, and shareholder contributions. They spent a fair amount on ground development, although far less than previous season. Plough Lane bond receipts allowed repayment of some other loans. Ticket sales added almost £2m to income, and catering/conferences £1m. Wage bill up £1m as football staff numbers increased. They spent £100k on players and had sales of over £700k.

The authoritative Swiss Ramble provides an in depth analysis of Millwall's latest accounts: https://swissramble.substack.com/p/millwall-finances-202122 The last time that Millwall made a profit was 20 years ago – and that was only £60k. They have lost £86m in the last 10 years.    Their losses had been reducing (from £12m in 2015 to less than £1m in 2019), but the onset of the pandemic (and a rising wage bill) has resulted in sizeable losses since then. Millwall continue to punch well above their weight in the Championship, given their relatively low revenue and wages, though they are fortunate that Berylson has continued to fund the club’s losses, which has allowed them to remain competitive.

Everton but in a spirited performance at Old Trafford last night before losing 3-1.  Fans displayed ‘Sack the Board’ banners.  Everton are the sixth biggest spenders in the Premier League since the summer of 2016 yet sit 18th in the table  But even as questions continue over whether to deal with the latest perceived symptom or manager, the overall malaise gripping one of the Premier League’s founding clubs is what consumes many supporters. They look for signs of hope from an absentee owner in Farhad Moshiri, who has seemingly given up attending Everton games. He continues to seek fresh investment as the legacy over his past mistakes means funds to address this perilously-weak squad have dried up. They also turn their ire to the board – chairman Bill Kenwright, chief executive Denise Barrett-Baxendale and, to a lesser extent, finance director Grant Ingles and non-executive director Graeme Sharp – who they blame for the poor decisions and failure to kee...

With the distorting effect of parachute payments, it's difficult to be competitive in the Championship and not lose substantial sums of money. Income at Millwall up almost 50% following end of lockdown, but costs up too, so operating losses slightly down from £13m to £12m.    Millwall total losses over the years now total £126 million, and they are one of the better run clubs in the Championship, reports football finance guru Kieran Maguire.

One year after Sport Republic took over, Southampton face a real threat of relegation. Southampton is Sport Republic’s flagship club within its multi-team model. The only other club they currently own are Turkish second-division side Goztepe. The Athletic  has revealed that, before Sport Republic arrived, Southampton were looking at potential investment from ownership models that involved a multi-team strategy. Chief executive Martin Semmens actively sought buyers with these credentials and expressed the benefits of utilising a multi-team approach. Southampton accept their summer investment at the end of last season — where they signed 10 players and recorded a net spend of £76million ($91.2m) which was the eighth highest in the Premier League — resulted in a larger turnover of players than they would have wanted. Though it was deemed necessary in order to drive through a new-found vision, Southampton’s squad had grown stale and major surgery was required. Southampt...

The authoritative Swiss Ramble reviews the rise of American ownership in the Premier League:  https://swissramble.substack.com/p/the-rise-of-premier-league-american The number of clubs in the Premier League under American control (100% ownership or majority stake) up to eight: Arsenal, Aston Villa, Bournemouth, Chelsea, Crystal Palace, Fulham, Liverpool, Manchester United.    There are only five clubs still under British control: Brentford, Brighton and Hove Albion, Everton, Tottenham Hotspur and West Ham.    In fact, more than half of Premier League clubs are now backed by US money, as 11 have received some level of investment. In addition, three Championship clubs have American owners, namely Burnley, Millwall and Swansea City. American owners will expect to make a profit and generate a return on their capital, so there is likely to be a clash with the expectations of the fans, as they attempt to introduce a model with which they are more comfortable. Th...

Income is up 16% with turnover of £4.7m at Carlisle United as matches in front of fans return. Operating profits of £118k were down 75% as there were increased overheads. Carlisle had almost £1.7m in the bank at end of 21/22 but also sizeable creditors so the money cannot be spent. Carlisle generated over £600k in cash from day to day activities, but a closer look shows the importance of player trading as almost all of this was cash from player sales.   Matchday income was 22% of total. Carlisle employee numbers up by 44%, mainly due to admin staff doubling following end of lockdown. Total wage bill up as a result, with wages £61 for every £100 of income, or £71 if player sales excluded.   This is in line with Uefa recommendations. Carlisle spent over £100k on infrastructure in 21/22. Their ground is vulnerable to climate change related issues especially flooding. Carlisle borrowed from Edinburgh Woollen Mill which went into administration. The loan appears to have b...

The authoritative Swiss Ramble reviews West Ham's finances:  https://swissramble.substack.com/p/west-ham-finances-202122 Off the pitch things look pretty good: they returned to profit, club record revenue, significantly lower debt and a large cash injection.   West Ham swung from a £27m pre-tax loss to £12m profit, a “notable” £39m improvement, as revenue rose £60m (31%) from £193m to a club record £253m, partly offset by profit from player sales falling £17m to less than £1m. West Ham’s £12m pre-tax profit is a fine achievement. Five Premier League clubs have so far published accounts for 2021/22, and Manchester City are the only other one to post a profit. Others have made big losses, especially Manchester United £150m and Arsenal £46m. West Ham now have the 7th highest revenue in the Premier League, so are the next best outside the Big Six. That said, the gap is still somewhat of an abyss, e.g. it is less than half of Manchester City £613m and Manchester United £583m. ...