The Political Economy of Football V2

QPR lost £474k a week pre tax in 2021/22 reports Kieran Maguire.   This took QPR total losses over the years to £332 million. Losses covered by a combination of shares issued to owners and loans.    In terms of cash, QPR spent £20m more than it generated in 2021/22, this was funded by borrowings from owners. Total revenue up over £7m mainly due to fans returning to matches post Covid.    Wages were up 10% mainly due to increase in playing staff. Wages are £124 for every £100 of income. QPR bought players for £2.8m and had sales of £250k. Also spent £8.5m on new training ground. QPR owe almost £6m to EFL for Covid loans, £10.2m on FFP settlement, £68m on loans and £2.1m on player transfer instalments. New investor Richard Reilly now owns 12% of QPR. QPR badly need a new stadium to generate income.

Grimsby Town publish 2021/22 accounts, reports Kieran Maguire. Figures don't tie in the previous year as club have remapped some numbers (nothing wrong with that). Turnover up 44% Wages up 25%. Went from £204k profit to £930k loss.  Owners put in a lot of money. Maguire notes: 'Getting promoted is a great event, but is expensive too, as Grimsby had biggest loss in a decade. Shows that the National League is a challenging division, especially with so many former EFL clubs in the competition.' For the fifth consecutive season Grimsby did not sign any players for fees. Grimsby owners lend the club £1.5 million interest free in 2021/22. Over £1.1m of loans were repaid. Presumably their FA Cup run will boost their finances this year.

Orthodox ways of valuing Manchester United (or any other leading football club) fail to come up with figures that reflect the distorted realities of the bidding process.  It's like looking in a hall of distorted mirrors which puff up your size. The Financial Times admits as much in a 'Lex in Depth' look at the club's valuation.   Out come discounted cash flow and other tried and tested techniques to arrive at a figure of $1.6bn which the Pink 'Un admits is 'very low'.  What works in other economic sectors does not fit football. The share price implies a valuation of $4.5bn, although that is hard to justify in terms of the underlying financials.     However, that does not account of the potential for growth through non fungible tokens and sports betting.   Even so, people may start to see through NFTs as a gimmick and sports betting faces some challenges.   Chelsea's sale went through at five times its revenue, although in United's c...

The authoritative Swiss Ramble examines Napoli's finances:  https://swissramble.substack.com/p/napoli-finances-202122 Napoli reduced their pre-tax loss from €78m to €66m, despite revenue falling €14m (8%) from €179m to €165m and profit from player sales dropping €44m from €48m to just €4m, as operating expenses decreased by a hefty €71m (23%).   Loss after tax also narrowed from €59m to €52m. Napoli’s €66m loss was one of the highest in the league, though it was less than half of Juventus €237m (restated after their accounting shenanigans), Roma €219m and Inter €137m. They were pretty much in line with Milan €60m. tThe big five Italian clubs have lost a staggering €2.1bln between them in the last three seasons (€613m in 2019/20, €813m in 2020/21 and €717m in 2021/22).    In fairness to Napoli, their €130m loss over this period was by some distance the least bad, comfortably “beaten” by Roma €609m, Juventus €554m, Inter €488m and Milan €358m. Napoli have now rep...

Manchester United’s Women’s team publishes accounts for 21/22. Revenue quadrupled to £5m and club made a profit of over £1m, although much of this was due to financial rather than football transactions, reports Kieran Maguire. Manchester United Women’s FC does not own any property or equipment assets itself. Main assets are amounts owing to other parts of Manchester United group and financial assets. MUFCW main income source is commercial, which is 88% of the total. Still a challenge turning fan interest into cash, with ticket sales generating £377k compared to £112 million for men’s team. Modest rise in wages to £2.3m for the year.    MUFCW did not sign any players for fees in 21/22.    MUFCW bought players for £445k since 30 June 2022, mainly on credit with instalments over four years.

Following the proposed acquisition of Birmingham City, the EFL has charged the club and individuals with breaches of its regulations:  https://www.efl.com/news/2023/february/efl-statement-birmingham-city/ Fans have recently been protesting against the ownership as the club slides towards the relegation zone. The Blues could face a suspended points deduction:  https://www.theguardian.com/football/2023/feb/20/birmingham-could-face-suspended-points-deduction-after-efl-charges

Arsenal Women’s team publishes 21/22 accounts. Revenue up 62% to £6.9m which puts it ahead of many League One clubs and breaks even for the year, but is there a but, asks football finance guru Kieran Maguire.? Main assets are player transfer registrations (£250k) and debtors from other institutions. Company owns no property or equipment assets itself. In terms of income sources, new WSL television deal (worth £8m a year) quadruples money from that source, fans returning post Covid helps ticket sales but 74% of revenue comes from parent company. Wage bill up to £4.3m, again exceeding some L1 and L2 clubs in EFL. Wages 63% of total revenue (which looks good) but 242% of revenue if exclude money from parent club. Staff numbers up 20% Arsenal Women’s team signed players for £320k in 2021/22, taking total squad cost to £1/2 million. A lot of debts sloshing around owing both from (£575k) and to (£1.7m) other parts of the group.

The authoritative Swiss Ramble takes a 'deep dive' into why Liverpool might be for sale - or not:  https://swissramble.substack.com/p/liverpool-up-for-sale Liverpool owner John W Henry has explained FSG’s position, “I know there has been a lot of conversation and quotes about LFC, but I keep to the facts: we merely formalised an ongoing process. Will we be in England forever? No. Are we selling LFC? No. Are talking with investors about LFC? Yes.” He added, “Will something happen there? I believe so, but it won't be a sale. Have we sold anything in the past 20+ years?” The sale of Chelsea set a new benchmark for a “Big Six” Premier League club, so may well have acted as a catalyst to at least consider a sale, especially as FSG would (rightly) expect to achieve a higher price than Chelsea, given their advantages over the Blues in terms of history, brand and financial position. As more Premier League clubs are bought by mega wealthy investors, FSG might conclude that the...

John Henry has said that Liverpool is not for sale, but he is expecting investment:  https://www.bbc.co.uk/sport/football/64711305 Possibly one of the American hedge funds who have expressed an interest in Manchester United might want to make a deal. Liverpool need new investment to maintain their top six place.  Manchester City and Newcastle are effectively state-owned clubs with all the access to resources that provides.   Manchester United may join them.  Chelsea have wealthy new owners prepared to splash the cash and Tottenham Hotspur have an additional income stream from their new multi-purpose stadium.

Under the Glazer family Manchester United have generated £7,591,000,000.  How has the money been spent asks football finance guru Kieran Maguire? The Glazers inherited an annual wage bill of £77m, this has increased five times since 2005 and is now the highest in the PL with the average weekly wage now £178k. It's not just the players who have been rewarded, with the board earning £129 million during that period and the highest paid director peaking at just over £4.1m in 2017/18. Lenders have been major beneficiaries of the Glazers period of ownership, trousering £917 million in interest payments in loans that earned up to 14.25% interest. Shareholders (some of whom may have the surname Glazer) have 'earned' £167 million during the period too. The Treasury has not been such a beneficiary though. Under the Glazers Manchester United has been an overall loss of £354 million, compared to a Premier League profit of £278 million from 1992-2005. Manchester United have be...

Bidders for Manchester United have been told to stop running public campaigns which could damage the Glazer family following the official start of the race to take control of the club. A statement from the Qatar bid in particular is understood to have caused consternation among those running the process, with the promise to return United to its “former glories” seen as implied criticism of the present owners. The confirmed bidders are a group led by Sheikh Jassim bin Hamad bin Jaber Al Thani, chairman of one of the Emirate’s biggest banks and Ineos, fronted by British billionaire Sir Jim Ratcliffe. It is understood there is no bid from Saudi Arabia despite initial interest. On Friday, the Qatari bid issued a detailed statement outlining plans that were clearly designed to appeal to supporters critical of the Glazer regime. This included the declaration that it would be a “completely debt free” purchase following the controversies of the Glazers’ leveraged buyout. The Qatar ...

The EFL has issued a stern statement about requirements for a change of control not being met at Morecambe:  https://www.efl.com/news/2023/february/efl-statement-morecambe More here about the EFL's concerns in relation to the 20 year old prospective owner:  https://www.bbc.co.uk/sport/football/64682241

The prospective sale of Manchester United reaches its first important juncture at 10pm (UK time) on Friday. That is the “soft” deadline for proposals to be submitted to Raine, the merchant bank handling the process on behalf of the Glazer family. At this stage, all investors have to do is write down their bid detailing the amount and provide proof of funds. It might just be a two-paragraph email. It is expected that not all interested parties will stake a claim for the full club, with some set to go for smaller percentages. Others, however, may go for the whole pie. In Doha, much of the talk in certain circles has been of a bid coming from Qatar for the club in full. Other sources with knowledge detect a growing confidence from the Qataris. As it is the Glazers running this show, there would be nothing to stop them from extending the deadline should the offers fail to meet their aspirations. Raine was targeting a price of £6billion to £7billion ($7.2bn to $8.4b...

How credible is Jahm Najafi’s reported intention to bid for Tottenham Hotspur.   His group MSP were interested in purchasing a minority stake in fellow Premier League side Everton. Talks about acquiring a minority stake in Everton have continued since then. Buying Tottenham for £3.11bn would be an altogether different level of financial commitment, so much would depend on the funding of the other partners in Najafi’s consortium. An MSP deal for Spurs would be a blow to Everton and in particular owner Farhad Moshiri’s hopes of bringing additional capital into the club. The expectation according to multiple sources is that Spurs would want far more than the £3.11bn reported as Najafi’s planned offer. Clubs are often valued in terms of the sale price as a multiple of the revenue. And while European clubs have traditionally been sold for three to five times their revenue, Premier League owners are well aware of the fact that in the US, teams often go for eight, 10 or ...

Iranian-American billionaire Jahm Najafi is preparing a $3.75bn takeover bid for Tottenham Hotspur.  Najafi, chairman of MSP Sports Capital, is working with a consortium of investors to structure the bid. They value the club's equity at approximately $3bn plus the $750m of debt on the club's books. MSP and its partners would put forward approximately 70 per cent of the bidm while backers from the Gulf, mainly from Abu Dhabi, will supply the remaining 30 per cent. The bidding group's interest in the club extends to real estate and development rights available through its ownership.

Shirt sponsorship deals can bring in as much as £50million ($60.7m) a season, with sleeve and training kit partners widening income streams further still. England’s top-flight sides have come a long way from the photocopying and timber firms on their shirts in the 1990s.   Seven of the current sponsors are betting firms, a relationship that concerns many fans. But  The Athletic  recently reported that as many as half of the 20 Premier League clubs were still to confirm their principle commercial partner for 2023-24, including Chelsea, Manchester United and Newcastle United. Since 2006, when Arsenal moved to a new home carrying the same branding, Emirates has been on the front of their shirts. That long-running partnership was last renewed in 2018 and an extended five-year contract, said to be worth £40million per season, is due to expire in 18 months. The commercial market will now be explored for improved terms by the Premier League’s cu...

The authoritative Swiss Ramble reviews the latest accounts of Tottenham Hotspur:  https://swissramble.substack.com/p/tottenham-hotspur-finances-202122 Tottenham’s £61m pre-tax loss is the second worst reported to date, only surpassed by Manchester United £150m. North London rivals Arsenal also posted a large loss £46m, but both Manchester City £42m and West Ham £12m were profitable. All clubs were adversely impacted by the pandemic, but it hit Spurs particularly hard, as they had invested in a very expensive stadium, counting on a large increase in match day (and commercial) revenue. Tottenham have now suffered large losses three years in a row, adding up to a £209m deficit in this period, though two of these seasons were severely affected by the pandemic.   Before that, Spurs had reported profits for seven consecutive seasons, which had generated an impressive £412m surplus. In 2018 and 2019 alone Spurs delivered a hefty £226m profit. Commercial is now Tottenham’s most ...

Richard Cawley of the South London Press reports: '  It seems like there could be some kind of legal challenge coming from Charlie Methven's group about Thomas Sandgaard ending their takeover talks.' “Our group refutes Thomas Sandgaard’s claim last Friday February 10 that we are in breach of the signed agreement to buy Clear Ocean Capital, the holding company of Charlton Athletic. We were expecting to complete the deal last Thursday February 9: a substantial deposit had been paid, the agreed purchase price had not changed, the money required was in the relevant bank accounts and Owners and Directors Test applications had been lodged with the EFL.' ' Our clear legal advice is that we are still in exclusivity to complete the purchase and we still expect to do so imminently, as stipulated by the agreement of December 20 signed by Mr Sandgaard. We note Mr Sandgaard’s statement that he has been conducting discussions with other potential investors and had been working...

The authoritative Swiss Ramble takes a 'deep dive' into the Premier League's charges against Manchester City:  https://swissramble.substack.com/p/manchester-city-charged-by-the-premier The scale of the accusation is unprecedented, adding up to more than 100 charges.   Basically, it is claimed that City have over-stated sponsorship revenue and under-stated costs in order to improve their bottom line, thus helping them to stay within FFP targets, either by boosting profits or reducing losses. Although many commentators have presented this as a Financial Fair Play (FFP) issue, the fundamental allegation is a lot more serious, namely that City have “cooked the books” by submitting false accounts for the best part of a decade. If true, this would amount to systematic cheating and have huge implications for the club. One of the accusations levelled at City is that commercial operations account for an unhealthy proportion of total revenue at 51%, but it is worth noting that PS...

Uefa has published its in depth annual report on the European football landscape:  https://editorial.uefa.com/resources/027e-174740f39cc6-d205dd2e86bf-1000/ecfl_bm_report_2022_high_resolution_.pdf It notes, 'A combination of macroeconomic factors and global investment trends has led to a sharp increase in multi-club investment and ownership in the last few years. At the end of 2022, the UEFA Intelligence Centre identified more than 180 clubs worldwide that were part of a multi-club investment structure, compared with less than 100 clubs four years ago and less than 40 in 2012.  After a slight weakening of growth in 2020 on account of the pandemic, multi-club investment has increased strongly further in the last couple of years, making it one of the most notable trends in football investment The rise of multi-club investment has the potential to pose a material threat to the integrity of European club competitions, with a growing risk of seeing two clubs with the same owner or ...

Southend United fans fear that their club may be weeks away from disappearing as the crisis there shows no signs of being resolved:  https://thefsa.org.uk/news/southend-crisis-we-may-no-longer-have-a-local-club-to-support/  

Despite revenue increasing from £361m to £443m Spurs still lost £61m before tax in 2021/22. New White Hart Lane generated £106m in ticket sales, three times as much as the old stadium. Spurs wage bill up to £209m but still way behind Manchester United (384m) City £354m and Arsenal £238m. At £3.25m, up over £1/2m they do have the highest paid director . Spurs spent £160m on signings in 21/22 and had sales of £25m. Chairman Daniel Levy admitted that previous transfer mistakes had cost the club:  https://www.football.london/tottenham-hotspur-fc/news/daniel-levy-totenham-financial-results-26204461

Richard Cawley reports of the South London Press reports: '   Sounds as if the Methven-led takeover has collapsed. And that all the people brought in by him - barring Dean Holden - have left Charlton. Trying to find out more.' Cawley has added: ' Methven's group say price was agreed at £8.5m for 90 per cent of the club. And that deposit paid and banks funded. Then they got a letter from Sandgaard saying "I've decided not to proceed."' Owner Thomas Sandgaard has confirmed that he called off the deal because of a failure to comply with very specific terms, but says that he has a Plan B: https://londonnewsonline.co.uk/thomas-sandgaard-on-the-breakdown-in-takeover-talks-with-charlie-methvens-group/ The Danish-American owner said: "I know they were very interested at getting into the club but if you can't stick to the terms that you set up the original deal with then there is really nothing there. Eventually I had to say this can't continue....

At least five serious bidders are preparing to do battle in the bid to buy Manchester United, with Sir Jim Ratcliffe stepping up his interest by involving major investment banks JP Morgan and Goldman Sachs. While a fund linked to the Qatari royal family remains undecided on whether to table an offer before the deadline on February 17, Ratcliffe, the petrochemicals billionaire, has sought backing from the banks for his bid. Ratcliffe, one of Britain’s richest individuals, remains the only potential buyer to have so far gone public on his desire to buy the Premier League giants but the cost, with the Glazers expecting more than £5 billion, would take a huge chunk of his fortune. He is understood to have sought potential partners. Sources close to the process believe there is sufficient interest to secure a price acceptable to the Glazer family, which would be north of £5 billion. Raine, the New York bank that is managing the potential sale for the Old Trafford owners, believes a cl...

Voice of the Valley website editor Rick Everitt comments: ' Looks like the 80-20 split in the Methven Charlton takeover bid is more complicated than thought, with the 20 intended to include Methven, Lenagan and (likely) Thomas Sandgaard. The 80 is US money and ties up with the earlier Texas stuff. Seems like an exercise in herding cats to me.' Everitt adds: ' The plan has very much been based on cost-cutting/efficiency plus promotion (which might well be contradictory). Conflicting rumours about whether it’s in trouble and hard to know either way.' I don't think this takeover will happen very quickly, if at all.

There are reports of renewed Qatari interest in Manchester United, although the prospective bidders value the club at £4.5bn rather than the £6bn demanded by the Glazers:  https://www.theguardian.com/football/2023/feb/08/manchester-united-takeover-could-qatari-investors-realistically-buy-club They have also had talks with Tottenham Hotspur, although these have included naming rights and a minority stake.

Manchester City have been charged with over 100 breaches of Premier League financial regulations after a four year investigation.  Do not expect an early resolution to this matter.  City will have the best lawyers to defend them:  https://www.bbc.co.uk/sport/football/64536785 The six-times Premier League champions have been accused of failing to give “a true and fair view of the club’s financial position”, of failing to “include full details” of player and manager remuneration, of failing to comply with rules regarding financial fair play and failing to co-operate in a Premier League investigation that has concluded after more than four years.

The authoritative Swiss Ramble uses his analytical skills to answer this question:  https://swissramble.substack.com/p/how-much-money-did-chelsea-really Chelsea ended up spending an incredible £286m in the January transfer window, which takes their total spend for the 2022/23 season to £539m. In fact, if we include transfer add-ons and the £10m loan fee to secure the services of Joao Felix for six months, the outlay in January was £327m with the expenditure for the full season being £603m. Adding the £63m committed to purchase Christopher Nkunku from RB Leipzig in the summer would give a spooky £666m. It seems like ages ago now, but only this summer Chelsea spent another quarter of a billion pounds, including the big money buys of Wesley Fofana, Marc Cucurella, Raheem Sterling and Kalidou Koulibaly – many of whom now find themselves on the bench. To place Chelsea’s expenditure into perspective, it was £180m more than the rest of the Big Six combined.   Chelsea on their o...

Forest Green Rovers broke even in 21/22, reports Kieran Maguire. Club made a sizeable profit previous season partly due to sale of an investment .Revenue up as previous season impacted by lockdown. FGR had cash in the bank at end of 21/22. Club has made total losses in previous years of over £11m but these are covered by money invested by shareholders. Almost half of FGR’s revenue comes from commercial deals. GR pay £63 in wages for every £100 in revenue.   FGR did not buy any players for fees in 21/22. Total cost of the squad was £84k at end of 21/22. Club presently bottom of League One but will get parachute payments for two seasons if relegated.

The authoritative Swiss Ramble takes a look at the finances of Feyenoord, currently leading the Eredivisie:  https://swissramble.substack.com/p/feyenoord-finances-202122 In 2010 Feyenoord found themselves “in serious financial difficulties” with sizeable debts, negative equity and “a serious threat to the club’s continued existence”. This was due to significant investment in the squad, allied with a failure to qualify for the Champions League. They narrowly avoided bankruptcy, only thanks to the intervention of a group of wealthy supporters, Feyenoord’s pre-tax loss in 2021/222 reduced from €17.8m to €9.7m, as revenue rose €25.4m (41%) from €61.8m to €87.2m and profit from player sales increased €1.8m from €3.8m to €5.6m.  Feyenoord have now posted pre-tax losses for four years in a row, losing €44m in this period, which followed seven consecutive years of profits. The last time that they managed to make money was 2017/18, which was also the last season that the Rotterda...

Crewe made a profit of £153k in 2021/22, reports Kieran Maguire. Substantially down on previous season but few clubs in EFL make profits in consecutive years. Crewe continue to have significant sums in the bank, although much of this is due to season ticket holders buying their 22/23 tickets in advance. Crewe did not buy any players for fees in 21/22. Crewe repaid over £1/2 million of director loans in 21/22.