The Political Economy of Football V2

How many clubs are constrained by Financial Fair Play rules? Although the 20 Premier League clubs posted a massive £1.6 bn loss over the 3-year monitoring period, this was reduced by £1.2 bn allowable deductions and £590m COVID impact (slightly offset by removing £63m loan write-off).   Incredibly, that switches the huge loss into a net £100m profit for the purposes of the FFP calculation. No fewer than nine clubs were actually profitable in terms of FFP with a further 4 clubs restricting losses to less than £10m.   In particular, Tottenham £231m, Manchester City £141m and Liverpool £109m seemed to have a lot of room to manoeuvre. Essentially, it looks like clubs making the largest FFP losses, even after taking advantage of all the allowable deductions, have needed owner funding to help stay within the maximum losses. This is the case for Chelsea, Everton and Leicester City, who are the only clubs able to utilise the full £105m allowable loss after their owners provided ...

The Manchester United takeover saga rolls on, with the rumour mill once again causing sharp gyrations in the club’s New York-listed shares. By Friday, the stock had gained more than 25 per cent through the week on reports — later denied — that the Qatari bid was edging ahead of its British-led rival. Further fuel to the speculation came when Rio Ferdinand, the former United defender, posted a YouTube video while waiting on a train platform in which he said the Qatari takeover was set to be concluded within days. With no football to distract, the atmosphere is febrile. Despite the surge, United’s share price has yet to return to the highs of mid-February. With football’s summer transfer window kicking into gear, pressure for a resolution is mounting. The fate of one of football’s most illustrious clubs rests in the hands of the Glazer family — the six siblings who control United through a share structure that grants them supercharged voting rights. Those who know the...

A group that includes Egyptian businessman Mohamed Elkashashy and Manchester-based sports lawyer Chris Farnell are in talks to buy a minority stake in West Bromwich Albion that could eventually lead to a full takeover.   Farnell in my view needs to be treated with some caution. Farnell was briefly disqualified from becoming a football club director in England, although he later successfully appealed against the ban. He was also cleared of any wrongdoing by the Solicitors Regulatory Authority.  West Brom are currently owned by several Chinese firms and businessmen but the controlling shareholder is Guochuan Lai, who runs the club’s parent company Yunyi Guokai (Shanghai) Sports Development Limited.  The web of Chinese owners that is led by Lai have been in charge at The Hawthorns since the Chinese businessman paid more than £200million to buy former owner Jeremy Peace’s 88 per cent stake in the club in August 2016. Elkashashy and Farnell have previously been li...

Football in England has rarely been so popular. At their Annual General Meeting on Wednesday, the Premier League confirmed that the average attendance for the 2022-23 season was a record 40,267, the first time it had passed the 40,000 mark, despite the division having a handful of stadiums far smaller than that. Manchester United It’s fair to say that Manchester United are the most consistently supported club in English football, recording their first five-figure average attendance in 1902-03 and then hitting impressive peaks in the late 1940s, 1950s and 1960s. They were also one of the few clubs not to see a significant decline in support during the 1980s. Between 1979-80 and 1989-90, United’s average attendance was higher than 40,000 in eight of 11 seasons, a trend no other club could match. Chelsea Although a younger club (founded in 1905) than most of their rivals, Chelsea have historically had consistent support, both in west London and in towns on the edge of the capital. The...

Partick Thistle are in financial trouble, having lost an estimated £280,000 in the last season.  However, there is no threat of administration:  https://www.heraldscotland.com/news/23589238.partick-thistles-financial-woes-state-play-explained/

The Premier League continues to dominate European football, according to the latest annual financial report from Deloitte Sports Business.   The EFL's combined revenue was more than £1 billion with the biggest percentage increase in League One:  https://www.bbc.co.uk/sport/football/65901519 Its forensic analysis details that just shy of €30billion (£25.6bn; $32.5bn) was generated by European clubs across the 2021-22 season. Covid-19 might have applied the brakes but the accelerator is back to being squeezed with growth of seven per cent year on year.The European football market has expanded by almost €10billion since 2012-13 — a billion for every season, if you like — and central to the continued uplift is the Premier League. All by itself, English football’s top division now generates €6.4billion (£5.5bn) per year. Spain’s La Liga, its nearest competitor, only just turned over half of that sum last season. In the women’s game, the upward trajectory is even steeper...

Wigan are in trouble after sinking deep into another financial hole. Relegation from the Championship, confirmed in late April, has become the least of their concerns. A club that was dragged to the brink as recently as 2020 is back on the slide under owners who promised the same would never be allowed to happen again. Phoenix 2021 Limited, an ownership group based in Bahrain, might have delivered the League One title during their first full season in English football, but that success has been bookended by suffering. Wigan are back in the mire, battling the woes they hoped never to see again. The drip, drip, drip of financial mismanagement has filled the sink and without a takeover this summer, there are fears of the water spilling over and flooding the DW Stadium. Debts owed to Her Majesty’s Revenue and Customs (HMRC) are understood to stand at £2.5million ($3.14million). Anxiety is on the rise and trust in the owner, Abdulrahman Al-Jasmi, and his son-in-law and chairman, T...

Swansea have been owned by an American consortium since July 2016, when Jason Levien and Stephen Kaplan bought a controlling interest in the club. They were joined in August 2020 by Jake Silverstein. According to the club’s website, they owned around 80% between them.  Following the conversion of some debt into equity, the Supporters Trust stake was diluted to around 13%, including a protected 5% ownership position. Last month Andy Coleman, an investor in MLS team DC United (where Levien is also involved), was appointed Swansea’s chairman, having acquired “a significant shareholding”.    This week Nigel Morris, the managing partner of QED Investors, also made an investment into the club and joined the board of directors. Swansea’s pre-tax loss in 2021/22 nearly tripled from £4.6m to £13.2m, mainly due to the ending of parachute payments in the fourth year after relegation from the Premier League, which contributed to revenue falling £7.9m (29%) from £27.6m to £19.7m. ...

There has been a renewed sense of optimism in the Qatari camp in the past 72 hours about acquiring Manchester United, fuelled, insiders claim, by dialogue with the Glazers and their representatives towards the end of last week. Since a third and final bid deadline was set by Raine at the end of April, the Qataris have tabled two more offers in an effort to regain the initiative. The fifth bid, submitted to the Glazers and Raine in the past week, came with a deadline of Friday, and a declaration from the group led by Sheikh Jassim that they would withdraw from the process if they did not receive a response. However, that deadline passed and the Qataris remain in the chase, with their hopes further fuelled by the fact that a month ago the Glazers contacted Nasser al-Khelaifi, the president of the Qatari-owned club Paris Saint-Germain, requesting that he ask Sheikh Jassim to increase his offer. However, an increased bid by the Qataris is now believed to be nearer to the o...

Which Premier League clubs performed best and worst in relation to their budget? One measure is how much each club paid in wages for each point gained in the Premier League. As an example, Manchester United’s wages were £384m, while they registered 75 points in the league, so they effectively paid £5.1m for each point. On this basis, Brentford were in a class of their own, paying just £1.2m wages per point, ahead of the other club renowned for the quality of its data analytics, Brighton £1.9m. Thanks to their excellent performance on the pitch, Aston Villa £2.2m and Newcastle United £2.4m also did well here. In contrast, Leicester City paid a chunky £5.4m per point. If we restrict the analysis to the Big Six, Arsenal’s performance was the best by far with only £2.5m per point. At the other end of the spectrum, we find Chelsea with £7.7m, comfortably the worst in the top flight. Clubs can also be ranked by comparing their final position in the Premier League with the position im...

The EFL has reported the highest attendances for 70 years.  The Championship accounted for nearly half of the total:  https://www.efl.com/news/2023/june/highest-league-attendances-for-70-years-as-nearly-22-million-attend-efl-competitions/

Quick financial comparison of today's UEFA Champions League finalists provided by the Swiss Ramble. Manchester City much stronger than Inter financially: City’s £619m revenue is over twice as much as Inter £261m, as is squad cost £1.1 bln vs £505m. City's £354m wages nearly 70% more than Inter's £210m. City's revenue was higher than Inter in every stream, especially commercial and broadcasting. City were profitable last season, while Inter reported a significant loss. Inter have much more debt (and interest payments).

Andrea Radrizzani, majority shareholder since 2017, is close to finalising a deal that will see 49ers Enterprises, the investment arm of the San Francisco 49ers, up its current stake and seize outright control at  Leeds United. A new era beckons in every sense. The takeover has been a long time coming, traced as far back as 2018 when Radrizzani invited the first of three tranches of investment from 49ers Enterprises. The fourth and final instalment, one which is currently pending, will be the most significant, passing control of Leeds into new hands and severing the last ties to Radrizzani. At every stage, the valuation of Leeds has fluctuated. Low in the Championship, upped in the Premier League. Now, with a fall out of the Premier League confirmed, the price required to end Radrizzani’s hold on the club has dipped once more. The summer’s proposed deal, with the Italian’s remaining 56 per cent stake sold to 49ers Enterprises, has been brokered on the premise Leeds is now ...

The takeover of Morecambe FC has been dragging on for months and is still ongoing according to the club's CEO:  https://www.beyondradio.co.uk/news/local-sport/morecambe-fc-sale-process-is-still-ongoing-says-shrimps-ceo/

The EFL has approved the takeover of Birmingham City, giving Blues fans ground for hope of a better future:  https://www.thebusinessdesk.com/westmidlands/news/2074815-efl-approves-birmingham-city-takeover-deal

This is a rather convoluted statement but it appears that Juventus have withdrawn from the European Super League project, leaving Real Madrid and Barcelona:  https://www.juventus.com/en/news/articles/press-release-06-06-2023 More here with greater clarity:  https://www.bbc.co.uk/sport/football/65828703 It may, of course, emerge again in the future in a different form.

RC Lens have qualified for the Champions League. There was much financial uncertainty under the former owner, Azerbaijani businessman Hafiz Mammadov, culminating in Lens not providing a sufficient bank guarantee in 2014. As a result, the French football authorities effectively cancelled that season’s promotion from Ligue 2, though the debate took a while to reach a conclusion, so this was only effected via a forced relegation at the end of 2014/15. Things look a lot better for Lens under the current owner, Joseph Oughourlian, who bought the club in 2016, before becoming president in 2018. During his tenure, Lens first won promotion to Ligue 1 in 2020, then finished in an impressive 7th place in both their first two seasons back in the top flight, before securing a place in the lucrative Champions League. That’s a notable achievement, but what is even more striking is that they have managed to do this without spending huge amounts, as can be seen by reviewing Lens’ financials. In 2021/2...

The Brown family want to sell St. Johnstone after 37 years in charge and are looking for foreign investment.   Mover and shaker Jez Moxey is overseeing the sale:  https://www.thescottishsun.co.uk/sport/football/10790901/st-johnstone-want-next-wrexham-american-investment/

The group aiming to take a significant stake in Everton is already providing them with funding for their new stadium and is “on track” to take two positions on the Premier League club’s board. MSP Sports Capital has been in exclusive talks with Everton’s majority owner, Farhad Moshiri, for the past two weeks about investment into Everton Stadium Development Company, the business Moshiri set up in 2017 to oversee the construction of the club’s new home at Bramley-Moore Dock. The proposed deal would see a limited partnership led by New York-based MSP effectively give Moshiri £100million to £150million ($124m to $187m) in loans that can be converted to equity in the Merseyside club. The British-Iranian billionaire has poured at least £750m of his fortune into Everton since taking control of the club in 2016, with £400m of that sum going into the new stadium alone. But there is still at least £360m needed to finish the stadium, as the project’s initial budget of £500m has ...

A sale and purchase agreement has agreed with the SE7 Partners consortium for Charlton Athletic:  https://londonnewsonline.co.uk/charlton-athletic-takeover-takes-big-step-forward-after-spa-agreement/ The consortium involves a co-founder of a hedge fund and a former owner of a MLS side. Richard Cawley of the South London Press notes: ' EFL approval likely to take a number of weeks - maybe between six to eight. Joshua Friedman's takeover party also need to get a lease agreement for Valley and training ground sanctioned by Roland Duchatelet.' VOTV website editor Rick Everitt points out: ' “Sanctioned by Roland Duchatelet” - what could possibly go wrong? Last time this was required it led to a 150% rent increase. The lease will have to be amended because Sandgaard’s US firm is explicitly named in it as the guarantor.'

Looking at the most recent accounts from the 2021/22, on the face of it Leicester City have the most to fear from relegation, because they had by far the largest operating loss of £83m, the highest wage bill of £182m, the highest wages to turnover ratio of 85%, the highest debt of £346m and the highest interest payable of £19m.  If we look at net profitability over the last five years, it is clear that Leicester have posted the highest losses of the relegated clubs. However, the picture was not exactly rosy at the other two relegated clubs with Southampton and Leeds United posting large operating losses of £37m and £34m respectively. Obviously, the most significant revenue decrease following relegation is broadcasting, even though the blow is softened by parachute payments. Basically, a club will earn at least £100m TV money in the Premier League, which will be halved to around £50m in the first season in the Championship. The fall in broadcasting will be steeper for Leiceste...

 A deal has been agreed to sell Wigan Athletic to a new buyer:  https://www.manchestereveningnews.co.uk/sport/football/football-news/wigan-athletic-new-owners-efl-27054905

The six Glazer siblings could retain stakes in Manchester United in a proposed phased takeover of the football club by Sir Jim Ratcliffe, who is seeking a way through the share structure and family dynamics that have complicated the deal. The Glazer family started a strategic review more than six months ago but the process has dragged on with only two full takeover bids emerging for one of the biggest names in global sport.   The offer from Ratcliffe and his Ineos chemicals empire is complicated because, unlike a rival proposal from a Qatari bidder, he is not seeking to acquire 100 per cent of United’s shares in one go, according to people close to the discussions. United has a listing on the New York Stock Exchange but the Glazers control 95 per cent of the voting rights thanks to a special class of B shares. The publicly traded A shares, which are largely held by minority shareholders, have minimal voting power. Ratcliffe, who flew to New York for talks last month, is seeking...

Ross County lost over £1 million in 2021/22, representing £1 for every £4 of income. Losses would have been higher had it not been for a related company writing off £234k of loans. Ross County spent £800k cash more than the club generated from day to day activities in 21/22. It covered this outflow by borrowing £850k in the year. Staff numbers were up, wages down. Wages £75 for every £100 of income.     RossCounty did not sign any players for a fee and the whole squad cost £0 in 21/22.

Leeds United chairman Andrea Radrizzani offered to use the club’s Elland Road stadium as security for a £26million bank loan which his company, Aser, and a bidding partner, Gestio Capital, intended to use to complete a takeover of the Italian club Sampdoria. Under a heads of terms agreement co-signed by Radrizzani — essentially an agreement in principle — Elland Road would act as collateral as part of a deal by Radrizzani’s Aser and his bidding partner Gestio Capital to borrow €30m (£25.8m; $32.1m) from Italian bank Banca Sistema, helping to fund their Sampdoria buy-out. Leeds are majority-owned by Radrizzani but the club’s minority shareholder, 49ers Enterprises, has been in discussions to acquire control of the club. No agreement has yet been reached, however, and sources close to the takeover process told  The Athletic  that the 49ers had not been informed about the stadium being put forward as the security for a potential loan. Less than 24 hours after Radrizzani had...