The Political Economy of Football V2

The economic challenges faced by Belgian professional football over the past few years have been significant. In the 2021-2022 season alone, the sport suffered a loss of €213 million, with the 2022-2023 balance sheet showing little improvement. These financial difficulties have been ongoing since the 2016-2017 season when the last positive records were reported. Nils Van Brantegem, the auditor general of the Licensing Commission, revealed in a recent Le Soir article that the losses amounted to €213 million for 2021-2022 and were already negative at €74 million as of 31 December 2022, for the following season. The situation has been particularly worrisome as only Club Brugge and Charleroi managed to maintain positive financial results consistently over the past three years. Anderlecht and Genk were the only clubs to successfully reduce their debts over five years. Although some clubs have been kept afloat by shareholder injections of funds, the overall revenue generation has been in...

Hull City supporters will be looking forward to the new season with some optimism after their decent performances under manager Liam Rosenior in the second half of last season. The former player had taken over in November 2022 and guided the club to a comfortable 15th place in the Championship. Just as important was the change in ownership in January 2022 when Acun Ilıcalı had purchased the club via his company Acun Media Group for a reported £20m (though some say this was as much as £30m). The Turkish businessman has managed to restore the club’s relationship with its fans after ending the Allams’ controversial regime. The former owners wryly observed that “There have been a lot of ups and downs over the last 11 years or so”, which is a good way of putting it. The Allams’ attempt to rebrand the club as Hull City Tigers met with strong resistance, while the fans were also unhappy with the owners’ “business-led approach”, which meant that they did not spend much on the squad. In...

A Canadian investment fund that claims it is owed £14.6million by a company that owns half of Peterborough United has mentioned the possibility of putting the League One club into administration. This could be a negotiating ploy rather than a serious threat. Set up in Calgary in 2016, OKR Financial’s main business is lending money to technology start-ups. In 2018 its co-founders, Dr Jason Neale and Randy Thompson, bought a 50 per cent stake in the English club via a different Canadian firm, Kelgary Sports and Entertainment. Neale and Thompson paid Peterborough chairman Darragh MacAnthony £2.5million for the shares and loaned the club another £3million, but their business relationship ended last year when OKR’s investors accused Neale of making unauthorised loans from OKR to Kelgary and other businesses. Neale denies any wrongdoing but he was forced out of OKR and recovery agents were brought in to chase those loans. In November, OKR sent a demand to the club for repaymen...

Allegations of insider trading against Joe Lewis didn’t just make the financial pages. That’s because even with a 98-metre yacht and an art collection full of Picasso and Matisse, the Bahamas-based billionaire is best known for owning Tottenham Hotspur for more than two decades. He acquired it from one time market trader Alan Sugar, noted for his remark about how money put into football was like prune juice.    Sugar wasn’t sophisticated, but he was street smart. Lewis, who was released on a $300mn bond secured by his yacht and private plane after entering a not guilty plea in New York, survived big changes in the business of football over two decades. With multi-club ownership now back in vogue, Spurs chair Daniel Levy and Lewis were ahead of the game in the 1990s and 2000s, when they owned stakes in teams across Europe, including Scotland’s Rangers, Czech Republic’s Slavia Prague, and AEK Athens of Greece. Even then, multi-club ownership raised conc...

Nene Park, Irthlingborough I used to go and watch Rushden & Diamonds from time to time.   The story of their rise and fall is an intriguing one with the neat stadium now demolished and a phoenix club facing its own challenges.  It shows that benefactor clubs have their limits:  https://sports.yahoo.com/brian-talbot-rushden-diamonds-raised-101834346.html

Jordan Henderson’s departure for Saudi Arabia has proved highly controversial: https://www.bbc.co.uk/sport/football/66324791 .  He is prepared to give up up the Liverpool captaincy for life at the seventh-best team in Saudi Arabia on a contract which, at around £700,000 a week, is not so much comfortable as mind-boggling. It is a move that will have serious repercussions for Liverpool — and which has caused dismay within the LGBTQI+ community, where Henderson had previously been the most prominent ally in the men’s game — but it is also one that will set alarm bells ringing in English football. A high-profile English player was always likely to be enticed to Saudi Arabia sooner or later, but few people would have imagined it would be one with as much to lose, both reputationally and professionally, as Henderson. Not just a Liverpool and England player, but captain of his club and vice-captain of his national team. Not just a high-profile player, but o...

These are challenging times at Wolves. It is a period unlike anything seen since the Chinese conglomerate Fosun purchased Wolves in 2016 and it comes amid widespread speculation the club are for sale — a claim that is repeatedly denied but refuses to go away, especially as Grasshoppers Zurich, effectively Wolves’ sister club, are on the market. The need to bring in more money than they spend is due in part to the risk of breaching the Premier League’s regulations on profit and sustainability, known commonly as financial fair play (FFP). But the issue is broader than simply staying within the rules. Fosun have invested heavily in Wolves in recent years, writing off a £126.5million ($163.5m) loan in the 2020-21 accounts and at least partly funding around £175million of spending in the past two transfer windows, even if much of the money in the past year has been spent poorly. Now they want a return on their investment, not just on the pitch, but on the balance sheet, too. The...

Tottenham Hotspur have distanced themselves from Joe Lewis after his indictment in New York, pointing out that the club is owned by a Bahamas-based family trust:  https://www.theguardian.com/football/2023/jul/26/tottenham-joe-lewis-insider-trading-football Lewis has to remain in the US and has been released on bail og $300m.  He was hardly a regular at White Hart Lane.

Tottenham Hotspur chairman Joe Lewis has been charged with insider trading in the well-known Southern District of New York.  He is alleged to have showered gifts on friends and lovers:  https://www.bbc.co.uk/news/world-us-canada-66274633 The 86-year-old, who is one of Britain’s richest men, is accused of tipping off employees, associates, friends and romantic interests with non-public information about companies in which he had invested, and lending some of them hundreds of thousands of dollars to trade on the knowledge. He has been charged with 19 counts, including securities fraud and conspiracy to commit securities fraud and make false statements. According to the indictment unsealed in Manhattan federal court on Tuesday, Lewis and his associates were collectively able to make millions of dollars using the stolen information, which included favourable results from clinical trials. A lawyer for Lewis, David Zornow of Skadden Arps, said in a statement: “The government has...

Seven Premier League clubs reported a pre-tax profit in 2021/22. Not only did Manchester City lead the way with £42m, but they were also the only club to post a profit in each of the last two seasons. Good money was also made in particular by Burnley £36m, Brentford £30m and Brighton £24m. In stark contrast, huge losses were posted by Manchester United, whose £150m deficit included £62m interest payable, and Chelsea £121m. Over the last 10 years only three Premier League clubs have been profitable, namely Tottenham £203m, Liverpool £153m and Burnley £125m. It might come as a surprise to some, but the largest losses in this period were made by Everton £420m and Aston Villa £399m, ahead of Chelsea £383m. In 2021/22 only two Premier League clubs managed to generate operating profits, namely Brentford £26m and West Ham £22m, while no fewer than eight clubs lost more than £50m, including a spectacular £224m at Chelsea - and that was before Todd Boehly’s huge recruitment spree. Over ...

I'm not sure that fan ownership of clubs is the panacea that some hope for, certainly at a higher level.  But congratulations to Partick Thistle where it has taken approaching four years to seal the deal:  https://www.heraldscotland.com/sport/23669411.partick-thistle-officially-fan-owned-years-long-saga-ends/

Global Football Partners have completed their takeover of Charlton Athletic from Danish-American Thomas Sandgaard and have issued a list of shareholders:  https://londonnewsonline.co.uk/new-charlton-athletic-owners-reveal-list-of-major-shareholders-and-structure-of-their-senior-management-team/ Former Sunderland part owner Charlie Methven has a prominent role and investors from the United States and Singapore are involved. A farewell letter from Sandgaard has enjoyed a mixed reception from Charlton fans:  https://londonnewsonline.co.uk/thomas-sandgaard-pens-open-letter-to-charlton-athletic-fans-as-se7-partners-complete-takeover/

The Premier league’s net interest payable increased in 2022 from £126m to £193m, with over half of this amount coming from just two clubs, namely Manchester United £62m and Tottenham £41m. Much of the Premier League’s debt increase had come via loans from club owners with this “soft” debt rising by nearly a billion between 2017 and 2020. Four clubs had over £200m owner debt in 2022: Brighton £406m, Everton £381m, Leicester City £266m and Arsenal £218m. The largest external debt in 2022 by far was at Tottenham £853m and Manchester United £636m with these two clubs accounting for nearly 60% of the division’s loans on their own. The next highest was Everton £174m. There will be a new record high gross transfer spend in 2022/23, amounting to £2.7 bn per Transfermarkt, largely thanks to Chelsea’s incredible outlay of more than half a billion since Todd Boehly’s arrival, Premier League clubs have spent £3.3 bn on capital expenditure in the last decade, including £2.2 bln in the last ...

The long awaited takeover of Charlton Athletic by SE7 Partners from Thomas Sandgaard has been approved:  https://londonnewsonline.co.uk/se7-partners-obtain-efl-approval-for-charlton-athletic-takeover/ Charlton have had unhappy experiences with owners for over a decade, so how this works out will remain to be seen.  There is certainly potential there, but will it be realised? This interview with Charlie Methven gives detail not available elsewhere:  https://thecharltondossier.com/charlie-methven-on-the-record/

In last weekend's Financial Times  Delia Smith did one of the Pink Un's long interviews over a meal at Carrow Road.  I can't say it revealed very much, but her tone seemed valedictory which is not surprising at the age of 82.   No 'let's be 'aving you'. I'm not a Norwich supporter, but it is one of the clubs I like.   Norwich have a sustainable business model, which is admirable in many respects but has made it hard for them to compete in the Premier League. They have been a “yo-yo club” for a long time, but this status is under threat after the club missed out on the Championship play-offs last season. The club maintains a family ethos and feels firmly rooted in Norfolk. One Norwich owner is a genuine UK household name and stands out as being a rare female in the boardroom. Delia Smith, 80, is a TV chef who has released a range of bestselling cookbooks and has been a majority shareholder with her husband Michael Wynn-Jones, a writer and publisher, s...

The Fair Game Index has rated the top 92 clubs in the pyramid through 80 different touchpoints across four criteria: Financial Sustainability, Good Governance, Equality Standards and Good Governance. At the moment over half of England’s top 92 clubs are technically insolvent, and a majority of Championship clubs are spending more than they earn on players’ wages. AFC Wimbledon emerge as England’s best run club with an overall score of 73.58 out of 100. The Premier League’s top club are Brentford.  Championship side Plymouth Argyle boast a perfect score in the Financial Sustainability metric, whilst League One’s Cambridge United set the standard for Good Governance. Exeter City are the highest scorers for Fan Engagement, with Lincoln taking the honours for Equality Standards. In fact, clubs in Sky Bet League’s One and Two scored higher overall across all four criteria than their counterparts in the Sky Bet Championship. The top three clubs for financial sustainability are ...

The Indian Government has pressured Venky's to cut their investment in Blackburn Rovers and a proposed 20 per cut has produced turmoil at the club:  https://www.mirror.co.uk/sport/football/news/jon-dahl-tomasson-blackburn-rovers-30480683 Tax rates on money sent from India are set to rise from five to 20 per cent:  https://www.lancs.live/sport/football/transfer-news/blackburn-rovers-tomasson-future-budget-27335121

Earlier this month the announcement that Birmingham City fans had been eagerly awaiting for so long finally arrived, when it was confirmed that ownership of the club had effectively passed to Thomas Wagner’s Knighthead Capital Management. Birmingham City have had a number of issues ever since Hong Kong businessman Carson Yeung took full control of the club in 2009. After he was arrested on charges of money laundering, Yeung resigned, but the club remained in the hands of Chinese owners. The recent agreement was secured after couple of potential deals fell through last year. First, an attempt by serial tyre kicker Laurence Bassini in June came to nothing; then a proposed takeover by Maxco Capital collapsed in December. Blues’ pre-tax loss   in 2021/22 widened from (restated) £5.6m to £25.0m, largely because profit from player sales dropped £23.3m from £26.5m to £3.2m, as the previous season included Jude Bellingham’s big money move to Borussia Dortmund. Blues’ pre-tax loss w...

Now in the National League,    Ebbsfleet United lost £33k a week in 21/22.  Ebbsfleet paid £314 in wages for every £100 of income in 21/22, the highest metric seen. Ebbsfleet have loans exceeding £5m, a large chunk of which is due to owners based in Kuwait. Some of us remember them as Gravesend & Northfleet.   The international station at Ebbsfleet has now closed.

The Glazers put Manchester United on the market in November because they were led to believe the news would spark a competitive auction between private-equity giants, sovereign wealth funds and assorted trophy asset hunters. The pitch was that at least one of these bidders would decide they simply must have Manchester United or they would never be able to show their faces in Davos again. This would trigger a bid of more than $8billion (£6.1bn). Instead, they got a two-horse race between bidders more worried about not being able to show their faces in Davos again if they spent much more than $6billion (£4.6billion) on a company that had a market capitalisation of less than half that figure the day before the auction was announced. Fear of looking daft has trumped fear of missing out. It can be reasonably sure that both bidders have settled on a number close to $6.5billion (£5bn). The Qatari bid says it will clear the debts immediately without taking on further borrowing. The INEOS...

Plymouth Argyle have been praised for combining success with a low level of financial risk in a new report:  https://www.plymouthherald.co.uk/sport/football/plymouth-argyle-top-league-new-8597908 Argyle got the highest score of all 92 Premier League and Football League clubs assessed in a sustainability matrix.

 Bansley have been charged with multiple breaches of EFL regulations:  https://www.efl.com/news/2023/july/efl-statement-barnsley-fc

Football finance guru Kieran Maguire fears that Southend United may be going the way of Bury:  https://www.echo-news.co.uk/sport/23652027.finance-expert-fears-southend-united-heading-way-bury/

Welling United (who share their stadium with Erith & Belvedere) have ambitious plans to redevelop their crumbling home by building 114 homes on the site whilst retaining a viable ground:  https://wellingunited.com/2023/07/welling-united-reveal-plans-for-park-view-road-redevelopment/ A local fan offers some balanced critical commentary here:  https://drinkingduringthegame.blogspot.com/2023/07/park-view-road-redevelopment-plans.html?m=0

West Bromwich Albion’s managing director, Mark Miles, recently confirmed what every Baggies’ fan knew, namely that the club continued to face financial challenges.   West Brom’s auditors had already rung an alarm bell when they cast doubt on the club’s ability to continue as a going concern without making player sale. Another indication of Albion’s financial issues came when they took out a £20m 4-year loan with MSD Holding UK Ltd in December 2022 “to finance the general business operations of the club”, secured on the club’s assets including the stadium.   Moreover, this loan is high interest, currently charging nearly 15% (9.75% plus SONIA 4.93%), which means that Albion have to stump up around £3m a year. Given the supporters’ understandable scepticism about the club’s management, they felt obliged to add, “for the avoidance of doubt, the loan will only be spent on the purposes of the football club”, though they did not define exactly what was meant by “purposes”. ...

A legacy debt at Carlisle United is rising by £3,500 a week with rising interest rates adding pressure.  The club lost £600,000 in 2022/23:  https://www.newsandstar.co.uk/news/23640805.carlisle-uniteds-debt-purepay-rising-3-500-per-week/

There has been uncertainty over Sheffield United’s ownership ever since Prince Abdullah decided to put the club up for sale, leading to some problems with cash flow. Prince Abdullah had become Sheffield United’s sole owner in September 2019 after the High Court ruled that Kevin McCabe had to sell his 50% share to the Prince. This also triggered an agreement whereby the club had to purchase the stadium, training facility, gym, hotel and offices. In the past 12 months two investors have tried to acquire Sheffield United, but both failed to get a deal across the line, as neither Henry Mauriss, nor Dozy Mmobuosi ultimately managed to satisfy the EFL during the Owners and Directors’ Test. However, it’s fair to say that the that the club may well have dodged a bullet here, as the American businessman has since been jailed for wire fraud, while the Nigerian’s company Tingo has been accused of shady business practices and faked financial statements. The Prince’s intention is still to s...

Ipswich Town will be one of the better financed clubs in the Championship next season and average crowds of 30,000 will help.   However, their CEO is well aware of the dangerous temptations as clubs seek to reach the top flight:  https://www.eadt.co.uk/sport/23633540.ipswich-town-mark-ashton-price-football-podcast/

These are tough times if you’re a supporter of Reading, as the club has once again been charged with “multiple breaches” of EFL regulations, including failure to pay wages on time on three occasions (October 2022. November 2022 and 2023) and the non-payment of tax to HMRC. In particular, owner Dai Yongge was personally charged with “causing the club to be in breach of EFL regulations, despite his commitment to fund the cash requirements of the club.” This raised the possibility of a points deduction for the third season in a row for the Royals. Their first penalty came in 2020/21, when they were deducted 6 points for breaching financial rules, as the EFL said that their FFP loss worked out to £58m for the 3-year monitoring period between 2018 and 2021, which was miles above the £39m limit. The second strike came in April 2023, when Reading failed to adhere to the terms of the business plan agreed with the FL, thus triggering a suspended 6-point penalty in 2021/22. The club had co...