The Political Economy of Football V2

Reading's old Elm Park ground could be gloomy in midwinter, but maybe fans were happier Of all its 72 clubs, Reading have gradually become the EFL’s greatest and most pressing concern. There are uncomfortable parallels with the still raw demise of their fellow third-tier side Derby County, another club who overspent in pursuit of a return to the Premier League and lived to regret their complete reliance on an owner who first would lose millions and then all interest. Dai Yongge, a Chinese businessman has owned Reading since May 2017.   Dai arrived with ambitions to lead Reading back to the Premier League, a level they fell from in 2012-13, but has instead left them hamstrung in the third tier following relegation in May, bound by financial constraints brought on by his folly. Reading’s total losses now stand at £191million ($232m) after five consecutive years where wages have eclipsed income. The club’s women’s team has been sacrificed, being downgraded to a p...

More concerns have emerged over Everton’s prospective buyers, 777 Partners, after its Brazilian club Vasco da Gama was hit with a Fifa transfer ban for late payments.  Vasco da Gama missed payments to three clubs towards outstanding debts and according to the Brazilian media outlet Globo there has also been a delay in a payment 777 was due to make to the club this month. A Fifa spokesman told The Times: “The club Vasco de Gama is currently prevented from registering new players due to an outstanding debt. The relevant ban will be lifted immediately upon the settlement of the debt being confirmed by the creditor concerned.” 777 partners recently met with Everton’s fan advisory board representatives over concerns about how the takeover will be funded The Times reported last week that late payments from 777 put the British Basketball League (BBL), which it co-owns, at risk of “immediate administration”. While 777 has been trying to get on the front foot, includi...

US private equity firm Dynasty Equity has purchased a minority stake in Liverpool Football Club worth at least $100mn, reports the Financial Times.   The investment in the Premier League football club is the latest example of private equity’s interest in sport and underscores the growing market for new sports-focused funds such as Dynasty.   Liverpool is owned by Boston-based Fenway Sports Group, a consortium of media companies and professional sports teams that include the Boston Red Sox in baseball and Pittsburgh Penguins in ice hockey. FSG itself has received passive institutional investments from other sports-focused funds, including Arctos Sports Partners and RedBird Capital Partners. The group in February called off a potential sale of Liverpool but retained Morgan Stanley and Goldman Sachs as financial advisers for outside investment options, leading to the Dynasty transaction. “Our long-term commitment to Liverpool remains as strong as ever,” said FSG president ...

French top-flight outfit Olympique Lyonnais hope to raise €300 million (US$316.36 million) from the bond market and will sell some of their assets as the club’s US owner John Textor attempts to reorganise their finances. Textor’s Eagle Football Holdings  completed the takeover  of Lyon at the end of last year, with the club valued at €884 million (US$932.21 million), by far the highest price ever paid for a French team and part of a wave of US investment into European football.   The deal, backed by US private equity firm Ares Management, made the Ligue 1 team the fourth to be affiliated with Eagle Football, joining  Premier League  side  Crystal Palace , Brazilian outfit Botafogo and Belgian team RWD Molenbeek. The US businessman told the  Financial Times  that he was currently occupied with “paring off non-core assets to focus on football”, believing Lyon to be “way too heavy on physical assets”.   ”. He added that the money genera...

Majority stakeholder Sport Republic has an office at Southampton’s training ground, Staplewood.  Despite being relegated from the Premier League last season, the club remain the jewel in its multi-club model, and getting Southampton’s affairs in order is imperative to the broader operation. The owner has two other clubs — Turkish second-tier side Goztepe, purchased in August 2022, and Ligue 2 outfit Valenciennes, acquired in July this year. Lead investor Dragan Solak, a Serbian telecoms billionaire, took out a £110million ($133.4m by today’s rates) loan to buy Southampton in December 2021. The loan was from Luxembourg-registered company Summer Invest Sarl, which is owned by Solak and is a majority shareholder in his telecom company United Group. This was unrelated to Southampton’s cash flow and the loan was not to be repaid out of club accounts. Since then, however, Solak has regularly provided Southampton with cash injections, covering “general running...

Scunthorpe United is in a dire state after the owner withdrew his support and home games are to be played at Gainsborough Trinity:  https://www.scunthorpe-united.co.uk/news/2023/september/club-update/ As this detailed analysis suggests, the situation there is 'beyond grim':  https://inews.co.uk/sport/football/scunthorpe-united-football-club-dying-2646754

Southampton have found relegation challenging on and off the pitch.   Revenue has been halved, they still have one of the biggest wage budgets in the league and they are paying off a £80m loan:  https://www.dailyecho.co.uk/sport/23818733.southampton-ceo-parsons-explains-keeping-finances-control/

Inter Milan's reported losses of $85m are a fall from $145m last year and are said to be within financial fair play regulations:  https://sempreinter.com/2023/09/26/inter-milan-board-of-directors-approve-financial-statements-2022-23/

Blackburn parent company Venky’s London publishes accounts to 31 March 2023. Revenue £19.9m, up 16%.   Operating loss £21.5m up 5%.   Wages £130 for every £100 income (2022 £145).   Total losses under the Venky’s £204 million.     Player purchases £4.8m.   Overdraft £14.5m.

Southend fans protested before Saturday’s home game against AFC Fylde. Hundreds of activists marched noisily from the city centre to Roots Hall, chanting their hatred of Ron Martin, the Southend chairman. There was cartoonish symbolism. The protesters followed a car that had a model of Martin attached, with the man in power depicted as a clown. There were even flashes of insurrection. Once the agitators made it to Roots Hall a handful breached the directors’ entrance, as if they were going to depose Martin there and then. “Shut the gate,” a steward cried desperately. Those who got through the entrance soon retreated autonomously and it must be emphasised that this uprising was benevolent, peaceful and had minimal police interference. Considering the fans’ heartache, their conduct was impeccable. Yet the measured behaviour should not mask the desperation for Martin to sell Southend. His 25-year ownership has been defined by unsuccessful attempts to move from Roots Hall to a ...

Academic analysis has shown that wage spending is highly correlated with a club’s finishing position over time (with a statistical R² (variance explained)  of 90%), as first seen in the seminal “Soccernomics” by Simon Kuper and Stefan Szyminski.    Even in a single season (2021/21), we can observe a fairly linear relationship between wages and league position, especially in the bottom half of the table. Clubs like West Ham, Brighton and Brentford have performed compared to their wage bill.    In contras is the extent of Manchester United’s under-performance, as they only finished sixth in the league, despite enjoying the highest wages in England’s top flight. Manchester United’s £384m wage bill was not only the highest in the 2021/22 Premier League, but actually the highest ever reported in England. Three other clubs paid more than £300m in wages, namely Liverpool £366m, Manchester City £354m and Chelsea £340m. There was then a big gap of more than £1...

Everton fans might start to think they have gone out of the frying pan into the fire with their prospective new owners, but there are no viable alternatives on offer. Everton’s prospective new owners, 777 Partners, were warned by the head of the British Basketball League (BBL) this month that the competition faced being put into “immediate administration” unless a delayed payment of £825,000 was received. The Premier League’s legal experts are studying 777’s takeover bid and the American investment company’s owners can expect to be quizzed over its financial dealings with the BBL, which it co-owns. UK Sport and the government are understood to be monitoring the situation as public funding was provided for the BBL clubs in the form of loans during the Covid pandemic. The British Basketball Federation, the sport’s governing body in the UK, has also launched a review of 777’s ownership. Everton fits perfectly into the model that 777 Partners has established for its football operat...

Daniel Levy has confirmed he is open to selling a stake in Tottenham Hotspur.  The Tottenham chairman is believed to value the club at about £4 billion and would consider selling up to 25 per cent. At the start of the year he met Nasser Al-Khelaifi, the president of Paris Saint-Germain and chairman of Qatar Sports Investments, and Spurs was subject to interest from the private equity fund MSP Sports Capital, among other interests in recent years. Levy and his family own a 29.88 per cent stake in Enic, the investment company which owns 86.58 per cent of Tottenham. The remaining 13 per cent is owned by 30,000 small shareholders.  Heavy financial investment in Newcastle United and Chelsea in recent years has increased the competition that Tottenham face. Spurs posted a net debt of £626 million in the latest company accounts, in part due to the building of a stadium that cost £1 billion. Interest on the debt was £22.2 million in 2021-22, an outlay which will have risen with in...

Crawley Town have published their 21/22 accounts very late, reports football finance guru Kieran Maguire. The club lost £1.4 million in the year but that’s after taking into account a write off of a £1m loan from former owner. WAGMI have lent the club £2.3m interest free.

Chelsea has raised about $500m in fresh investment from Ares Management, the US alternative asset manager:  https://www.aresmgmt.com/ Revenue has been constrained by the failure to find a front of shirt sponsor that would normally bring in tens of millions of pounds a year.   The club needs to raise money either to redevelop Stamford Bridge or to build a new stadium at Earls Court.  It is also thinking of acquiring Sporting Lisbon as it seeks to build a global network of clubs. Ares already has football interests including in Atletico Madrid and Eagle Football, the group that acquired Olympique Lyonnais last year.

Wrexham’s new Kop stand will not be open for the start of next season due to a series of hold-ups. The League Two club had been hoping to start work on the 5,500 capacity stand in June after demolishing the old terrace that had stood empty since 2008. Government funding of around £25million has been pledged to the Gateway project, which is part of a wider scheme to transform a key corridor into the city that includes improvements to the nearby Wrexham General station. However, no building work has been done on the site since the demolition work took place during the final months of last season. Four new floodlights, however, were added in the summer to bring the Racecourse Ground up to EFL standards following promotion.   No start date for the new stand is in place for what is expected to be a 12-month job. Among the hold-ups has been the need to relocate an electrical sub-station that powers the student accommodation blocks that sit behind the main stand. An existing sewer...

Judging from the Newcastle fan interviewed on Radio 5 this morning the Toon Army enjoyed their night at the San Siro and were justifiably satisfied with their 0-0 draw.  The financial rewards may not be as great. Why will the Champions League not benefit Newcastle United as much as their rivals?   The Geordies have basically been hammered for the crime of not playing in Europe for ages, so it does not really matter how good (or bad) the current team is, which means that Ashley’s legacy still lingers on. Normally, the English clubs in the Champions League receive around four times as much as those playing in the Europe League, but Newcastle are the “Inbetweeners” this season. Their €30m revenue is stuck in the middle of the €60m average for the other three Champions League clubs and the €16m average for the Europa League. Newcastle will receive a much lower TV pool than the other English clubs. Before a ball is kicked, their share will be €9.8m, which is only around half ...

Liverpool have announced a lucrative partnership with international delivery service UPS.   It’s the third multi-million pound commercial deal the club have struck in as many months following recent agreements with Peloton and Google Pixel. The three deals are expected to bring in more than £35million over the course of the partnerships. UPS will become Liverpool’s first official global logistics and shipping partner and they will work together to expand the worldwide distribution of LFC’s retail and e-commerce operations. Liverpool commercial director Ben Latty said: “We are proud to be announcing this global partnership with UPS. As one of the world’s largest companies, UPS are bringing a wealth of knowledge and expertise to our already successful retail operations. We are looking forward to seeing the impact this will have, and how it will improve fans’ experiences around the world.” In July, Liverpool agreed a multi-year partnership with Peloton to become the club’s digita...

Everton’s prospective new owners 777 Partners will have to pay back £140 million provided by two lenders for the club’s new stadium should their deal to buy out Farhad Moshiri proceed. MSP Sports Capital offered a £100 million loan after their own attempt to acquire some of Moshiri’s shares collapsed, while businessmen Andy Bell and George Downing also put down about £40 million towards the completion of the 52,888-capacity arena at Bramley-Moore Dock. Under the terms of the deals, however, a change of ownership would mean that those loans have to be repaid and Miami-based 777 Partners are now set to request meetings with both parties in the hope of keeping them involved. While sources suggest that 777 and Moshiri are confident of a positive outcome with the creditors, any hitch would increase the financial burden on the US firm, who would have to find fresh funding for the £550 million stadium, cover Everton’s running costs and also have money for strengthening the team. Everton...

Pundits have stopped being amazed by Brighton and are now giving them full credit for their exciting play and their ability to spot talent as key players depart. Owner Tony Bloom discussed   the longevity of a model which defies logic: Brighton & Hove Albion get better while selling their best players.   Bloom is a lifelong Brighton supporter, as well as the owner and chairman. “Our aim, naturally, is to carry on sustaining it for a long time to come,” says the owner-chairman. “But I can’t guarantee anything and we know how competitive and tough the Premier League is. “Every year, three teams get relegated, so you can finish in the top half as some teams have for three, four, five, 10 years, but that doesn’t mean you don’t have one bad season and get relegated, or have a really bad season and get close. “What we’re going to try to do every season is to be as competitive as we can, look upwards, accepting that we will have some bad times and some bad seaso...

Is multi-club ownership really such a positive thing? And as so often, it is a question the game has never really faced up to, preferring to stand by and do nothing for years before finally stopping to wonder if it is now so widespread that they might as well just legitimise it. The arguments in favour of multi-club ownership are clear. As well as the Red Bull empire, you could just look at the success of the City Football Group.  It's a road Chelsea are planning to go down. City are at the top of the tree, Premier League champions for four of the past five seasons. But Melbourne City (men and women), New York City, Mumbai City and Yokohama F Marinos have won league titles as part of the group and Girona, Troyes and Montevideo City Torque have won promotions, all of them benefiting from a shared network of players, coaches and scouts as well as data, knowledge, infrastructure and strategy. With the investment of Brighton & Hove Albion owner-chairm...

Real Madrid have earned the most TV money from UEFA competitions in the last 10 years with a colossal €887m, though four other clubs have also received more than €800m in this period: Manchester City €826m, PSG €817m, Juventus €810m and Bayern Munich €802m. There are actually three Spanish clubs in the top seven, as Barcelona are in 6th place (€721m) and Atletico Madrid are 7th (€675m), while two English clubs are not far behind, namely Chelsea €647m and Liverpool €631m. Looking at the top 20 clubs, England have the most representatives with all of the so-called Big Six featuring, followed by Spain and Italy with four clubs apiece. Germany and Portugal both have two clubs, while France and Netherlands each have just one club. In the last five years Manchester City have the highest growth in Europe TV revenue, more than doubling from €64m to €131m. All other clubs in the top six have also seen growth with the exception of Juventus, down 20% from €80m to €64m. Barcelona’s revenue...

Chelsea announced late last month that they were scrapping the coach subsidy that had, for more than a decade, offered a small group of fans road transport for £10 return on away trips within the United Kingdom. This decision, made despite appeals to maintain the service during a lengthy consultation with the club’s fan advisory board, supporter groups and users of the coaches, drew swift condemnation from the Chelsea Supporters’ Trust (CST). “It appears that during a cost-of-living crisis, Chelsea FC are happy to increase the financial burden on many supporters by penny-pinching,” their stinging final line in a punchy statement read. It is also worth noting that removing the coach subsidy is only one of a number of unpopular financial decisions taken since the appointment of Chris Jurasek as Chelsea’s new chief executive officer by the club’s ownership, led by Todd Boehly and Clearlake Capital, in May. Most relate to the matchday experience, where prices have gone up between fiv...

It’s just a few months since West Ham United won their first trophy in more than 40 years with a last-minute 2-1 victory over Fiorentina to win the Europa Conference League final in Prague. The host city was fitting. Czech tycoon Daniel Křetínský has owned around 27 per cent of West Ham since buying the stake for around £160mn in November 2021. Sweeter still, the match was played at the Fortuna Stadium, home to Slavia Prague. Křetínský is co-owner of arch-rivals Athletic Club Sparta Praha, internationally known as Sparta Prague, his boyhood club. Křetínský was once a little-known lawyer. Now, he’s one of Europe’s most prolific dealmakers, with a string of investments in companies including UK supermarket Sainsbury’s, Royal Mail and French newspaper Le Monde. But like any billionaire worth Scoreboard’s time, he’s a man who loves his football. West Ham, he tells the Financial Times , always struck a chord with him, thanks to the club’s distinctive claret and blue home shirts. It al...

In the old days, football fans wanted a sugar daddy owner who could fund extravagant spending sprees in the transfer market to power their club to trophies. Farhad Moshiri appeared to fit the bill. The British-Iranian bought into Everton in 2016 and took majority control two years later. He invested at least £750mn into the club to start construction on a new stadium and snap up players. Except his cash never paid off on the pitch. When business partner Alisher Usmanov was sanctioned in the wake of Russia’s invasion of Ukraine, it exposed how reliant Everton had become on external capital. The club had to cut commercial ties with Usmanov-backed USM, while Moshiri’s own shares in the Russian company were put out of reach. Following months of talks, Moshiri has now agreed to sell his 94 per cent stake in Everton to Miami-based firm 777 Partners, a serial collector of football clubs. It will mark a stark change in approach. Josh Wander, 777 co-founder, told the FT just a couple o...

The prospective American owners of Carlisle United have thrown down the gauntlet about the club's debt.  The deal cannot go ahead without the Pureplay debt being resolved:  https://www.newsandstar.co.uk/sport/23789797.prospective-american-owners-carlisle-united-focus-club-debts/

For years, as their empire went from strength to strength under Ferguson’s management, United were cited as the gold standard — the ultimate yardstick on the pitch and off it. To return to that line from Sean Dyche, yes, there was always glossiness about Manchester United, but there was an unmistakable earthiness too. It was a global brand with a local heart. Or, if you prefer, a local club with a global outlook. But the Manchester United of 2023 seems less sure of itself, less comfortable in its own skin. It is no longer even comfortable in its historic Old Trafford home, which, like the team, has deteriorated under the Glazer family’s ownership. For a decade since Ferguson’s retirement, though, United, as a club, has drifted.    He was a truly exceptional manager and a very hard act to follow.   When he had a great team he was always building the next one.    Players feared and respected him. But one thing that is widely agreed upon is the sens...

Back in the dim and distant days when I was young we used to call 'hire purchase' to obtain goods like televisions 'the never never'. Both North London clubs, Arsenal and Tottenham, have invested heavily in their squads in an attempt to reach the top four and maybe even challenge for the title. In fact, both clubs had their highest ever gross spend this summer, breaking through the £200m barrier for the first time (with the January window still to come). Arsenal spent £204m this summer to bring in Declan Rice from West Ham, Kai Havertz from Chelsea and the unfortunate Jurrien Timber from Ajax, while only making £59m from player sales, mainly Folarin Balogun to Monaco and Granit Xhaka to Bayer Leverkusen. The famously tight-fisted Daniel Levy opened up his cheque book to splash out £216m on new players, the second highest in the Premier League this summer. In the last five years, Arsenal and Tottenham have had the third highest and fifth highest gross spends in the...

Chelsea were no slouches in the transfer market under Roman Abramovich, but the Blues have gone to another level since the arrival of Todd Boehly’s consortium, splashing out almost a billion in just 18 months. This is an unprecedented level of spending, exacerbated by lengthy player contracts, which has committed the club to significant future payments. Their recruitment has included two purchases costing more than £100m, namely Enzo Fernandez and Moisés Caicedo, while other big money signings included Wesley Fofana, Mykhaylo Mudryk, Marc Cucurella, Roméo Lavia, Christopher Nkunku and Raheem Sterling (plus many others). It’s fair to say that the jury is still out for a number of these buys. Boehly has so far shown little sign of slowing down, but the gross spend has been partly mitigated by high player sales, including Kai Havertz, Mason Mount, Mateo Kovacic, Kalidou Koulibaly, Christian Pulisic, Edouard Mendy and Ruben Loftus-Cheek this summer alone. The Manchester clubs The o...

Any takeover of Everton by the American investment firm 777 Partners is likely to be a lengthy process while the Premier League ensures that no rules on club ownership will be broken. There are numerous issues for the Premier League to consider concerning 777 and new rules on leveraged buyouts will apply after they were brought in for this season. 777 Partners already has majority or minority stakes in several clubs, including Genoa in Italy, Hertha Berlin in Germany, Vasco da Gama in Brazil, Standard Liège in Belgium, Sevilla in Spain and Red Star in France. Those close to the process accept that the Premier League’s rules are considerably tougher than in other countries, and its lawyers will have to sift through a number of legal claims that have been made against the company and its subsidiaries, as well as a drugs case involving the co-founder Josh Wander who admitted in 2003 to having cocaine sent to him through the post. He was placed on a probation that expired in 20...