The Political Economy of Football V2

Manchester United significantly reduced their pre-tax loss in 2022/23 by £117m from £150m to £33m, as revenue rose £65m (11%) from £583m to £648m, which was not only a new club record, but the highest ever reported in England. That was obviously good news, especially in a year when United did not participate in the lucrative Champions League, but it’s worth remembering that the club still posted a loss, despite all the impressive revenue progress. United’s revenue growth was driven by new club records for both commercial, which shot up £45m (17%) from £258m to £303m, and match day, up £25m (23%) from £111m to £136m. On the other hand, broadcasting slightly dropped by £6m (3%) from £215m to £209m. As has often been the case in recent years, United’s bottom line did not benefit much from profit on player sales, which fell £2m (7%) from £22m to £20m, mainly from the moves of James Garner to Everton, Andreas Pereira to Fulham and Tahith Chong to Birmingham City.   United’s inabil...

The collapse of the Buickingham Group has seriously delayed Liverpool’s Anfield Road end rebuild. Replacement contractor, Rayner Rowen, has since put its own stamp on the project and is working hard to deliver the project as fast as possible for Liverpool’s owners Fenway Sports Group. But it is a far from ideal situation on the back of delays described as “really complex and deeply frustrating” by Liverpool CEO Billy Hogan. Lost revenue is racking up and with 11,000 seats unavailable and the stand’s upper tier still closed, Liverpool are finding it increasingly difficult to relocate supporters who had purchased tickets in the unfinished section of the stand all the way up until the New Year. Liverpool chose Tier 1 contractor Buckingham Group in 2021 after extensive research into some of their other projects, which included delivering new stadiums for Brighton & Hove Albion, MK Dons and Brentford, as well as new stands at The Oval cricket ground in London. Buckingha...

Manchester United have reported Premier League record revenue of £648.4m for the year ending 30 June. The figure is 11% up on the previous 12 months and beats the league record set by United in 2019, but the club still reported a loss of £42.1m. The record earnings come despite United being in the Europa League, rather than the more lucrative Champions League, last season. The club predicted revenue for the 2023-24 period will be between £650m and £680m. United’s wage bill for the period was down £52.8m to £331.4m, which the club attributed to squad turnover and their absence from last season’s Champions League. The report confirmed no dividends had been paid to the Glazer family who own the club.

The US investment firm 777 Partners are expected to pay a reduced price for Everton if the club have points deducted for an alleged breach of the Premier League’s financial rules. It is understood the Premier League believes a breach of profitability and sustainability (P&S) rules should carry sanctions up to a points deduction. The Daily Telegraph has reported that the maximum deduction recommended is 12 points ― the same as the maximum level in the EFL’s guidelines for sanctions for Financial Fair Play breaches. Any points deduction would be imposed straight away and docking 12 points would leave Everton on minus five for the season so far. It is the first case ever brought by the Premier League on alleged P&S breaches and is considered by all clubs as an important test case.

Barcelona’s pre-tax profit in 2022/23 shot up from €124m to an incredible €423m, though this included €800m from the financial levers, which increased €534m from the previous year’s €266m. Revenue rose €167m (26%) from €639m to €806m, but this was more than offset by €331m (43%) growth in operating expenses. Player sales generated a €42m book loss, which was €70m worse than the prior year’s €28m profit. Net interest payable was slightly higher at €34m. Barcelona’s reported profit would actually have been even higher without consolidating the Espai Barca Securitisation Fund used to finance the new stadium development, which produced a €48m charge. These accounts clearly benefited from a near €400m gain from the sale of 15% of the Barcelona’s La Liga TV rights to Sixth Street. This followed a similar transaction in the previous year, when the club sold 10% of the rights for €266m. In total, these sales have delivered €665m, but there’s no such thing as a free lunch, so the club w...

Borussia Dortmund posted an €11m pre-tax profit in 2022/24 (€10m after tax), which represented a €41m improvement on the previous season’s €30m loss. Revenue rose €48m (13%) from €377m to €425m, a new club record, boosted by profit from player sales increasing €10m (15%) from €63m to €73m. This was partially offset by €15m (3%) growth in operating expenses, while net interest payable was up €2m to €6m. There was good growth across all three of the main revenue streams, though commercial was the star of the show, rising €33m (18%) from €184m to €217m, a new high for the club. Match operations nearly doubled from €23m to €44m, as COVID restrictions were lifted, while broadcasting increased €12m (9%) to €158m. After nine consecutive years of profits, which generated €227m between 2011 and 2019, Dortmund were hit hard by COVID, which led to three consecutive losses, adding up to €150m that “put our business model to the test”. However, it was business as usual in 2022/23 as the clu...

Why are many United supporters eager for the Glazer family to sell up? You only need to look at the debt amassed, the interest paid out, the dividends disbursed and the money spent in the transfer market to find the answers to that question. United’s most recent set of accounts dated up until the third quarter of 2022-23 put the club’s gross debt at £725m.   That is the highest it has been since 2010 when the Glazers carried out a major restructuring of the club’s finances in order to bring the cost of their borrowing under control, and is up from £636m at the end of the 2021-22 season.   That increase is largely due to United borrowing another £100m last season as a drawdown from their revolving credit facility. As the majority of United’s debt is denominated in U.S. dollars, fluctuations in the exchange rate also affect how it is reported when converted to British pounds sterling. The dollar’s strength against the pound means United’s $650m principal debt was worth £52...

Another defeat for QPR yesterday and the latest set of accounts  from March, showed the club was losing around £2million ($2.4m) a month, and sporting director Les Ferdinand left his position in June and has not been replaced.  The Athletic reckons this is the sorry tale of a club stuck in an ominous downward spiral. A big part of QPR’s problems has centred on their recruitment, namely their inability to cash in on prized assets.    Kevin Gallen, who now works as a full-time scout for Crystal Palace, says: “Recruitment in a football club is the most important thing. QPR’s recruitment over the years hasn’t been good. That part drastically needs to improve. With QPR unable to bank a hefty fee since Eze joined Crystal Palace for £20m in August 2020, they are sailing close to breaching financial fair play (FFP) rules. This means they have little spending power to improve the squad. Under the rules, Championship clubs are allowed losses up to £39m in a three-yea...

Ineos founderJim Ratcliffe is nearing a deal to take a 25 per cent stake in Manchester United, giving it an enterprise valuation somewhere between $6bn and $6.5bn — by far the highest ever for a football team. If approved by the board, Ratcliffe’s arrival would be followed quickly by a capital raise to bring new money into the club. Ratcliffe and Ineos sporting director Sir David Brailsford would then take up two seats on a new committee to oversee the football operations, alongside current executive chair Joel Glazer. Such an outcome offers something for almost everyone. Ratcliffe gets to sail into his childhood club and lead the effort to revive its fortunes. The Glazers get to stay in control of their lucrative asset while taking out a nice lump sum. They can ride the wave if Ratcliffe is successful, and have someone else to blame if he isn’t. Fans, though clearly divided on the idea, at least have the prospect of witnessing some change. The people that may be wondering what’s...

Porto swung from a pre-tax €22m profit to a €47m loss, a deterioration of €69m, despite revenue rising €22m (15%) from €144m to €166m, which reflected a return to normality after three years impacted by the global pandemic.  The main reason for the worsening of the bottom line was a steep reduction in profit from player sales, which slumped €70m (83%) from €84m to €14m. Porto’s revenue growth was driven by more progress in the Champions League which led to broadcasting increasing €15m (17%) from €90m to €105m. Commercial rose €5m (11%) from €43m to €48m, while match day was up €2.5m (23%) from €11.0m to €13.5m, due to the lifting of all COVID restrictions. In contrast to Porto’s reported €47m loss before tax, the other leading Portuguese clubs were all profitable in 2022/23, with Sporting leading the way with €26m, followed by Benfica €21m and Braga €2m. As we have seen, Porto’s business model is very reliant on player sales, as they have earned an impressive €438m in the las...

Crystal Palace have cleared most of the formal barriers to begin work on the redevelopment of Selhurst Park, but costs have ballooned to around £150million ($184m). The start of work to build a new 13,500-capacity Main Stand and improve other areas of the ground, which celebrates its 100th anniversary next year, has moved significantly closer after the relocation of nearby residents was completed. The redevelopment of the stadium is seen as being crucial to Palace’s ability to compete in the Premier League, with chairman Steve Parish saying it would provide an extra £20m-£30m each season. Palace have begun their search for a main contractor, having put other contracts out for tender. Exploratory work commenced this year in the car park at Selhurst to establish the ground conditions and prepare for the laying of the foundations for the new stand, with holes drilled down to 35 metres. Since the redevelopment was proposed in 2017, with a budget of around £100million, costs hav...

The Qataris have withdrawn their bid for Manchester United and Sir Jim Ratcliffe now hopes to take a 25 per cent stake, leaving the Glazers in charge to the dismay of supporters:  https://www.bbc.co.uk/sport/football/67107688 Ratcliffe and his petrochemicals firm, Ineos, will pay up to £1.3 billion for an initial 25 per cent stake, with the agreement expected to be ratified at a board meeting this week. Ratcliffe’s initial offer valued the club at more than £5 billion, a world-record price for a sports franchise. His willingness to allow the Glazers to keep a stake in United has also been significant. For United supporters, the Qataris appeared to represent the club’s best hope of matching the financial muscle of Manchester City and Newcastle United, who already have super-rich Middle Eastern owners. But the Qataris did score an own goal with an early public statement that was interpreted as criticism of the Glazer family and, as The Times reported, they did not match Ra...

Fulham fans are calling on supporters to demonstrate outside Craven Cottage before next month’s home game against Manchester United over the club’s “completely misguided” ticket pricing. That home game against Manchester United features some truly eye-watering matchday ticket prices, including £160 in the new Riverside Stand with cheapest ticket in the Hammersmith End still a staggering £67. A huge jump on the same fixture from last season. Supporter groups are now calling for action - Fulham Supporters' Trust and Fulham Lillies said this week that the club's ticket pricing was "alienating a large part of our core fan base to the extent that increasing numbers just can’t afford to come to a game." It seems to me that the club are disregarding long-term fans in favour of those who live in their affluent locality. Read more here:  https://thefsa.org.uk/news/fulham-fans-call-for-protest-over-ticket-prices/

Managerial turnover is a baked in feature of modern football.   Owners and fans are impatient for success and a few bad results can mean the sack, never mind the cost.  Very often the replacement doesn't do much better with the same set of players. A new trend is the sacking of relatively successful managers.  'Chopper' Harris saved Gillingham from the driop last season and they were only just outside the play offs when he got the heave ho.  The new owners decided they wanted 'a new dircetion' whatever that means. Now Wayne Rooney is to replace John Eustace at Birmingham City, agreeing a deal with a salary that is three times the amount Eustace was earning. Eustace, 43, impressed during his time at the club against a backdrop of financial uncertainty and ownership change. Birmingham are sixth in the Sky Bet Championship after 11 matches this season. However, a statement said he had been dismissed because the board wanted to implement a winning mentality and “c...

Juventus have published their accounts for the 2022/23 season, which was disappointing for a number of reasons.  After the Italian Football Federation (FIGC) brought charges against Juventus for financial irregularities, the club’s board of directors resigned, including chairman Andrea Agnelli, vice-chairman Pavel Nedved and chief executive Maurizio Arrivabene. The club has actually had to deal with two separate legal cases: the first one involved over-stated capital gains via inflated player trading values, while there was also another one with allegations of false accounting involving salary “manoeuvres”. To add to Juve’s woes, their former star player, Cristiano Ronaldo, has recently taken legal action against the club over €19.5m unpaid wages (linked to the salary manoeuvres case). And to prove that it never rains, but it pours, Paul Pogba has failed a drugs test, so his Juve career is in the balance, though from a purely financial perspective this could give the club the...

The Qatari group bidding for Manchester United will not increase their existing offer of £5 billion despite the threat posed by a new deal being tabled by Sir Jim Ratcliffe. This week it emerged that the Glazers were considering Ratcliffe’s offer of £1.5 billion for a 25 per cent stake as part of what could be a staged takeover at Old Trafford. One insider close to the process has described the British billionaire’s proposal as “feasible”. However, sources close to the Qatari group being led by Sheikh Jassim Bin Hamad al-Thani say that the news of Ratcliffe’s restructured bid — he had initially offered to buy the 67 per cent stake belonging to the Glazer family — amounts to another pressure tactic designed to make them increase their bid. While the Glazers value United at about £6 billion, the Qataris remain convinced the price is too high and are standing by their offer of £5 billion for a 100 per cent purchase: not least because Erik ten Hag’s side are misfiring o...

 ome would argue that the balance at Ajax has tipped too far towards making money, which has had an inevitable impact on performances on the pitch. Despite the poor sporting results, Ajax still achieved an impressive €55m pre-tax profit in 2022/23 (€39m after tax), compared to a €32m loss in the previous season.   The €87m improvement was largely due to significant profit from player sales, which shot up €75m from €38m to €113m. In addition, revenue increased by €7m (4%) from €189m to €196m, while operating expenses fell €6m (3%) to €248m. Ajax’s revenue was hit by lower TV income from European competitions, which led to an €18m (25%) reduction in broadcasting from €74m to €56m, but this was offset by increases in the other two revenue streams. Match day rose €17m (49%) from €34 to €51m, as some matches were played without crowds the previous season because of COVID restrictions, while commercial was up €9m (11%) from €81m to £90m. Ajax’s 2022/23 figures greatly benefi...

Football finance guru Kieran Maguire reckons that Reading FC are an attractive proposition at the right price which he puts at £20m to £25m.  He notes that they are not quite a London club, but the nearest thing you will get to one:  https://www.readingchronicle.co.uk/sport/23833788.football-finance-expert-predicts-reading-fc-valuation/

Scunthorpe United have been rescued by a local businesswoman with a close association with the club:  https://www.bbc.co.uk/sport/football/67010923 The Iron are thought to be close to a deal to stay at Glanford Park.

Good news at last for Southend supporters as a sale is agreed to a consortium led by Justin Rees:  https://www.southendunited.co.uk/news/2023/october/03/club-statement--sale-of-the-club/ All too often crises at clubs have to go to the wire.  Southend fans have fought long and hard for their club:  https://www.theguardian.com/football/2023/oct/03/weve-got-out-club-back-southend-fans-celebrate-win-and-takeover-deal The club will stay at Roots Hall and the stadium will need major work:  https://www.echo-news.co.uk/news/23831800.southend-united-agreement-to-see-club-stay-roots-hall/

The release of the audio exchanges between officials at Saturday's game between Spurs and Liverpool has fanned the flames of the controversy about the offside decision.   They reveal an unacceptable level of incompetence and casual decision-making. Dan Chapman, partner and head of sport and employment at Leathes Prior, said it was difficult to see what legal claims Liverpool had.   He told  The Athletic : “What Liverpool are probably going to do, perhaps with the support of most clubs, is say, ‘This is no longer acceptable’ and, ‘There needs to be radical changes’. I can’t realistically see there is a legal route. But you don’t need a strong case sometimes, you need an arguable case and then you use it to bring about change. “I can’t see any circumstances where it’s going to result in any changes being made to the fixture because you can’t demonstrate that the game would have been different had that goal counted.” Hannah Kent, a senior associate in the dispute re...

Uefa has replaced financial fair play by a sustainability framework of squad cost control with the ratio of player wages, transfers and agent fees being limited to 70% of revenue and profit on player sales. In reality, the cost control ratio will benefit the wealthiest clubs, who either enjoy big TV money or large commercial deals. This could further cement the dominance of English clubs, who make up 16 of the top 30 richest clubs, according to the Deloitte Money League. Perhaps a better way of highlighting how the new ratio will widen the gap to the elite clubs is the amount they could spend and still be within the 70% cost control target.   For example, the difference between the Big Six and the rest in England is enormous. Manchester City’s budget would be £481m, while 7th-placed Aston Villa could only spend £193m, which is around 40% as much. Newcastle United have a very high cost control ratio of 107%. This highlights the challenge for ambitious clubs, which have to inve...