The Political Economy of Football V2

This week football’s simmering issues around multiclub ownership topped the agenda at a Premier League shareholder meeting. Eight clubs voted to block a proposed ban on interlinked clubs loaning each other players, meaning those in favour fell short of the two-thirds majority required to get their way. That means Newcastle United is clear to borrow footballers from the four Saudi Pro League teams owned by the kingdom’s sovereign wealth fund when the transfer window reopens in January. The vote itself shone a light on some of the tensions and contradictions within football over these issues. Some of the clubs that backed a ban have clear connections to other clubs, such as Crystal Palace through its shareholder Eagle Football, which also owns Olympique Lyonnais. Yet those that knocked down the rule change included teams that have no external ties, but perhaps have aspirations in that direction — Burnley, for example. The real benefits of multiclub ownership are sti...

Stockport’s upward trajectory — they are aiming for a third promotion in six seasons — is one of football’s feel-good stories, given it is only a few years since they were sleepwalking towards potential oblivion. Stockport are six points clear at the top of League Two 18 games into the 46-match season. There are plans to redevelop three sides of Edgeley Park, doubling its capacity to 20,000. A new training ground will also be built, with enough space to accommodate the academy and women’s teams. But it feels like even more of an achievement bearing in mind the challenges of living in the shadow of the two giants just up the road. Their Edgeley Park ground is six miles from the Etihad Stadium, the scene of City’s reinvention as the best football team in the country, even Europe. Old Trafford, where United used to hold that honour, is not much further on the other side of Mancunian Way. The new owner Stockport strayed dangerously close to slipping off the radar altogether befor...

Manchester City’s on-pitch success was replicated off the pitch, as they set new club records for both revenue and profit in 2022/23.  City’s pre-tax profit nearly doubled from £42m to £80m, as revenue surged by £100m (16%) from £613m to £713m, which was also the highest ever generated in England, and profit from player sales rose £54m (80%) from £68m to £122m. It is clear that City’s £80m pre-tax profit is an excellent performance, more than twice as much as the highest profit made by anyone in the previous season. This financial strength is very different from the large losses reported elsewhere, e.g. Chelsea £121m, Leicester City £92m and Newcastle United £73m. However, there was a price to pay for this success, as operating expenses also shot up by £113m (18%) from £641m to £754m. City have now reported a profit in every year since 2014/15, with the exception of the COVID-impacted 2019/20 season. Even including that sizeable £125m deficit, City are in the black to the tun...

Sir Jim Ratcliffe is closing in on a roughly $33-per-share deal with the Glazer family that would see the British tycoon buy about 25 per cent of Manchester United. If agreed, the deal would value the Premier League club at about $5.4bn and implies an enterprise value of more than $6bn including debt based on the existing number of shares in issue There is a desire to get the deal agreed by the end of next week and before the US Thanksgiving holiday on November 23, according to people familiar with the matter. However, they cautioned that negotiations are ongoing, meaning the timeline could change.    Next week will mark one year since the Glazers, who have controlled United since a £790mn leveraged buyout in 2005, said they would consider a sale or an injection of capital from outside investors.  Ratcliffe’s flexibility and willingness to consider a range of proposals have been key to establishing him as the favourite to strike a deal.  United shares rose by...

Some of the reaction to the points deduction at Everton has been excitable and over speculative.  One might think it was the end of the Premier League as we know it.  As one spoof site commented, 'Manchester City to be relegated to National League North.' Everton are to appeal, but they did admit that they were in part in breach of the rules.   That said, they would regard the penalty applied as excessive.   However, I think their claim that they were transparent with the investigators will not carry much weight.   Tactically it shows a certain naivety (evasiveness and delay might have worked better), whilst saying 'we know we are outside the rules' is not much of an excuse. However, given Everton's upward curve on the pitch and the weakness of three potential candidates for relegation, I don't think that they are in any danger. If the appeal fails, Everton are likely to face legal action for compensation for four clubs relegated when they were br...

Breaking the Premier League’s profit and sustainability regulations over the three-year period ending in season 2021-22 has earned Everton a 10 point deduction, the first in the top flight.. Specifically, according to the findings of a regulatory commission, the club exceeded the permitted losses by a sum of £19.5million and “submitted misleading information about the stadium financing costs”. Even among rival fans, there was sympathy for Everton on Friday. Is financial mismanagement and errant book-keeping on this scale — an overspend of £19.5million higher than permitted over a three-year period in which the club finished 12th, 10th and 16th — really the most grievous offence committed by any club in the Premier League era? It is a legitimate question, even if those clubs relegated over that period are entitled to feel aggrieved that Everton breached the rules in staying up at their expense. Everton, who immediately announced their intention to appeal, called it a“wholly di...

Rangers’ pre-tax loss in 2022/23 slightly increased from £2.2m to £3.1m, as revenue fell £3m (4%) from club record £87m to £84m and other operating income dropped £4m (82%) from £5m to £1m. Rangers’ revenue decrease was largely driven by having no European football after the group stage, which led to reductions in gate receipts & hospitality, down £2m (5%) from £42m to £40m, and commercial, down £1m (6%) from club record £20m to £19m. Broadcasting rose very slightly to £25m. Despite the lower revenue, Rangers still invested more money in the squad, as the wage bill increased £9m (17%) from £55m to a new club record of £64m.   This was partly due to bonuses for Champions League qualification. This means that wages have now grown seven years in a row, nearly quadrupling since promotion in 2016. Rangers’ results were boosted by their best ever profit from player sales of £23.6m, which was more than twice as much as prior year’s £11.2m, mainly due to the club record sale of C...

Despite its success on the pitch — winning both the English Premier League title and Europe’s Champions League — Manchester City consistently loses money at the operating level. Last season, its loss widened by two-thirds to £35.6mn. Over a decade those losses have summed to £334mn, according to data from football analyst Kieran Maguire. The club’s wage bill is one of the highest in the Premier League at £354mn. Its wage to revenue ratio of 59 per cent, though relatively low, has not shifted since 2019. But City, like some other top Premier League clubs, makes tidy profits from trading in players. In the decade through last season, City earned nearly half a billion pounds in this way. This is good news for the owner, Sheikh Mansour bin Zayed al-Nahyan, a businessman and politician from the United Arab Emirates. Crosstown rival Manchester United, the subject of endless takeover speculation, made £150mn from trading in players. These transactions have kept City’s pre-tax profits in...

Inter’s pre-tax loss has significantly fallen from €137m to €77m, thanks to what the club described as “financial rebalancing”. This referred to a combination of increasing revenue, which rose €71m (22%) from €325m to €396m, and reducing costs, which were cut by €54m (10%). The improvement was further boosted by net interest payable dropping by €11m (23%) from €48m to €37m, though it’s worth noting that this is still a huge annual interest burden, which has effectively doubled Inter’s loss from €40m to €77m. So the club took many steps in the right direction, which were more than enough to offset the substantial €77m decrease in profit on player sales from €105m to €28m. Success on the pitch contributed to revenue growth in both match day, which more than doubled from €40m to a new Italian record of €82m, and broadcasting, up €41m (26%) from €156m to €197m. Player loans and other income from player management nearly tripled from €4m to €11m. However, commercial fell €19m (15%) fr...

After many years under the guidance of Delia Smith and Michael Wynn Jones, the Norwich City are increasingly influenced by Michael Attanasio, the owner of American baseball team Milwaukee Brewers. He first purchased a minority stake from former director Michael Foulger last year, but the club has recently ratified the acquisition of many more shares, bringing his shareholding to the same 40% level as Smith and her husband. However, it’s clear that the fans are very unhappy, as epitomised by a very blunt statement from the Canaries Trust. “The completion of the legal process with Mark Attanasio seems to finally be approaching a conclusion, but, from an outside perspective there’s no overall sense of leadership, or direction, and supporters are desperate for some sense of a vision that we can all buy into and move forward together. Norwich City’s pre-tax loss widened from £24m to £27m, as revenue dropped £58m (43%) from the club record £134m to £76m following relegation to the Ch...

Real Madrid’s pre-tax profit in 2022/23 reduced from €20m to €9m, even though revenue shot up €121m (17%) from €722m to a club record of €843m, which comfortably surpassed the pre-pandemic €757m peak, and profit from player sales increased from €62m to €71m. However, all of these improvements were offset by the fact that there was no repeat of the previous year’s €316m capital gain from Sixth Street/Legends. Marketing increased €40m (14%) from €290m to €330m, while broadcasting rose €8m (4%) from €179m to €187m and other income more than quadrupled from €9m to €39m. Real Madrid earned €118m for reaching the Champions League, semi-finals in 2022/23, which was €16m less than the prior season’s €134m, when they were the winners. Real Madrid’s profit from player sales increased from €62m to €71m (€104m gains less €33m losses), mainly thanks to the sale of Casemiro to Manchester United. A number of players left on free transfers, including Gareth Bale, Luka Jovic, Isco and Marcelo. ...

Sheffield Wednesday’s owner Dejphon Chansiri has asked the club’s fans to raise £2 million in the coming days to clear debts and pay wages. The millionaire Thai businessman said he had a problem with “cashflow” and has asked for supporters to bail the club out of their mess, promising to pay them back with interest. The EFL has placed the club, who are bottom of the Sky Bet Championship, under a registration embargo — meaning they cannot register any new players without prior written consent — over money owed to HM Revenue & Customs, and Chansiri revealed that if those debts are not paid in the coming days the club face a three-window transfer ban. Chansiri also said that players and staff may not be paid this month and has called on supporters to help.    In September the Wednesday owner threatened not to invest any more money into the club because he believed he was being treated unfairly by the supporters. Wednesday are nine days into a “persistent default”...

A stake of up to 10 per cent in West Ham United has been put up for sale by Vanessa Gold, the daughter of the club’s late joint-chairman David Gold, and has drawn interest from international investors. Club insiders believe the opportunity may attract an offer from Qatar after Sheikh Jassim bin Hamad al-Thani’s failed bid to buy Manchester United. Ms Gold’s family has a 25 per cent shareholding in West Ham and she is working with the Rothschild bank to sell part of that stake. It is understood that if the price was right, Ms Gold may be willing to sell the entire shareholding. The Czech billionaire Daniel Kretinsky, who bought a 27 per cent stake in the east London club in 2021, is understood to have been consulted on Ms Gold’s decision to sell but he is not expected to buy the shares. Other investors have already been sounded out. David Sullivan retains the biggest stake in West Ham at just under 39 per cent, while the financier Tripp Smith has 8 per cent.

Celtic’s pre-tax profit  in 2022/23 surged from £6.1m to £40.7m, a record for Scottish clubs, though chief executive Peter Lawwell pointed out that this included “some material items of a one off nature” which amounted to £13.5m. This was thanks to a £10.0m business interruption insurance claim and £3.5m compensation received following Big Ange’s departure. Revenue rose £31.7m (36%) from £88.2m to £119.9m, another Scottish record, though profit on player sales more than halved from £29.0m to £14.4m. The main reason for Celtic’s revenue increase was participation in the Champions League, as opposed to the prior season’s Europa League. This resulted in healthy growth in both broadcasting, which more than doubled from £13m to £31m, and match day, up £8m (18%) from £43m to £51m.   To complete the “financial treble”, commercial also rose £6m (18%) from £32m to £38m. Celtic have posted profits seven times in the last eight years, the only exception being the COVID-impacted los...