The Political Economy of Football V2

Regulators in the US states of Utah and South Carolina are moving to force five insurers to cut their exposure to the Miami investment firm 777 Partners, according to an official memo seen by the Financial Times . Their demands are intended to protect retirees, widows and orphans relying on annuities and other products from the insurers. They mark the latest fallout from a dealmaking spree in which 777 has bought sports teams around the world and come as it is bidding for Everton.  The potential for forced sales of investments comes as 777 is under heightened scrutiny and faces multiple lawsuits from creditors. Initially, 777 Partners made its money in esoteric corners of finance such as structured settlements. Its bid to buy Everton, the nine-time English champions, from British-Iranian Farhad Moshiri has pulled it into the spotlight, drawing scrutiny from local politicians, journalists, insurance analysts and regulators. It is unclear how 777 Partners will fund a takeover...

Everton have reported greater losses than anticipated in their 2022/23 accounts, increasing the likelihood of a further points deduction. Since Farhad Moshiri bought Everton, the club has lost more money than any other in the Premier League, despite making a profit in the first year on the back of selling Romelu Lukaku, reports football finance guru Kieran Maguire.   Losses over last three seasons £255m Losses up due to no longer having Usmanov sponsor deals, wage cut modest anf interest costs doubling.     Stadium build costs are excluded from losses. Cash balance down as club dealing with significant monthly demands in terms of meeting payroll and new stadium costs. Total losses over the years now £550m Revenue £172m up 5%.   Wages £159m down 2%.   Manager/coaching payoff £7m. Executive pay off £2.5m.   Loss pre player sales £130m.   Pre tax loss £89m.   Player signings £91m. Player sales £61m. Everton was spending cash of more th...

 AC Milan’s record-breaking sale by Elliott Management in 2022 was proof the football club had completed a remarkable turnaround under the US hedge fund’s stewardship. The Italian team was sold to private equity group RedBird Capital Partners for €1.2bn, the highest price paid for a club outside the English Premier League. It was once again winning Serie A titles and competing in the lucrative European Champions League.  L ast year, it made its first profits in more than two decades. But police raids earlier this month have dragged AC Milan back into a messy battle of wills pitting Elliott, the notoriously combative $65bn fund manager, against Blue Skye, a investment firm run by two longtime former partners of the hedge fund and which owned a small stake in the club before the sale. The two Italian financiers behind Blue Skye have claimed the hedge fund violated their minority shareholder rights by signing the RedBird deal, and have raised questions over whether Elliott st...

The vast majority of National League clubs have published accounts now for 22/23, reports football finance guru Kieran Maguire. Few clubs have published full details, but of those that have, there is a big difference. Over the years, the companies that own NL clubs have lost over £140 million between them. Only two clubs have made a profit in the National League and overall the losses for the season were over £21 million (Southend figures from 2021 and nothing for York ) Only five clubs signed players for fees.    At end of season only five clubs had squads that cost transfer fees. Yeovil Town lost £1.5m in 22/23 when the club was relegated from the National League.    Yeovil are funded by loans from owners and Sports Council.  

As the deadline approaches, clubs are filing accounts at a fast and furious pace.   Thanks to Kieran Maguire for this data.  Fleetwood Town lost more than £6m in 22/23, taking total losses over the years to nearly £31m.  Fleetwood owe other parts of the Pilley empire over £31m in terms of interest free loans advanced to the club. Burton Albion, one of the most sustainable clubs in the pyramid, lost just over £1m in 22/23. Player sale profits reduced these losses to £133k Burton bought players for £200k in 22/23 and had sales, presumably of Bosman or academy players, of £973k.    Peterborough United   have submitted their   accounts: Revenue £10m up 42%. Wages £7.7m up 15%. Underlying loss pre player sales £5.4m.   Player purchases £775k. Player sales £4 million.

There may be light at the end of the tunnel for fans of Reading FC, one of the oldest clubs in football. Last week we brought you the sorry tale of the Chinese-owned team, where unpaid bills and mounting debts have left it in full-blown crisis. Its troubles are symptomatic of the broader financial woes facing English football, and help explain why the British government is seeking to regulate the game. This week there was a breakthrough when Reading owner Dai Yongge said he had entered exclusive talks with a potential buyer, who Bloomberg later identified as Chiron Sports Group. The Switzerland-based firm is backed by money from Christian Angermayer, a German entrepreneur with interests varying from AI and cryptocurrencies to biotech and psychedelics. Sell Before We Dai, the fan campaign group that has long been pressing for a sale, described the start of the formal talks as “a good day”. Let’s see what happens.

Northampton lost over £1m in their promotion year from League Two and debt increased to over £7m.  Title winners Leyton Orient lost over £4m:  https://www.northamptonchron.co.uk/sport/football/thomas-comfortable-with-cobblers-financial-position-despite-higher-losses-and-increased-debt-4573035

Wrexham lost over £5m when they won promotion last year although turnover was up by 75 per cent.  There appear to have been substantial cash injections by the Hollywood owners:  https://www.wrexham.com/news/turnover-up-75-as-wrexham-afc-say-losses-shouldnt-be-repeated-as-payroll-nears-7m-249336.html It means co-owners Ryan Reynolds and Rob McElhenney oversaw a loss of a little over £8m in their first full two seasons at the helm. An increase in the wage bill during the 2022-23 title-winning season partly explains the increased losses, as total salaries rose from £4.05m the previous year to £6.9m. Among the income streams that rose significantly were retail, which brought in £3.4m compared to £1.3m in the 2021-22 campaign.    Sponsorship and advertising also rose sharply to £1.88m (up from £1.05m), while football revenue almost tripled to £1.3m (from £531,000) in 2022-23. The latter increase can largely be attributed to Wrexham’s run in the FA Cup. Wrexham’...

Blackpool have submitted their 22/23 accounts: Revenue £17.3m up 13%.  Wages £13.5m up 16%. Underlying loss was £3.2m. Player purchases £1.7m. Player sales £3.3m, giving a small surplus. Blackpool losses low by Championship standards, which average £20m before player sales.   Blackpool have cash in the bank, losses over the years less than £10m. All three main sources of income for the year were up.    Main costs player related. Amortisation (transfer fees spread over contract up 50%. Average first team wage was £6k a week, half that of Championship average.   Highest paid director £334k Blackpool finished season with a squad costing less than £4m.   Blackpool funded mainly by parent company to whom it owes almost £16m

Huddersfield Town have submitted their 22/23 accounts, repots Kieran Maguire.  Revenue up £18.1m or 42%.   Wages £21.5m up 6%. Underlying loss £16.2m (hardly any Championship clubs make a profit).. Player purchases £3.1m. Player sales £9m.  Revenue down in 22/23 as payments finished. This caused losses to increase 5x as costs maintained. Player sale profits and covid claim reduced losses to £5m Huddersfield have cash in bank. Whilst total liabilities are over £62m majority is due to parent company. Losses over the years are £32m Running club on day to day basis Town spent over £11m cash in 22/23. Player sale receipts and net borrowings of £9m in the year funded this deficit. Wages up in year. Average first team weekly wage £10k, below Championship average of £12-13k. Town bought players in year for £3m which meant squad cost at end of season was just over £4m Town have no external borrowings. Loans from parent interest free and total £50m. In depth analysis ...

It’s not so long ago that Stoke City were a solid mid-table Premier League club.   The regression has been stark. Stoke have won just 12 of their 43 home games in the Championship since April 2022 and concerns over how this season ends simmer.   Relegation to English football’s third tier, a level they have not seen since the 2001-02 season, cannot be discounted as two points split Stoke from the Championship’s relegation places with eight games left.    There they could encounter Port Vale from Burslem, although they may well be relegated. This, almost certainly, will be Stoke’s sixth consecutive season ending in the Championship’s bottom half. Two finishes of 14th (2020-21 and 2021-22) are as good as it has got since relegation from the Premier League in 2018. The average gap to the team finishing sixth, and so taking the final play-offs place, in the five completed seasons has been almost 16 points. In the current one, they are 20 adrift of six...

The format of UEFA’s competitions will change next season with more teams taking part and more games being played.   The new distribution formula is complex and not easy to understand, but it does look like another case of ‘to him who hath shall be given’. One very important point is the quiet revolution in the distribution mechanism, as two of the previous elements, namely the TV pool and UEFA coefficient, have been combined into a new “value pillar”. The maximum amount a club could earn in prize money in the Europa Lague, including the participation fee, has increased by €9m (40%) from €24m to €33m. Basically, if a team wants to earn good money in this competition, it needs to go deep, as the money earned in the latter stages is quite high. In the Conference The maximum amount a club could earn in prize money, including the participation fee, has increased by €3m (20%) from €16m to €19m Before we estimate what could be earned by a club next season, let’s remind ourse...

Last week Manchester City announced an average season ticket price rise of five per cent — with some as high as 11 per cent  During conversations between  The Athletic  and supporters’ groups, complaints about the club’s ticket costs have crossed over into other concerns, including: Limited impact of fan feedback at the club Increased ticket prices and controversial sales criteria for matches Flat atmospheres at the Etihad Stadium A boycott of the official ticket resale platform Concerns about the new ‘flexi-gold’ season ticket initiative Increase to a minimum-attendance clause on season tickets All four main City fan groups — the Official Supporters Club, the 1894 Group, MCFC Fans Foodbank Support (FFS) and City Matters, the club’s fan engagement programme — voiced their opposition to the increases. Justifying the decision to increase the cost of season tickets, City pointed out that they offer season tickets starting at...

Bournemouth have announced their 22/23 accounts which show the impact of promotion to Premier League. Revenue was up £141m.  Wages were £100m up 61%.  Underlying loss was £21m up 62%. Player purchases £130m.  Player sales £2.5m.   Owner and other loans £136m. The club did, however, show an operating profit:  https://www.bournemouthecho.co.uk/sport/24208748.afc-bournemouth-announce-profit-44-5m-annual-accounts/ Football finance guru Kieran Maguire comments: ' Bournemouth bought players for £130m and ended up at 30 June 2023 with squad costing £278m. Suspect this will be higher than that of Forest who started season with squad costing £12m and had net spend of £143m, but were given a points deduction.'

Portsmouth look to be on course for promotion from League One.  But as we all know the Championship has the craziest finances of any division and probably of any league anywhere.   Parachute payments prevent a level playing field and clubs overspend in what is n effect a Premier League Division 2. I'm certainly not saying that Portsmouth will be the new Rotherham, but any promoted club faces new challenges, even though Fratton Park is in great shape:  https://www.bbc.co.uk/sport/football/68663734

A growing sense of division within Chelsea’s fanbase took a fresh twist today with the club’s Fan Advisory Board criticising the letter released by the Chelsea Supporters’ Trust last week. Chelsea came under more negative scrutiny after the CST put its recent correspondence with the club out into the public domain. In a strongly worded letter addressed to co-owners Todd Boehly and Behdad Eghbali, they claimed the bond between fans and the club was the “lowest since the early 1980s”, that there was “a fast-growing lack of trust due to severely limited communication” and warned it “could result in irreversible toxicity with more targeted chanting and impactful forms of protest”. FAB, an initiative set up by the Todd Boehly-Clearlake consortium comprising seven lifelong Chelsea fans to improve communication between supporters and the club, has released a statement making it clear it does not agree with the CST’s version of events. The FAB states: ‘significantly more resources ...

Now we need lawyers for Subbuteo as well as accountants One of the biggest dilemmas for commentators on contemporary football is the issue of points deductions for breaking financial fair play rules.   Fans of penalised clubs argue that they are the ones that suffer rather than those at the top who have made poor management decisions.  And what about Manchester City, they ask?    All in good time: the charges are so numerous and complex that they are going to take time to resolve, not to mention the court battles that will follow.   Once again, the real winners will be the lawyers. The PSR rules are intended to maintain the integrity of the competition, so would it be fair that clubs who breach the limits should be allowed to do so with impunity, while others respect the rules? To extend Jean-Paul Sartre’s famous quote, “In football everything is complicated by the presence of the opposite team… and PSR”. The harsh reality is relegation could be decid...

In today's Financial Times football (and many other things) guru Simon Kuper reviews Alex Duff's book Smart Money: the Rise and Fall of Brentford FC published by Constable at £22. Here are some excepts from his review: 'One day in 2005, when little Brentford Football Club were threatened with administration, a man named Matthew Benham phoned the club offices asking how he could help. He ended up making an anonymous loan. Benham, an unflamboyant professional gambler who grew up supporting Brentford, went on to use statistical insights to lift the west London club up the divisions to the Premier League. Founded in 1889, Brentford were for almost all their history a suburban neighbourhood club. They drew their support from the white working-class streets around Griffin Park, their ground until 2020, which had a pub on each corner. They had a brief heyday in the then first division either side of the second world war, marked by an ill-judged tour of Nazi Germany in 1937. Afte...

The recent travails of Reading FC, founded in 1871, have been held up as a case study as to why regulation of football is needed, after an ambitious owner overspent and underdelivered, leaving the club with unpaid bills, points deductions, relegation and the threat of collapse. “Football is currently organised as a casino and it attracts gamblers,” Greg Double told the Financial Times speaking as, part of the campaign group Sell Before We Dai, which has been urging a sale of the club. “We got a bad one.” Perhaps unintentionally, his reference to a casino echoes Susan Strange’s famous book Casino Capitalism which was one of the founding documents of the study of international political economy, suggesting from a non-Marxist perspective that risky speculation was endemic in capitalist economies. Reading was acquired in May 2017 by Dai, who made his fortune in China turning air-raid shelters into shopping centres, and his sister Xiu Li Hawken. The paperwork was signed just days before...

The Premier League’s statement this week said it had referred Leicester City to an independent commission for an alleged PSR breach and for failing to submit their audited financial accounts to the league for the 2022-23 season, when they were still in the Premier League. The Premier League has yet to see the accounts — although they were submitted to the English Football League earlier this month — and Leicester believe they do not have to share them with the Premier League as they are now an EFL club and therefore not bound by the top flight’s new December deadline brought in after Leicester were relegated in May 2023. It seems from Leicester’s statement yesterday that they are up for a fight on this, unlike Forest, who opted for a path-of-least-resistance approach to have their penalty reduced for good behaviour. Leicester’s legal team, led by Nick De Marco, has already written to both leagues warning them that they will ask for a Rule K arbitration hearing (the FA sy...

The Football Supporters Association notes: ‘There's a rising tide of anger around ticket prices (and related issues) with the latest bouts coming from supporters' groups at Chelsea and Manchester City. It follows on from other examples at Arsenal, Fulham and Spurs. This issue is not going away and we back our members campaigns. The 1894 group at Manchester City commented: ‘To hell with the legacy fans who carried the club & concentrate on the global fan base amd charge stupid amounts for match day prices/ packages. The price of everything amd the value of nothing.’ The increases have not necessarily been above recent inflation rates and recent accounts show big rises in club's operating costs which include utilities.  They also compare well with West End theatre prices which I can no longer afford. However, one wants access to football not to be limited to the well off.  Having said, even third tier non-league football is not cheap.

Ipswich Town have sold forty per cent of the club to a US private equity company Bright Path Sports for £105m:  https://www.itfc.co.uk/news/2024/march/22/press-release-bright-path-sports/ They manage a public sector pension fund in Arizona. They raise and deploy Native American capital:  https://www.brightpathsports.com/

Leicester City have been charged with breach of the Premier League's financial rules.   This is in addition to a probe they are facing from the Championship:  https://www.bbc.co.uk/sport/football/68580638 In their response Leicester imply that there may have been an unlawful exercise of jurisdiction by the football authorities.   I do not know what they have in mind here, although there has always been an unresolved and untested question about the compatibility of football governance rules with competition law.  Admittedly, EU competition law no longer applies, but domestic law remains in place. Fans inevitably bring up the case of Manchester City when another club is charged.   The sheer number and complexity of the charges against them mean that a judgment is unlikely before the autumn.   Any adverse judgment would then go to appeal which would probably not be resolved until the spring.  Also City have some of the best lawyers. Th...

Wycombe Wanderers lost almost £3 million in 22/23 as total losses over the years  upto almost £10m, reports football finance guru Kieran Maguire. Wycombe did not sign any players for fees in 22/23. Maguire states that it looks as if Wycombe’s losses in 22/23 were funded by £600k of fresh shares and about £2m from ‘other creditors’ which could be from the owners.

Warwickshire is covered by what looks like clag off the North Sea this morning, but it may clear later to reveal increasing patches of blue sky, offering an analogy to Coventry City’s revival. I was being driven through the Black Country on Saturday listening to the FA Cup match and an obvious Wolves supporter in a car in front pumped the air when they scored.    The Sky Blues, of course, went on to win a trip to Wembley.   The score was 2-1 when my partner's daughter popped into Aldi to buy some flowers and 2-3 when she came out. The 2022/23 were the final accounts of Coventry’s previous owners, after local businessman King took ownership of the club in January 2023, initially through the acquisition of an 85% stake and then buying the remaining 15%. The previous owners, London-based hedge fund SISU Capital, had saved the club from administration in 2007, but came under fire from many supporters for their penny pinching approach in subsequent years. During t...

American owners are keen to buy up English football clubs, but may not realise the scale of the challenge, particularly at a leading club. Chelsea fans have warned Todd Boehly and Behdad Eghbali that a lack of clear direction at the club could lead to “irreversible toxicity” among supporters and they have threatened “more impactful forms of protest” if the situation doesn’t improve. In a damning letter written on March 8 to the club’s co-owners, the Chelsea Supporters’ Trust (CST) said it “would like to highlight and address some serious supporter concerns and the disconnection felt by supporters towards the majority of the team, the manager, the club ownership and the board.” Chelsea came 12th in the Premier League last season, their lowest league finish in 29 years, and they are 11th this term, 17 points adrift of the top four. Fans have regularly vented their frustration at Stamford Bridge this season, including during Sunday’s chaotic FA Cup quarter-final win over Leicest...

Nottingham Forest face having to sell one of their star players before the end of June or risk another points deduction next season for breaching financial rules, even if they are relegated. The judgment of the independent commission which imposed a four-point deduction on Forest for breaching permitted losses in the three years up to June 30, 2023, reveals they are at risk of being in breach again this season. It would mean Forest having to make about £30 million in profit from selling players. They do have names that would command large fees such as Morgan Gibbs-White, the 24-year-old attacking midfielder. Forest’s own calculations, disclosed in the findings, show they made a loss of £40 million in the 2021-22 financial year (FY22) when they won promotion from the Championship via the play-offs, £52 million in FY 23 and, according to the judgment, are “projecting to realise losses of approximately £12-17 million for the year ending June 30, 2024”. That total loss ove...

Google DeepMind has developed a prototype artificial intelligence football tactician in collaboration with Premier League club Liverpool, in the latest push to use the technology to master the ebb and flow of big-money sports. The computerised coach’s suggested improvements to players’ positions at corner kicks — a large potential source of goals — mostly won approval from human experts, “What’s exciting about it from an AI perspective is that football is a very dynamic game with lots of unobserved factors that influence outcomes,” Petar Veličković, a DeepMind researcher and co-author of the Nature paper, told the Financial Times.   “It’s a really challenging problem.” The DeepMind project is the product of three years of work with Liverpool on deploying AI, including in areas such as penalty kicks and predicting movements of players. DeepMind’s latest model uses geometric deep learning on a data set comprising 7,176 corner kicks from the English Premier League between 2020 a...

Manchester United have announced financial results for the first half of 2023/24, incorporating the first six months of the season which cover July to December 2023, in other words before Sir Jim Ratcliffe’s purchase of a minority stake. Manchester United’s pre-tax loss narrowed from £25m to just £6m, as revenue increased by £72m (23%) from £311m to a first half record of £383m and profit on player sales more than doubled from £14m to £30m.   However, this was accompanied by operating expenses rising £52m (16%) to £383m, while net interest payable also increased by £16m (85%) from £19m to £35m. The revenue growth was driven by the return to the Champions League, which drove large increases in both broadcasting, up £52m (55%) from £94m to £146m, and match day, up £24m (47%) from £51m to £75m.   This was partially offset by lower commercial, which fell £4m (2%) from £166m to £162m. The impact of interest payable on United’s accounts is striking, amounting to £35m in the fi...

For the second time this Premier League season, a points deduction for breaching its profit and sustainability rules (PSR) has dragged a club down the table and into the relegation zone. First it was Everton, whose initial 10-point penalty last November was recently reduced to six on appeal, and now it is Nottingham Forest. A four-point deduction, confirmed by the Premier League on Monday has pushed Nuno Espirito Santo’s side from 17th to 18th, suddenly a point adrift of safety. This is what a Premier League commission called a “significant” breach of PSR. Forest were allowed permissible losses of £61million ($77.6m) as a promoted club in 2022-23 but were found to have exceeded that threshold for a three-year period by the very precise sum of £34,536,000. Forest have never contested the breach, either at the point of charge or during a two-day hearing held this month in London, but always maintained that the “uniqueness” of their situation warranted lenien...

Manchester United will be hit with a £10 million penalty every time they fail to qualify for the Champions League under the terms of their new £90 million-a-year kit deal with Adidas. The clause will come into force from next year and is a change to the existing deal, whereby United were only penalised if they did not qualify for the competition for two seasons in a row. The original ten-year deal, worth £750 million, expires in 2025. The new one runs until 2035 and the details were included in United’s half-yearly financial accounts, released this week. Bonuses up to a maximum of £4.4 million a year will be paid should either United’s men’s or women’s team win “the Premier League or Women’s Super League respectively, FA Cup or continental competitions”. The original penalty clause was never invoked, as United never missed out on the Champions League for two consecutive seasons, but had they done so it would have prompted a 30 per cent deduction, worth about £22 million. Th...

Nottingham Forest are expecting to discover their profit and sustainability (PSR) fate on Monday.  A hearing to decide on what punishment the club will face for breaching PSR regulations was held last week, on Thursday and Friday. It remains unclear exactly what punishment Forest will receive for the breaches — which came during their first season back in the top flight, in 2022-23 — but they will have until April 15 to decide whether they wish to appeal the verdict reached by a three-person independent panel. The six-point deduction Everton have received (reduced from 10 points on appeal) for similar breaches is regarded by some as a potential bellwether for what Forest can expect — but nobody knows for certain what will happen. If they do appeal, the backstop for that process to be completed would be May 24, five days after the end of the Premier League season. Everton are also still facing a second round of charges, stemming from breaches during the 202...

Building a new stadium is expensive. That is a key factor behind the Glazer family’s decision to sell a 25 per cent stake in Manchester United to Sir Jim Ratcliffe — the British billionaire and founder of petrochemicals giant INEOS — in February after a year-long negotiation. The cost to rebuild Old Trafford has been estimated at £2billion ($2.5bn) and a task force has been created by the club to discuss, among other things, where that money is going to come from. More debt being added to the club to fund a new stadium or the redevelopment of Old Trafford is a viable option and one that decision-makers will seriously consider. It is still a good stadium but it has needed significant investment for two decades and has fallen behind other Premier League venues in terms of modernity. The roof is leaky, the chicken isn’t cooked properly and a club of United’s size and stature should have a state-of-the-art home. The cost of building a new Old Trafford h...

Amid the fanfare of Michael Edwards’ appointment as Fenway Sports Group’s (FSG) chief executive of football on Tuesday was an acceptance that Liverpool need to change.  A new era without Jurgen Klopp will now be crafted by Edwards, Liverpool’s former sporting director, and included in the plans are the ambitions to invest in a partner club. The multi-club ownership model is coming to Anfield, with Edwards believing Liverpool have little choice but to expand if they are to “remain competitive” in the Premier League and beyond. It is a clear shift in strategy for Liverpool, a club that has so far gone it alone in contrast to many of their big rivals.    Well over half of the 20 English top-flight clubs now have relationships with at least one other European club and the pattern has been extended in the past 12 months. It has long been mooted that FSG was open to buying another football club to run alongside Liverpool. There were links to ...