The Political Economy of Football V2

Posts

Porto decide to splash the cash

From his Zurich eyrie, the authoritative Swiss Ramble turns his attention this week to Porto who have changed their strategy. Here is a summary of his main conclusions, much more on his Substack page. Porto have started the season in great form, at least domestically, where they have won their first eight games in the league, though results have not been so impressive in the Champions League, as they have lost both games to date. There has been a marked change in strategy, as the club chose to spend heavily on strengthening the squad and retain some of its talent, as opposed to its usual approach of selling players to balance the books. The “significant investment made to restore sporting competitiveness” clearly paid dividends in the league, but it was also reflected in Porto’s financials, as they swung from the club record pre-tax €45.0m profit to a €20.3m loss, a significant year-on-year deterioration of €65.3m. Porto’s €20.3m pre-tax loss was actually the worst in...

Sunderland's financial boost

Sunderland could get a big financial boost from the Europa League, although there is always the rsik of their domestic performances being affected by the additional demands: https://www.sunderlandecho.com/sport/football/sunderland-afc/sunderland-europa-league-prize-money-financial-boost-9291882

Goebbels row leads to it all kicking off between Real and La Liga boss

Spain is facing a closely fought and arguably historic general election, but probably most football fans are more interested in a clash between Real Madrid and the president of La Liga. With one branch of my family now resident in Spain and my great-granddaughter likely to become a Spanish citizen, I have been reading up on the country’s politics and history. My preliminary conclusion is that some of the rows in football have deeper historical roots in a country that was wracked by a civil war. Real Madrid have demanded the “immediate resignation” of La Liga president Javier Tebas after he likened the approach of the club’s management to that of Joseph Goebbels, the Nazis’ infamous propaganda chief. (Nazi Germany gave active support to Franco during the Spanish Civil War). Madrid described Tebas’ remarks as “deeply offensive” and “morally repugnant”. Madrid said they disqualified him from continuing to hold his positions as head of the Spanish to...

Newcastle and Villa both hit by PL rules but have different responses

One issue that has surrounded financial fair play rules is whether they are really designed to protect the position of existing top clubs and prevent well-funded aspirational clubs breaking through the glass ceiling. If that could be shown to be the case, the courts could rule that the Premier League’s rules are a breach of competition law by a private entity that has facilitated cartel activity. Newcastle host Aston Villa, a meeting of the division’s aspirational interlopers, who both recently ended long waits for silverware and each qualified for the Champions League twice. Both have found their pathways blocked by more stringent rules than those faced by City. Newcastle’s takeover, which was led by Saudi Arabia’s Public Investment Fund (PIF) and completed in October 2021, brought an immediate stiffening of the Premier League’s rules, with fellow clubs concerned they would use their extraordinary wealth to game the system. Having spent big in a bid to avoid relegatio...

Should clubs be borrowing against players?

I know that I am old fashioned kind of guy and that I don't fully understand high finance. Nevertheless, at a time when many football clubs are technically insolvent, the idea of borrowing against players concerns me. After all, they can get injured or just lose confidence. Private credit funds are targeting football’s biggest transfer market with a push to extend loans to English clubs based on the value of their players, as increasingly exotic financing filters into the sport. Discussions over so-called squad-value financing are picking up among English clubs and their lenders, according to several specialist football advisers. The novel loans are sized according to the value of a club’s playing squad and sometimes involve the lender only taking security over hypothetical receivables from potential player sales, the people said. London-based sports finance firm 23 Capital, which was wound down during the Covid-19 pandemic, has relaunched with squad-value loans as a core ...

Solidarity deal could create new cliff edge

The English Football League (EFL) and Premier League are now only £27 million apart from agreeing a comprehensive new financial solidarity package for the men’s game after years of stop-start talks. While there are still some other details to decide, the EFL has told the Premier League it will accept the so-called New Deal for Football if the latter ups its latest offer of an extra £180m a year in solidarity payments to £207 m annually, with the additional amount ring-fenced for Leagues One and Two. Under the terms of the last solidarity deal the leagues agreed in 2019, the Premier League currently shares 13 per cent of its £4billion-a-year media-rights income with the rest of the game, just over £430 m a year. Of that sum, more than half goes to half a dozen or so clubs recently relegated from the top flight in the form of parachute payments, with just over £140 m shared between the rest of the EFL’s 72 clubs in solidarity payments and a similar sum dished out to fund communi...