The Political Economy of Football V2

  Exeter City's chairman says that the Grecians have overcome the financial issues they faced last season.  However, they are operating on a restricted budget in League Two:  https://www.bbc.co.uk/sport/football/articles/c4gjk3834nqo

I have always been sceptical of the viability of the fan ownership model in professional football and the recent experience of AFC Wimbledon and Exeter City confirms this.  Exeter City badly need external investment to survive and flourish:  https://www.devonlive.com/sport/football/football-news/exeter-city-external-investment-necessity-10940501

As Exeter City emerges from a financial crisis which has led to budget cuts, it is evident that there have been offers of external investment.  This interview with the interim chairman illustrates some of the limitations of the fan ownership model:  https://www.devonlive.com/sport/football/football-news/exeter-city-open-investment-offers-10872138

The financial troubles at fan owned Exeter City continue:  https://www.bbc.co.uk/sport/football/articles/c3ede8g785zo The club has a good record of developing players in its Academy and selling them on, but there are obvious risks in a financial model based on player sales.   Of course, many big clubs are also very reliant on player sales, but they also have other substantial revenue streams they can draw on. I have always been sceptical about the financial viability of fan ownership - AFC Wimbledon are in an affluent part of a global city and even they have been looking for outside investors. You either need a benefactor (e.g.., Brighton) or a private equity company willing to take risks to make a capital gain. Consider this announcement made today which confirms the interest of finance capital in sports teams.  Arctos Partners has been one of the most prolific purchasers of sports assets including a minority stake in Liverpool FC. Today the private equity firm KK...

I have always been a sceptic about the idea of fan owned clubs.  It's not just a question of the lunatics running the asylum: one can usually find well qualified lawyers and accountants to sit on the board.  However, even if fans can raise the purchase price of a club in administration, they find it difficult to sustain the losses needed to secure success on the pitch and a downward spiral on and off the pitch can often result.. Exeter City has been referred to as the glowing example of a fan owned club, escaping from the clutches of the administrators, albeit with the benefit of some lucrative FA cup games. Yet they raised their playing budget by £1m in two years while everyone else in the league was raising it by £3m or £3.5m.  The highest playing budget in League One is £19m.  The Grecians are currently fifth from bottom.   General manager Clive Harrison admitted that it was not possible to guarantee selling a player each year to fill the financial gap. ...

Fan owned Exeter City are having to make £1m in cutbacks as the League One club encountered cash flow problems:  https://www.devonlive.com/sport/football/football-news/exeter-city-make-1m-cutbacks

The English county of Devon is in the spotlight, with two of the best three teams in the country making the long journey south-west in the FA Cup fourth round. I lived in Exeter for two years and never felt more disconnected from football.   For some, rugby union is more synonymous with the area than football — the Exeter Chiefs won the Premiership in 2017 and 2020 — but dig beneath the surface and look beyond the stunning coastline, popular tourist hotspots and cream teas and you will find an area that has forged its own footballing culture. Devon’s two English Football League (EFL) clubs have never been in the top flight and neither have won a major trophy. Plymouth are bottom of the Championship, while Exeter are 18th in League One. Torquay United have a proud heritage but are now in the National League South, the sixth tier, after falling on hard times. Devon is the fourth-biggest county in England by area, but it is sparsely populated.    The fact Dev...

Exeter City's manager sets out the case to changes to the FA Cup:  https://fanbanter.co.uk/exeter-manager-gary-caldwell-explains-hes-saddened-by-changes-made-to-the-fa-cup/ As a supporter of a League One club myself, I did not see why replays had to be scrapped in the first or second rounds as leading clubs are not involved then. However, Í am suspicious of the argument that a FA Cup run or even a replay can 'save' a lower league or non-league club.   It may benefit particular clubs at particular times, but it's a lottery.   It is not a systematic source of revenue. The Cup remains the FA's biggest single source of revenue.   However, there is always the risk of the bigger clubs pulling out and further devaluing the competition.   I am finding the new Champions League format (and Europa League and Conference), if a bit baffling, also more exciting.   

The decision to scrap replays in the FA Cup has attracted widespread criticism, not least from fans, and it is difficult to see why it is necessary in the first or second rounds.   However, revenue and morale boosts for lower league clubs are not systematic and depend, literally, on the luck of the draw. When I was growing up winning the FA Cup was in some ways a bigger deal than winning the league, but that is no longer the case and sentiment clashes with the reality of modern football business.  Some fans hope that a regulator will be able to intervene in decisions like these in the future. Nigel Clough appreciates more than most how integral they can be.   In the winter of the 2005-06 season, he was seven-and-a-half years into a decade as manager of Burton Albion when the then non-League club landed a third-round tie at home to Manchester United. That game finished goalless, earning Burton — who had moved into their new Pirelli Stadium a year earlier — a ...

The Fair Game Index has rated the top 92 clubs in the pyramid through 80 different touchpoints across four criteria: Financial Sustainability, Good Governance, Equality Standards and Good Governance. At the moment over half of England’s top 92 clubs are technically insolvent, and a majority of Championship clubs are spending more than they earn on players’ wages. AFC Wimbledon emerge as England’s best run club with an overall score of 73.58 out of 100. The Premier League’s top club are Brentford.  Championship side Plymouth Argyle boast a perfect score in the Financial Sustainability metric, whilst League One’s Cambridge United set the standard for Good Governance. Exeter City are the highest scorers for Fan Engagement, with Lincoln taking the honours for Equality Standards. In fact, clubs in Sky Bet League’s One and Two scored higher overall across all four criteria than their counterparts in the Sky Bet Championship. The top three clubs for financial sustainability are ...

I am old enough to remember when floodlights were an innovative novelty and games in midwinter finished in near darkness.   These days we take them for granted, but energy price rises have focused attention on their cost. Exeter City chairman Julian Tagg, like many executives in football, knows that hard times could be on the horizon amid the cost of living crisis this winter. As energy bills soar for clubs and fans, the margins will get even tighter for EFL and non-League clubs. “Every club has a huge dependence on bums on seats,” Tagg says, with Exeter having made an impressive start to life in League One after promotion last season. “Lots do great work but you’re only as good as the number of bums on seats at our level. Everyone is going to feel that. Cashflow is king and many football clubs have to walk a tightrope on that front.” League Two Mansfield Town have announced that their upcoming home match against Walsall on October 15 will be moved to an earlie...

Most EFL clubs regard themselves as being in a weaker financial position than in March when lockdown was imposed and Leagues One and Two were curtailed.  That allowed clubs to furlough most of their staff and take advantage of deferments on VAT and PAYE payments, as well as fees to the league. Advances in payments from the EFL and solidarity payments from the Premier League also helped them to stay afloat.  The decision to end the League One season early saved Bristol Rovers around £500,000. Over the past six weeks staff were redeployed in the expectation that substantial crowds would be returning from October 1st.   It was hoped that 30 per cent of stadium capacity could be used which would be near average attendances for some lower league clubs.  However, that hope is now very much in doubt.  If crowds were limited to 1,000, it would hardly offset the resultant increase in overheads. Costs are ramping up again with HMRC looking for its deferred money alon...

The latest accounts for Exeter City have come out. They are in the small company format, so there is limited information, but they lost £792,000 in a year. However, they only owe money to the Supporters' Society who are an industrial and provident trust and the sole owners. One challenge for Exeter is they are in a city with a very successful rugby union side. The surrounding area has a high retired population who may not be inclined to come to matches and/or have allegiances to up country clubs. Accrington Stanley are having a very successful season, but they are sandwiched between a Premier League club at Burnley and Blackburn Rovers that fell on hard times, but are now reviving. A Burnley fan tells me that some of their fans do treat Accrington as a second club if they want to see a game when the Clarets aren't playing. In 2016/17 they had the lowest average home attendance in League Two at 1,699. The figure for Exeter was 4,166. Lower league clubs are very reliant ...