The Political Economy of Football V2

Kieran Maguire of the PriceofFootball has produced some interesting figures on infrastructure spend by Premier League clubs over the last ten years.   In essence this relates to stadiums and training grounds. Not surprisingly Tottenham Hotspur has spent the most, a total of £1,502m which has got them a new stadium. Manchester City have spent £379m, probably a lot of that on adjacent facilities.   Brighton are the club outside the top six that have spent the most (£159m).   Upgrading Anfield has cost Liverpool £153m. Arsenal have spent £116m.  What is noticeable is that relatively little has been spent at Old Trafford (£94m) where a stadium upgrade is overview and the training ground is looking tired.  Chelsea have spent £92m, probably most of that on the training ground.

This is a shortened version of an article that originally appeared in the Charlton fanzine, Voice of the Valley. We are constantly told that football is all about opinions, although in practice modern recruitment and coaching is increasingly driven by in depth data analysis.   However, some of the debate surrounding football uses terminology in a rather loose way, perhaps once again demonstrating that it is a unique part of society and the economy. One example which is the theme of this article is the use of the term ‘big’ club.   It is unclear what qualifies a club to be described as ‘big’, other than in the eyes of its supporters who are always ready to claim the title.    Some supporters say their club is 'massive'. The top six In reality the only clubs that are truly massive are the ‘top’ or ‘big’ six that dominate the Premier League and English entry to the Champions League (Arsenal, Tottenham Hotspur, Liverpool, Chelsea and the two Manchester clubs). ...

National Basketball Association chair Larry Tannebaum has been revealed as one of the backers of Stephen Pagliuca's bid for Chelsea.  Pagliuca is a private equity billionaire and co-owner of the Boston Celtics basketball team. Other backers include former Disney chief executive Bob Iger and his journalist wife Willow Ray along with Facebook co-founder Eduardo Saverin and his wife Elaine Saverin. In February Pagaliuca led the acquisition of a majority stake in Atalanta.  Tannebaum  chairs Maple Leaf Sports and Entertainment ice hockey team and the Toronto Raptors basketball outfit. Whatever the outcome American investors will soon own four of the six top six clubs.

Only Kieran Maguire knows as much about English football finances as the authoritative Swiss ramble.   From his Zurich bunker, he considers the finances of Chelsea as the club is put up for sale. Abramovich is surely worried that the government will try to freeze or seize his assets, due to his alleged links to Russian president Vladimir Putin. He is not yet on the list of oligarchs being sanctioned, but if he were added, he would almost certainly be unable to sell.    [WG: they are giving him some rope because they do not want to run a football club or annoy Chelsea fans, but the opposition are making an issue of Abramovich as he is so high profile]. Abramovich is reportedly looking for £3 bln, but this will be difficult to secure, give that this is a “distressed” sale, so it is a buyer’s market. Forbes valued the club at £2.4 bn, KPMG £1.7 bn, while the Markham Multivariate Model gives £1.25-1.5 bn, i.e. a wide range. It’s worth what anyone will pay for it [As w...

The tireless Swiss Ramble applies his forensic accounting skills to the latest financial results from Tottenham Hotspur. The pre-tax loss widened from £68m to £80m (£84m after tax), as revenue dropped £32m (8%) from £392m to £360m, though profit on player sales rose £4m to £19m. Partly offset by a £9m (2%) decrease in operating expenses, while net interest payable was cut £6m (15%) to £37m. Of course, all football clubs have been significantly hit by the effects of the pandemic, so the £84m loss after tax is by no means the largest in Europe. In fact, it is much lower than Inter £215m, Juventus £184m, Roma £163m and especially Barcelona £422m. The main reason that revenue only fell 8% was £71m (52%) increase in broadcasting from £136m to £207m, mainly due to deferred revenue from 2019/20, which compensated for COVID driven reductions in match day, down £93m (98%) to £2m, and commercial, down £10m (6%) to £152m. Revenue was significantly impacted by COVID.   The Swiss Ramble h...

Football finance guru Kieran Maguire takes a look at 'Project Big Picture':  http://priceoffootball.com/project-big-picture-my-coup-a-choo/ Although the plan was rejected, Maguire correctly warns that it will back again in another form.  He says, 'many of the ideas contained within will resurface as those at the top try to increase their share of the finances of English football.'

Football finance guru Kieran Maguire has produced some interesting figures on the median income levels for clubs in English football.    The Big Six have 3.3 times the income of the other 14 Premier League clubs.   Big Six wages are three times those of the other 14.  The other 14 have 2.6 times the income of parachute payment clubs.    In turn the parachute clubs have three times the income of other Championship clubs, bringing home the distorting effect of parachute payments. The Championship has 2.9 times the income of League One and League One has 1.6 times the income of League Two.

Liverpool and Manchester United have come up with a radical plan to shake up the Premier League which would see it reduced to 18 clubs:  https://www.bbc.co.uk/sport/football/54499998 The plan is being opposed by the league itself, but is expected to attract the backing of the other top six clubs who have been involved in talks.  They would have special voting status, alongside three other clubs with a long-term Premier League record (Everton, Southampton and West Ham United).   Changes could be made with the support of just six of these nine long-term 'shareholders'. The EFL would get its £250m bailout package and 25 per cent of all future revenue, but the highly distorting parachute payments would be scrapped.   Another sweetener is fan away tickets to be capped at £20. Football finance guru Kieran Maguire is concerned that every time Championship clubs get more money they spend it on wages.  He also thinks a big issue is that the top six would get a ...

Kieran Maguire of the Price of Football looks at the cumulative profits and losses of the top six Premier League clubs since 1992.  Arsenal made the biggest profit at £480m, followed closely by their North London rivals Tottenham Hotspur at £477m. Manchester United made £266m and Liverpool £138m.   Manchester City recorded a loss of £636m and Chelsea £797m. The relationship with success is unclear, although the two most profitable clubs saw Arsenal win the title three times and Spurs not at all   Chelsea won it five times, so you could say each title cost them nearly £160m.

Very few companies have pulled out of football sponsorship despite the constraints imposed by the pandemic, according to a study from KPMG:  http://www.insideworldfootball.com/2020/07/22/big-brands-stick-club-sponsorships-digital-media-drives-value/ However, it is possible that more deals will be short-term with companies uneasy about making long-term commitments. What is clear is that the Premier League, and in particular the top six, within that league outpace everyone else in terms of the sums raised.

The authoritative Swiss Ramble explains the background to the latest financial developments at Arsenal.  Writing from his Zurich fastness, he notes, ' Last week Arsenal announced that they will redeem their outstanding bonds, which had been part of the debt taken on to fund the construction of the Emirates Stadium. This will be financed by owner Stan Kroenke’s company KSE.' The first thing to appreciate is what this transaction does not mean. It will not make the club  debt-free, nor does it mean that Kroenke is finally investing into the club. Instead, it is simply a restructuring of the club’s current debt by changing the lender. The football finance guru explains, ' This is similar to where you take out a mortgage at a certain interest rate with one bank, but a few years later realise that interest rates on new mortgages are much lower, so decide to remortgage with another bank – even though you have to pay a penalty for early repayment.' Arsenal issued £260m of bond...