The Political Economy of Football V2

As noted in Deloitte’s annual review of football finance, the trade in top footballers is muted. Dan Jones, head of the consultancy’s sports business group, said: “buyers appear to be few and far between as a number of major clubs are in a position where sales are required before purchases can be made.” The two Spanish super clubs are suffering more than most.  Real Madrid   and  FC Barcelona  are eschewing the big money acquisitions they were accustomed to making before the pandemic arrived.  It should be no surprise that neither club has given up on the failed  European Super League , a breakaway competition that would have provided “welcome bonuses” worth €200m-€300m per club. Both were involved in capital-intensive stadium redevelopments when the pandemic hit. Barca also made a series of big-money signings and allowed borrowings to pile up, although this week the club was quick to note that credit rating agency  Fitch  is posit...

The authoritative Swiss Ramble reviews the (13 month) 2019/20 accounts of Crystal Palace. The club swung from £5m pre-tax profit to £58m loss, mainly due to profit on player sales dropping from £46m to only £0.5m. Revenue fell £13m (8%) from club record £155m to £142m, partly due to COVID. The £142m revenue was 11th highest in the top flight, though the gap to the Big Six is enormous, as Palace are more than £200m behind Arsenal £343m. For more perspective, it’s less than a third of Manchester United £509m, Liverpool £490m andManchester City £478m. Although the £58m loss is obviously not great, it is only mid-table in the Premier League, as all clubs have been adversely impacted by COVID with no fewer than nine of them posting higher losses than the Eagles in 2019/20, Main driver of the revenue reduction was broadcasting, which fell £11.7m (9%) from £124.4m to £112.7m, while match day dropped £2.8m (19%) from £14.6m to £11.8m. However, commercial rose £1.4m (9%) from £16.4m to £1...

The combined revenue of Europe's top five leagues fell by £3.4bn because of the Covid-19 pandemic according to the Deloitte Annual Review of Football Finance.   The Bundesliga was the most reslient league:  https://www.theguardian.com/football/2021/jul/29/european-football-clubs-revenue-declines-by-34bn-over-pandemic

Gillingham FC kept losses down to £100,000 in 2019/20 on a turnover of £7m in a difficult year.  Chairman and owner Paul  Scally, who said he was satisfied with the results, claimed £214,000 in consultancy fees:  https://www.kentonline.co.uk/medway/sport/gillingham-chairman-satisfied-with-performance-as-finances-a-251359/

Leicester City are proposing to expand the capacity of the King Power stadium to 40,000 by adding 8,000 seats.  The plans include a hotel and a multi-purpose entertainment and events venue:  https://www.skysports.com/football/news/11095/12365987/leicester-city-plans-to-expand-king-power-stadium-to-40000-unveiled Whilst broadcasting revenues are the main source of income for Premier League clubs, boosting capacity can be a valuable source of additional revenue, although it also demands success on the pitch.

Writing for The Athletic, football finance guru looks at possible ways of restraining spending by top clubs. At present clubs are allowed to lose £15 million pre-tax over a rolling three-year period. However, certain costs (academy, community, women’s team, infrastructure) are excluded, and owners are allowed to contribute via share issues a further £90 million over the three-year period. Maguire tries to work out the effect of a crude version of the La Liga model that focuses on future expenditure Those clubs that have had historic good control over costs would be rewarded, and the Big Six would still enjoy a substantial financial advantage over the other clubs. At the bottom end of the table, the sight of Everton might initially surprise but the club has spent a lot in recent seasons and this has resulted in high wages and amortisation fees, which would be clawed back by a tighter budget for 2021-22. If such rules were to be introduced there would have to be a transition period...

What is the situation with the Premier League's investigation into Manchester City's alleged breach of its profitability and sustainability rules? In August 2019, the league issued a disciplinary complaint against Manchester City and asked them to release documents; the club refused   In October 2019, the league set up an arbitration tribunal to enforce that request; the club challenged the tribunal’s jurisdiction and impartiality.    In February 2020, the league changed its rules to ensure impartiality and the tribunal restated the demand for disclosure In June 2020, the tribunal rejected a fresh challenge from the club, who then filed an arbitration claim at Companies Court.    In July and November 2020, the tribunal again rejected arguments from the club and issued a final demand for disclosure but the order was stayed pending court proceedings In March 2021, Justice Moulder rejected the club’s arguments about the league tribunal, denied it permission to ...