In spite of the inescapable economic crisis, which will get its grubby little hands on us all in one way or another, English football remains in rude health. Or so it would seem.
Within the space of seven days, the publication of Deloitte’s Club Football ‘Money League’ and announcement of a new, improved TV deal have given cause for optimism to those concerned about the impact of the contracting economy on the much-loved national game.
If the exchange rate value of the pound had not depreciated so dramatically of late, there would have been nine, rather than ‘just’ seven English clubs in the Deloitte Top 20 and Manchester United would instead have topped the list (which is based purely on revenue) ahead of Real Madrid. Even so, the big guns of the Premier League need not fear falling far behind their continental cousins any time in the near future.
In the face of the challenging economic environment, the Premier League also secured a record deal for live domestic broadcast rights for 2010/11 to 2012/13, up 4% to £1.782bn in total. And that’s before lucrative overseas rights are stirred into the pot.
It’s a rosy picture indeed for those clubs at the top of the pyramid, but for the vast majority of Premier and Football League members, that picture is increasingly obscured by stormy clouds on the horizon. To say nothing of the problems faced by a plethora of lower league clubs, those top flight teams without the clout of United, Liverpool or Chelsea are facing up to a period of enforced austerity and serious belt-tightening.
Let’s take, for example, two long-established Premier League clubs; both firmly entrenched in the unseemly scramble for survival which has, this season, engulfed the top-flight’s traditional also-rans.
Struggling Middlesbrough, it has emerged, are in debt to the tune of a hefty £85m. Under-fire manager Gareth Southgate has been quick to acknowledge the pressure that such a ticking financial time-bomb places on his position and on the club as a whole.
“We know the resources we have and we know the parameters and that makes life difficult,” said Southgate.
“We are in a different position now to the last eight or nine years. The chairman knows what he will get from me and that is every hour towards keeping this football club in the Premier League.”
Failure to do so, though softened a little by two years worth of ‘parachute payments’, would hold catastrophic consequences for the Teesiders, let alone the managerial career of the ex-England international.
It’s a simple economic reality: If a club can't regularly fill a 35,000 capacity stadium, then it will inevitably incur big, fat debts. Middlesbrough have punched above their weight for a sustained period now. Fortunately for them, their saintly proprietor Steve Gibson has underwritten the majority of that colossal debt and should his side be one of the three to slip through the trapdoor this May, then the resulting loss of revenue will fall at his door only. Of course, should such a Boro blow-up come to pass, there will be few, if any, buyers willing or able to take a quite unattractive proposition off Gibson’s hands.
Over in Lancashire, amid the big-spending might of United, City and Liverpool, lies Blackburn Rovers FC. It’s more than a decade now since their remarkable Premier League win under the stewardship of the Walker/Dalglish dream-ticket. They’ve had their ups and downs since then, but in the aftermath of the inspirational Mark Hughes’ departure, the hasty curtailment of Paul Ince’s tenure and subsequent installation of Sam Allardyce, Rovers are prime candidates for the drop.
The posting of record turnover this year (£56.4m, collated principally on the back of media money) presents a positive facade. Yet, as chairman John Williams pointed out this week, Blackburn are still, more or less, only breaking even. This is due to ridiculous wage expenditure - 76% of their turnover has been splurged on salaries over the past five years. Such a percentage is absolute commercial nonsense.
Allied with average attendances of under 24,000 (currently the 3rd lowest in the League) and a commendably reasonable ticket pricing policy (generally speaking, Rovers lay on the cheapest top flight tickets); Blackburn have cultivated a model which is impossible to continue upon relegation.
Not only Blackburn but all clubs, whether they’re spending 60, 70 or 80 percent, should be striving to reduce obscene salaries. In fact, most other businesses operate around the 25% mark. In other European leagues there are strict rules capping the percentage of income a club can spend on paying players. Unless the English game is to slip into a deep black economic hole, the most extravagant spenders have no alternative but to fall in line.
Chairman Williams admits that his club are walking a financial tightrope: “If we ran with the 17th highest wage bill - believing that would mean three teams finish below us - that would be incredibly risky.”
“Of course if you have the 12th highest wage bill and you get relegated and you have a relatively small turnover you are in for trouble, which is why relegation for us would be so worrying.”
The Premier League has made token efforts to even up the playing field between the haves and the have-nots. They would argue their distribution formula of TV revenue gives a semblance of even distribution. And, more so than in other leagues (such as Serie A, where each club negotiates its own deal) it does.
“It could be more even,” argues Williams. “More sporting socialism, a bit like the NFL, would suit Rovers.”
For a club that effectively bought its way to the title in the recent past, that might strike some as a rather hypocritical stance to take. Williams, though, has a valid point. The NFL employs a salary cap in which each franchise can spend only a set limit on wages. Under European employment law, this scheme would be almost impossible to integrate into the Premier League, even if the will was there among the clubs – and it isn’t.
Another US sport, baseball, might hold the key to tackling this escalating problem. Teams mutually agree an upper salary limit. If this limit is exceeded, the franchise must pay a ‘luxury tax’, to be re-distributed among the other teams. That’s the kind of ‘sporting socialism’ which could conceivably return some semblance of a level playing field to our game. But, again, enforcement is a major problem.
All of the top clubs are in significant debt too, whether it is to an individual (Chelsea) or to our beloved, eminently trustworthy financial institutions (United, Arsenal, Liverpool). These vast debts, however, are serviced by guaranteed income from giant international fanbases, ownership of lucrative stadia and regular Champions League football. Other more modest clubs such as Blackburn, Boro, Portsmouth now find themselves in a predicament which, if it doesn’t yet threaten their very existence, might see any one of them go the way of Charlton, Southampton or even Leeds United.
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