PtG Article 29.10.2007

An excess of riches and a lack of good sense

The rewards have never been greater and the price of relegation never higher. But is English football’s financial model sustainable? Play the Game invited a number of experts to examine the state of professional game today.

The Play the Game conference ended its first day by asking a number of provocative questions related to the financial state of English football. The Oct 28 session began with an address by Dr Simon Chadwick, Professor of Sports Business Strategy and Marketing at the UK’s Coventry Business School and Co-Director of the University of London’s Birbeck Sport Business Centre.  Entitled “From Cradle to Grave, From Debt to Profit”, his address provided a brief history of English football from the foundation of the Football League to today’s multi-billion pound industry.

Many of the recent changes to English football, which is experiencing a fundamental shift in its off-the-field structure, have their roots in the Taylor Report into the Hillsborough tragedy, he said. Taylor’s recommendations led to the introduction of new all-seater stadia, which combined with the advent of satellite TV made clubs more attractive to investors. In the 1990’s, football clubs began to be floated on the stock exchange and the concept of league clubs being run by businessmen to make a profit became widespread.  Other contributory factors such as the Bosman ruling led to an increased flow of money into a league which is now home to some of the biggest clubs in the world.

Fans allowed in for free?

Many English clubs are already making more money through off the field activities than through selling match tickets, he said. However, clubs will always need fans in the stadium to generate the atmosphere. In the future, he suggested, fans could be allowed into games for free in return for the contribution they bring to the marketing of the event.

Brian Sturgess of Bournemouth University and the website spoke of the attractions of investing in football clubs, and how their social and cultural aspects often make them attractive to outsiders. Entitled “New Wine in Old Bottles: the ‘Wasteful’ Market Structure of English Football”, his presentation lamented the growing number of clubs investing in the trappings of Premier League status  - expensive stadiums, elite academies and players earning tens of thousands of pounds a week – without actually being in the Premier League.

Part of football’s traditional attraction, he said, has been the European model of promotion and relegation, with smaller teams occasionally “living the dream” in the big time. However, the relationship between clubs' expenditure on talent and their on-the-field performance is greater than ever, and today’s clubs cannot achieve success without spending money.

Championship is unstable

English football’s second tier, “The Championship”, has become unstable, he continued, due to the huge sums of money involved in promotion to and relegation from the Premier League. No current member of the Championship has remained in the league for more than 13 consecutive seasons, and many are now paying the financial price of an earlier gamble to join the nation’s elite. However, he reminded Play the Game, structural change is nothing new. English football has been developing since the foundation of the Football League especially in the pre WW2 period.  In conclusion, he said that the waste involved in gambling to achieve promotion to the Premier League means it is time to look again at the structure of English football.

Sean Hamil of Birbeck Sports Business Centre, spoke on the role of supporters’ trusts in English football, and asked a number of probing questions on the current state of the game. Why, he asked, when there has never been so much revenue coming into football, are there still so many problems? Almost half English league clubs have been placed in administration over the past fifteen years, some of which would have folded completely if it was not for the efforts supporters’ trusts.

Today, he pointed out, football clubs are increasingly being viewed as a branch of the entertainment industry and being run on strict business lines. However, unlike other branches of entertainment, audiences will attend even without success. Most football clubs make a loss, he said, and if left to market forces, will die.

He warned that not enough safeguards are in place regarding ownership of these “fantastic institutions”, many of which have survived for over 100 years. "Takeovers do not bring new money into clubs” he said. “Venture capitalists are not fans – they are serious about making money, and borrow on future revenues, meaning that clubs must pay interest on loans and must make a profit”.

Most clubs’ stadiums would be worth more as housing, he said. And if clubs do not make a profit, this new breed of investor will not think twice about looking to the value of all the clubs’ assets – including its real estate - when looking to realise their investment.

"The problem is the management"

“When forty-one clubs in a ninety-two club league have gone into bankruptcy, that is a fundamental management and regulatory problem,” he said.  “The problem is not the product. The problem is not the players. The problem is the management. The current system is not sustainable”.

Following the speeches, a round table discussion the featured all participants together with former Newcastle United goalkeeper Shaka Hislop, who said that in his experience, well paid players do not see themselves as being partly responsible for the current state of the game. “If people run a business as poorly as they [the owners]do, then so be it,” he said. “We have short careers”.

The conference also looked at the decline in UK soccer participation rates. “We are moving from being participants to being consumers”, Simon Chadwick said.