Towards the end of last year, a seminar was held under the grand title of ‘The 3rd annual European Football Finance forum.’ And what important tactical questions was this august body discussing:? ‘The road to recovery: Achieving growth and stability in football.’ The official blurb then explains: ‘The nature of European football finance has changed dramatically in recent years..., the industry must now re-emerge and sustain a period of stable growth and economic prudence. The ... Forum will play host to an expert line-up of clubs, banks, associations and analysts who will aim to provide solutions to football’s heavily documented problems, such as the viability of the football business model, spiralling costs, financial transparency and the reliance on TV revenues.’ A glance down the agenda reveals endless reference to things like ‘revenue streams’, ‘player branding’ (ouch!) and ‘New and innovative financing solutions and predictions for future investment trends’
With admission costing over a £1000 a ticket, even higher than what it costs to get into Stamford Bridge, you can safely assume that not too many fans would be turning up. No, this meeting was for the money men who have been circulating around football for sometime.
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In England the biggest money pot of all has long been Manchester United. And for some years now we have seen various attempts by one party or another to grab hold of the club. With Deloitte and Touche ranking Manchester United as the world’s richest club for eight years in a row, it is an attractive target. Now a predator has struck. US tycoon Malcolm Glazier has grabbed control of over 75% of the club’s shares – he can now, if he wishes, delist the club from the stock exchange and if he can get over 90%, take total ownership forcing all remaining shareholders to sell. But why should a man who knows little about football, and cares even less, be forking out £790 million to grab this club? And what are the consequences? Well before looking at that we need to review the background a little bit more.
The establishment of the Premier League, a renaming of the old First Division, in the early 1990s opened up a period of naked commercial exploitation. The new league exists to maximise the profits and commercial potential of the richest clubs at the expense of the rest. Central to this are clubs like Manchester United. Originally owned by the Edwards family, who had made their money by selling dodgy meat in Manchester, they made a wad by turning the club into a plc and floating it on the stock exchange. An aggressive marketing drive by the self-styled biggest club in the world opened up new markets both at home and abroad. New TV rights, linked to the growth of satellite broadcasting, added massively to the bank balances of clubs like Manchester Utd. Strategists have begun talking about a unholy alliance between football and the sportswear giants which could exploit worldwide markets in a way that no other sport ever could. This is what has caught the eye of Malcolm Glazer and other like him.
Glazier already owns US grid-iron franchise the Tampa Bay Buccaneers and has done well financially out of them. But American football enjoys virtually no interest outside the USA whereas soccer is popular everywhere. Early indications are that Glazer will do the same things at Manchester Utd as he did at Tampa Bay. There ticket prices shot up as did the prices of merchandising, season tickets, etc. Glazer will also have noted that whereas in America the clubs are firmly under the control of the game’s governing body, the same does not apply here. The ruling bodies of football – the FA, EUFA etc – are all united in being toothless defenders of the game who cave in at every opportunity in the face of pressure from the rich clubs especially. Manchester Utd have benefited more than most from this state of affairs. The supposed guardians of the game have aided and abetted in the transformation of football at the highest level into a major source of income generation at the expense both of supporters and the rest of football. As money has flowed into the top flight so it has drained away from the lower leagues. Here we have seen a pattern of decline, of staff and player cutbacks and general neglect. But who cares about them – instead it’s show me the money!
So Glazer will set about getting his cash back by one means or another. Nothing will be sacred. Best of all, the huge debt that Glazier has incurred by buying a controlling share of the club can now be passed onto the club for it to service. Since the annual repayments will be higher than the currently generated profit levels of the club, it does not take a financial wizard to work out that profit margins will need to be expanded by one means or another. Either income must be increased or costs cut or probably both at the same time.
Glazer was not the first wealthy man to grab hold of a club for his own ends and he won’t be the last, unless something is done about it. Many in the game including supporters are now asking for clubs to be protected from such raiding parties, especially where they are plcs. But the problem is more fundamental than that. Football clubs are an important part of the fabric of local communities yet they all function as companies just like any other factory or firm. They should be taken out of private ownership and passed over to the control of representatives of supporters, players and the local community, there to serve the people not the shareholders of assorted multinationals. If this is not done then the game will move further and further away from working people and will become just another set of profit and loss charts.