As a Manchester United supporter and prominent blogger I am more aware of the problems in football finance than ever before.
This weekend United and Liverpool meet at Old Trafford and each faces similar problems of an over-leveraged business model and significant debt.
The result at United has been a 48 per cent (on average) rise in season ticket prices over the past five years. It is an increase that has far outstripped inflation and promises to exclude the next generation of supporters from the stadium.
But it is not just these high profile teams that are beset with problems resulting from financial mismanagement. Crystal Palace, Portsmouth, Southend, Cardiff, Notts County and Chester City supporters are suffering too.
Football has failed to put its house in order and enact proper regulation of the game we all love. The Football Association has failed our game. It is not good enough simply to say that football works within the framework of company law when whole communities look to their club for inspiration.
The narrow ‘fit and proper’ owners test has failed to ensure proper management in football.
Football needs proper governance. A system of regulation that ensures our sport remains credible, fair and serves the long term interests of the game. Football is too important to allow this mismanagement to go on any longer. We must act now.
A movement is developing at United, which is inspiring supporters across the country. When United supporters spend money on tickers or merchandise from our club the owners, the Glazer family, take 75 per cent of profit all profit to service debt and pay themselves dividends. The long term future of one of the sport’s most famous institutions is under threat.
While clubs like United, Liverpool and Portsmouth are most affected, this story is repeated across football. As a leader in this field we need you to stand up and act now to protect the game we all love.
Alan Keen, Chair of the All Party Parliamentary Football Group
Don Foster, Liberal Democrat Sports spokesman
Lord David Triesman, FA Chairman
Ian Watmore, FA Chief Executive
Gerry Sutcliffe , Minister for Sports and Tourism
Hugh Robertson, Conservative Sports Spokesman
Ian Lucas, Parliamentary Under Secretary of State for Business and Regulatory Reform
Michel Platini, President of UEFA
Richard Scudamore, Premier League Chief Executive
Sepp Blatter, President of FIFA
Send your own letter via the Manchester United Supporters’ Trust today.
6 thoughts on “Letter to football’s power brokers”
nice one ed!!..
bit off the topic but can someone explain how real madrid spend crazy unreal amount of money all the time and still we never hear of them having any finacial difficulties???
€600 million bank debt is the answer. Periodically this is written off. A few years back the local council bought Real’s central Madrid training ground at vastly inflated price and built a couple of tower blocks… and Real a new training complex.
None of the local banks that fund Real would ever foreclose on them – it just wouldn’t look good.
There’s too much money in football for sentiments! I know where you are coming from and would love to see pro active involvement from the powers that be, but this is not a footballing question anymore. Not when there’s a billion pounds involved!! Nice that you are doing all you can, let’s hope there are level headed people in the administration motivated enough to do something!
I do share your concerns Ed, but I don’t share your view that we face similar problems with Liverpool. We are not (yet) over-leveraged as we can meet our interest payments and still maintain success. There are no signs yet of the owners not wanting to invest in players, so for the foreseeable future we should be ok, unless they are lying.
This means that the “fit and proper” criteria are fulfilled as the club is a going concern and its operating profit can service the interest. How else do you propose this test to be carried out? Should there be a limit to the amount of risk an owner is permitted to place on a club? Or should there be no debt at all, period?
The debt itself can always be refinanced and if the club can maintain its revenues (or even better, increase them) the debt will be refinanced at better interest rates. I read an article recently which said that expectations are high when it comes to launching internet content (like live matches) in the Asian markets, so this is not so far fetched.
Finance is always going to be a part of the game, I’m afraid, and being from Gothenburg, Sweden, this all apparent. In the early 90’s IFK Gothenburg qualified for the group stages of CL a few years on the trot (and even knocked out Man Utd once) and competed well. In the 80’s they won the UEFA Cup twice. No regulations on governance is going to change the fact that this is not going to happen again. No Swedish club is going to have even the slightest impact on the European cups in the future. This is all because they cannot compete with player salaries in other countries. In turn, this is because of inequalities in revenue, rather than debt-levels.
All this being said, I’m not totally comfortable with the level of debt in our club. I would prefer an ideal state where finance didn’t matter that much. I do think, though, that there is more behind all the press this has received than just the debt issue.
One big question is who will benefit from the unrest currently surrounding the club? What does it mean if we don’t win the league this year? And it was good to see your blogpost the other day about what owners we would prefer.
As it stands the fit and proper owners test has one criteria only: no criminal record. That’s it, nothing else. Essentially the FA and Premier League say as long as it’s within UK company law that’s ok. For me, that’s not nearly good enough because football isn’t an industry like any other. Indeed, there is already special provision with European labour and company law for football.
But I’m happy to put my neck on the line and say what I think should be done. I speak for nobody else bar me here. For the good of the game I would implement the following criteria, not all of which are about finances.
1) Leverage: No clubs can be bought without 100% of the equity provided in the acquirers’ cash, with proof of funds provided to the FA.
2) Transparency: all clubs should publish full accounts each quarter
3) Financial probity: all clubs’ expenditure must be less than 100% of turnover
4) Salary cap: on all European clubs at 60% of turnover (tax adjusted, so anti-competitive ‘Beckham’ tax rates can’t be implemented)
5) Ownership: names & registered addresses of owners must be published.
6) Debt: can be acquired for capital expenditure only
7) Fair competition: no loans between teams in the same competition (stops teams hoarding players)
8 ) No transfers of under-18s
9) No third party ‘ownership’ of players
10) All agents fees to be paid by players, not clubs and be completely transparent
As an 11th point I’d also like the German system of 50% plus 1 share to be in the hands of fans Europe-wide. Practically that would be hard to implement of course.
Some of these points may require actual legislation to achieve rather than football regulation. All the better – UEFA, FIFA and the FA are not in a position to do so.
Also this is all off the top of my head, I’ll write a better thought out post on this.
For the record the Glazers would only actually fail 1,2,6,8,10