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.
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.
