Football Heading for Financial Disaster?

[Saj]

Do you expect to see more and more clubs folding / heading for financial disaster in the coming months and years?

Take Portsmouth for example, who would have thought a couple of years ago they would be in the mess they are in?

Southend, Cardiff, Bournemouth are just some of the other clubs with financial problems.

 

[Amjid Javed]

Many have suggested the model of sports teams in U.S where clubs can only spend a certain % of their turn-over on wages, players and transfers. I think something like that may need to be implement here in UK to stop clubs going to the wall.

 

[Amir]

I am with AJ. Such a model needs to be implemented or we will see more Pompeys who pay very high wages for no reason.

As much as people hate United, their footballing model is at least correct. They never have spent out of their means unlike Leeds and all transfers are driven by profits generated. The % of turnover method needs to be used.

 

[Geordie Ahmed]

Football is amidst a financial problem - more teams than not have money problems, its the result of years of mismanagement and a poor financial model

The situation is only going to get worse before it gets better and i think it might just be the best thing for the game in the long term

Also Sky have pumped in billions into football BUT the problem is that the bigger sides tend to get the bulk of the money - we dont really see the money trickle down towards the smaller clubs and even grass roots

 

[Geordie Ahmed]

I am with AJ. Such a model needs to be implemented or we will see more Pompeys who pay very high wages for no reason.

As much as people hate United, their footballing model is at least correct. They never have spent out of their means unlike Leeds and all transfers are driven by profits generated. The % of turnover method needs to be used.

BUT its easy to do that when you have the turnover and profit that Man-U have

 

[Amir]

BUT its easy to do that when you have the turnover and profit that Man-U have

But that is the way it goes, if you don't have the turn-over...don't abuse your finances then or you will just wind up like Pompey.

Better to be a decent football club than no football club.

One thing you overlook is that United did not just become United due to their name. They made their name over 20 years. They successfully commercially marketed their product. Football is much like a industry with higher barriers of entry and big firms that dominate market share. If teams want to have such turnover it will take time and patience. One slow step at a time, but once you try to grow too fast...it can be very damaging just like any business firm.

 

[Geordie Ahmed]

But that is the way it goes, if you don't have the turn-over...don't abuse your finances then or you will just wind up like Pompey.

Better to be a decent football club than no football club.

True BUT clubs want to play in the CL, to do that they spend big because they need better players to challenge for those players BUT when they fail to get to those spots they lose money and lose it quick

I think a rule needs to be implemented by FIFA that clubs can spend a certain amount over their turnover - if that means they can buy big players then so be it, operate within your means

 

[Amir]

Football is amidst a financial problem - more teams than not have money problems, its the result of years of mismanagement and a poor financial model

The situation is only going to get worse before it gets better and i think it might just be the best thing for the game in the long term

Also Sky have pumped in billions into football BUT the problem is that the bigger sides tend to get the bulk of the money - we dont really see the money trickle down towards the smaller clubs and even grass roots

That is a little misleading. The PL do a decent job of supporting their lower teams. If United could have a private TV deal...we would trump Chelsea in terms of spending power. The whole sharing of TV money is actually limiting them.

I do agree the FA needs to put more into grass roots.

Take for example Spain. They can negotiate their own TV deals and that is why the gap between Real-Barca is growing every year and will continue to grow. I am sure if the big four could have their own TV deals, they wouldn't be in many debt problems or could have spending power those two have.

 

[Geordie Ahmed]

But that is the way it goes, if you don't have the turn-over...don't abuse your finances then or you will just wind up like Pompey.

Better to be a decent football club than no football club.

One thing you overlook is that United did not just become United due to their name. They made their name over 20 years. They successfully commercially marketed their product. Football is much like a industry with higher barriers of entry and big firms that dominate market share. If teams want to have such turnover it will take time and patience. One slow step at a time, but once you try to grow too fast...it can be very damaging just like any business firm.

I never overlooked anything

Man-U are in the position that they are in partly because they have been the best side and a bit of luck - they started to become a decent side about the time Sky entered into English football, that meant they got the big bucks - those big bucks ensured they could spend more than their rivals and stay ahead of them

For the past 5 years or so we have seen the same sides finish 1-4, only this season does it look like someone else might take that 4th spot instead - that side being Spurs who themselves have spent heavily over the recent years

 

[Amir]

True BUT clubs want to play in the CL, to do that they spend big because they need better players to challenge for those players BUT when they fail to get to those spots they lose money and lose it quick

I think a rule needs to be implemented by FIFA that clubs can spend a certain amount over their turnover - if that means they can buy big players then so be it, operate within your means

Well like a small firm in a big industry, you cannot grow overnight. Maybe one season you finish 10. Bring in a big star, and slowly improve until your in the CL. Maybe that big star will move to a bigger team, but that is the dynamic of the industry. Nothing the FA can do if a player wants to leave. You cannot restrict player movement.

I agree with your 2nd point. They need to do it based on that and if your a smaller club....well that is the way it goes. Better that, than what we have right now.

 

[Amir]

I never overlooked anything

Man-U are in the position that they are in partly because they have been the best side and a bit of luck - they started to become a decent side about the time Sky entered into English football, that meant they got the big bucks - those big bucks ensured they could spend more than their rivals and stay ahead of them

For the past 5 years or so we have seen the same sides finish 1-4, only this season does it look like someone else might take that 4th spot instead - that side being Spurs who themselves have spent heavily over the recent years

Not like Sky gave United a billion dollars and we are roling in it. Sky gave us more exposure, but that exposure was also offered to everyone else. The year Sky took over, Liverpool, Arsenal and Leeds won the previous few titles. United were smart and commercially marketed themselves. Its not like United had some super advantage. We had a good manager, who played a great brand of football and won. Our business acumen was smart and capitalized on this.

 

[Geordie Ahmed]

Not like Sky gave United a billion dollars and we are roling in it. Sky gave us more exposure, but that exposure was also offered to everyone else. The year Sky took over, Liverpool, Arsenal and Leeds won the previous few titles. United were smart and commercially marketed themselves. Its not like United had some super advantage. We had a good manager, who played a great brand of football and won. Our business acumen was smart and capitalized on this.

I never said you had the advantage, i said you was lucky that the timing of your rise coincided with Sky entering english football - obviously thats credit to Man-U for becoming a top side BUT the role of sky in football cannot be underestimated

 

[Oxy]

F

Also Sky have pumped in billions into football BUT the problem is that the bigger sides tend to get the bulk of the money - we dont really see the money trickle down towards the smaller clubs and even grass roots

Virtually all of the TV money goes into players salaries / wages!

 

[Oxy]

Not like Sky gave United a billion dollars and we are roling in it. Sky gave us more exposure.

I might be wrong, but Sky might have actually owned a 10% share of Man Utd before Glazier got involved???

 

[ShehryarK]

They didn't Oxy... at least, as far as I know.

They tried to buy the whole club outright, and the fans foolishly and wrongly made a big deal out of it and refused.

The PLC Board recommended BSkyB's bid and the management wanted it - however, it was blocked ostensibly by the Competition authorise (in reality the Culture secretary, and not the Business Secretary) on the grounds that it would give BSkyB too much power and control over the Premier League if they were both the main broadcaster and the owner of the biggest club.

The fans rejoiced.

A couple of years later, we got the ginger gnomes from Florida!!!

 

[d0gers]

I am with AJ. Such a model needs to be implemented or we will see more Pompeys who pay very high wages for no reason.

As much as people hate United, their footballing model is at least correct. They never have spent out of their means unlike Leeds and all transfers are driven by profits generated. The % of turnover method needs to be used.

This made me lol. United are up to their eyeballs in debt. To the tune of 716.5 million pounds. (Source: http://news.bbc.co.uk/sport2/hi/football/europe/8589872.stm) I would call this many things but a correct footballing model it is not.

 

[AZ]

This made me lol. United are up to their eyeballs in debt. To the tune of 716.5 million pounds. (Source: http://news.bbc.co.uk/sport2/hi/football/europe/8589872.stm) I would call this many things but a correct footballing model it is not.

lol, too true.

 

[Amir]

This made me lol. United are up to their eyeballs in debt. To the tune of 716.5 million pounds. (Source: http://news.bbc.co.uk/sport2/hi/football/europe/8589872.stm) I would call this many things but a correct footballing model it is not.

What is the the difference between a footballing model and a financial model?

As you can see, I used my words very wisely and knew someone would bring up our debt. And hence, I choose my words well. Fans of opposing teams can be very daft at times. They see a number. Get excited. Jump for joy and think we are some sort of evil empire. Quite to the contrary.

Why do we have that debt? Well its not for football reasons. Its because our owners leveraged their buyout on our assets. United have never spent over their means and have funded all operations through what they generate. We may be in financial trouble, but as I said...that is not down to our footballing model but more so our financial model and idiot owners. Our footballing model is sound, buy the big stars occasionally with what we generate, and churn our great stars through out academy.

Next.

 

[d0gers]

What is the the difference between a footballing model and a financial model?

As you can see, I used my words very wisely and knew someone would bring up our debt. And hence, I choose my words well. Fans of opposing teams can be very daft at times. They see a number. Get excited. Jump for joy and think we are some sort of evil empire. Quite to the contrary.

Why do we have that debt? Well its not for football reasons. Its because our owners leveraged their buyout on our assets. United have never spent over their means and have funded all operations through what they generate. We may be in financial trouble, but as I said...that is not down to our footballing model but more so our financial model and idiot owners. Our footballing model is sound, buy the big stars occasionally with what we generate, and churn our great stars through out academy.

Next.

Amir this footballing model won't survive with the financial model in place. Your debt is growing not shrinking each year. In the long run it really won't matter whether money from transfers in is lower than transfers out.

Also please tell me you're joking when you imply that United being able to offer higher salaries to players than other more prudently run clubs is outside the domain of its footballing model.

 

[Amir]

Amir this footballing model won't survive with the financial model in place. Your debt is growing not shrinking each year. In the long run it really won't matter whether money from transfers in is lower than transfers out.

Also please tell me you're joking when you imply that United being able to offer higher salaries to players than other more prudently run clubs is outside the domain of its footballing model.

I am not talking about going forward or the future merits of our finances. I am talking about the recent past and now. Yes, we pay high wages but that is because we can afford it.. We are paying these players on the revenue we generate, not on delaying transfer payments or taking upon loans to fund our operations like Pompey. And hence, our footballing side of things has been correct to date.

Going forward, sure, we may run into problems. At that time, we will adjust to it. We won't be able to spend as much since our revenue generation may be lower. But even then, our model will still be correct because we are not living beyond our means.

Once again, footballing model has been correct...finances not so much but that is hardly at fault of the club. My point in all this leads to my original point. Clubs should only spend from what they generate. No club should be able to take loans or "interest-free" loans to fund operations because it is askign for trouble.

 

[Geordie Ahmed]

What is the the difference between a footballing model and a financial model?

As you can see, I used my words very wisely and knew someone would bring up our debt. And hence, I choose my words well. Fans of opposing teams can be very daft at times. They see a number. Get excited. Jump for joy and think we are some sort of evil empire. Quite to the contrary.

Why do we have that debt? Well its not for football reasons. Its because our owners leveraged their buyout on our assets. United have never spent over their means and have funded all operations through what they generate. We may be in financial trouble, but as I said...that is not down to our footballing model but more so our financial model and idiot owners. Our footballing model is sound, buy the big stars occasionally with what we generate, and churn our great stars through out academy.

Next.

Im sorry BUT what? ate you serious?

You churned out a bunch of great players over 15 years ago (Giggs, Scholes, Beckham, Neville etc) BUT what have you brought out since? Plenty of average players BUT none even remotely close to being great. The only top player has been Darren Fletcher BUT he was signed from Scotland so cant really credit that to your academy BUT lets say he is, 1 in 15 years?

 

[AZ]

Im sorry BUT what? ate you serious?

You churned out a bunch of great players over 15 years ago (Giggs, Scholes, Beckham, Neville etc) BUT what have you brought out since? Plenty of average players BUT none even remotely close to being great. The only top player has been Darren Fletcher BUT he was signed from Scotland so cant really credit that to your academy BUT lets say he is, 1 in 15 years?

spot on, haven't seen anyone even close to that level emerge from their academy...unless they are claiming youngsters poached from the continent as their own now.

 

[Geordie Ahmed]

spot on, haven't seen anyone even close to that level emerge from their academy...unless they are claiming youngsters poached from the continent as their own now.

even if you add poaching players, which great player has their been?

 

[AZ]

hehehe, pata nahi, Amir hi bata sakta hai

 

[Amir]

Im sorry BUT what? ate you serious?

You churned out a bunch of great players over 15 years ago (Giggs, Scholes, Beckham, Neville etc) BUT what have you brought out since? Plenty of average players BUT none even remotely close to being great. The only top player has been Darren Fletcher BUT he was signed from Scotland so cant really credit that to your academy BUT lets say he is, 1 in 15 years?

Maybe great was an exaggeration but people really underestimate our academy. Its no accident Man Utd win titles. Sure, the Ronaldo, the Giggs, the Rooneys win you titles but what happens when they are injured? Who makes the clock tick? You cannot undervalue players like O'Shea and Brown who contribute a lot, along with Fletcher. Yes, we did develop Fletcher...not like he came as some partial end product, he did not come from a professional football club (or at least that I regard as).

People seem to be arguing a lot of technical points about United here. The bigger picture remains, United work within their means. Their means may be bigger, but that is the way it goes. They are not going to spend at some lower clubs level.

United have a great mix of youth players that some may come from the academy or are bought young and develop here, but also have seasoned old warhorses. It is no surprise Fergie has been able to keep winning because that has been his motto for past 20 years...to mix the old with the young. It is a footballing model that has worked and been within the confinements.

 

[Geordie Ahmed]

Maybe great was an exaggeration but people really underestimate our academy. Its no accident Man Utd win titles. Sure, the Ronaldo, the Giggs, the Rooneys win you titles but what happens when they are injured? Who makes the clock tick? You cannot undervalue players like O'Shea and Brown who contribute a lot, along with Fletcher. Yes, we did develop Fletcher...not like he came as some partial end product, he did not come from a professional football club (or at least that I regard as).

People seem to be arguing a lot of technical points about United here. The bigger picture remains, United work within their means. Their means may be bigger, but that is the way it goes. They are not going to spend at some lower clubs level.

United have a great mix of youth players that some may come from the academy or are bought young and develop here, but also have seasoned old warhorses. It is no surprise Fergie has been able to keep winning because that has been his motto for past 20 years...to mix the old with the young. It is a footballing model that has worked and been within the confinements.

No they dont - your academy has been rubbish. Lets look at the list of players in the last 15 years

1) Darren Fletcher - he joined Man-U at 16 so you can hardly credit your academy for that

2) John O'Shea - a good utility player BUT joined Man-U at 17

3) Wes Brown - he has properly came through the academy. Good defender when fit BUT has plenty of injury problems

4) Jonny Evans - Similar to Fletcher and O'Shea, joined Man-U at 16 so cant really credit your academy for that

5) Danny Welbeck - a proper academy product BUT hasnt broken through yet

There have been others like Simpson, Campbell BUT we have seen what standard they have ended up at

Thats about it really - hardly a ringing endorsement of the Man-U academy is it? In fact i dont think people under-rate it enough - in 15 years that is all you mustered up? Only 2 of those have been local boys as well


Our circus of a club has been as prosperous i would say. In that time we have brought through Shola (granted his status as a football is in question), Taylor and Carroll. Also similar to the guys you brought in we had David Edgar, although he joined us at 14 so can be regarded as a academy product.

 

[Amir]

No they dont - your academy has been rubbish. Lets look at the list of players in the last 15 years

1) Darren Fletcher - he joined Man-U at 16 so you can hardly credit your academy for that

2) John O'Shea - a good utility player BUT joined Man-U at 17

3) Wes Brown - he has properly came through the academy. Good defender when fit BUT has plenty of injury problems

4) Jonny Evans - Similar to Fletcher and O'Shea, joined Man-U at 16 so cant really credit your academy for that

5) Danny Welbeck - a proper academy product BUT hasnt broken through yet

There have been others like Simpson, Campbell BUT we have seen what standard they have ended up at

Thats about it really - hardly a ringing endorsement of the Man-U academy is it? In fact i dont think people under-rate it enough - in 15 years that is all you mustered up? Only 2 of those have been local boys as well


Our circus of a club has been as prosperous i would say. In that time we have brought through Shola (granted his status as a football is in question), Taylor and Carroll. Also similar to the guys you brought in we had David Edgar, although he joined us at 14 so can be regarded as a academy product.

Evans played in our academy team and many played within our reserves before breaking in. Did not realize we were getting technical to the point where I needed to ensure our player was born in the hospital wing of our academy.

Anyways, I am sure you can accept this much: over the years United have taken many young players and have developed them or assisted in their development. Many of those players also play for various PL teams, if not United. Maybe not United as the quality is high but they DO make an impact on their team like Phil Neville or Ryan Shawcross.

United always have had the ability to take rough diamonds and turn them in stars, Rooney, Ronaldo, Giggs all included. United may have bought big stars in the process but never have they bought one set of big stars aka Citeh, Chelsea, and Real.

In conclusion, to really drive the point home and the point of this thread. United have done all of this from what they generate. That is how football should be run.

 

[Geordie Ahmed]

Its not about being technical - even if you include the likes of Evans, Fletcher etc you have to agree its a pretty sub-standard list - the fact that you mention Phil Neville sums it all up really, the guy made his debut over 15 years ago

 

[ShehryarK]

Amir this footballing model won't survive with the financial model in place. Your debt is growing not shrinking each year.

Debt only becomes an issue when debt servicing becomes difficult or impossible - otherwise, debt is a normal fact of life for all individuals and businesses, as routine as banknotes.

At the moment, given United's turnover and more relevantly its EBITDA, debt servicing is not a major issue at all.

If it ever becomes a major issue, it will still be manageable for us - companies face survival issues whilst servicing their debt only if de-leveraging is not possible or not viable.

However, for United and its owners, de-leveraging is not only a viable financial option at all times, its also a very lucrative and attractive one, even in the current depressed equity market. Hence, there isn't really a huge problem, and definitely not a 'survival' of going concern issue.

The issue that exercises many fans is the amount of cash being taken out of the business by its owners, cash which they believe should be available for player transfers. Well, the fans can believe whatever they like - they don't own a damn thing so its not their call! The issue thus is owner greed and owner priorities, not debt.

 

[MenInG]

Unsustainable financial practices at football clubs are set to be tackled by the government under new proposals - with fans given a greater role in their day-to-day management.

An independent study commissioned by the government claims there is a "widespread culture" of clubs placing the pursuit of success over sound financial management - with an overreliance on owner funding leaving them dangerously exposed if the plug is pulled on cash injections.

While UEFA says no more than 70% of a club's revenue should be allocated to wages, research performed before the pandemic suggested Championship teams were spending 107% of their revenue on salaries - leaving them in debt.

Ten key recommendations were set out during a fan-led review of football governance that was published in November 2021, and the government has announced it now plans to endorse them all. They include:

• "Shadow boards" that will give fans a greater voice in how their clubs are run

• "Golden shares" to ensure supporters have a bigger say in changes to their team's name and kit - as well as where they play

• Stronger action to improve equality and diversity in club boardrooms

• Ensuring women's football is treated equally to the men's game

In other developments, the government also plans to consider whether the sale and consumption of alcohol in sight of the pitch should be allowed at matches in the lower leagues of men's football.

Delays to reform could be 'catastrophic'

Tracey Crouch - who led the review into football governance - has welcomed the government's support, but warned fans "will remain nervous that this commitment will be delayed or watered down by the vested and conflicted interests in the game, which have resisted the much-needed reform for so long".

The MP said: "Further delays could be catastrophic for clubs, communities and fans seeking a more secure and certain regulatory environment."

The government is going to set out its full response to the fan-led review this afternoon, and a white paper will be published in the summer.

But Labour's shadow culture secretary Lucy Powell said: "This announcement will come as a massive disappointment to fans across the country.

"After a government review and many previous promises to legislate, today's announcement of a further consultation later this year - and a delay to legislation until at least 2024 - is a kick in the teeth to proud footballing communities across England."

Why the fan-led review was launched

The fan-led review into football governance was launched following a series of crises that began with the collapse of Bury FC in 2019.

Bolton Wanderers, Derby County, Macclesfield Town and Wigan Athletic subsequently followed - along with widely discredited plans to form a European Super League.

Prime Minister Boris Johnson said: "Football brings friends, families and communities together, which is why we are taking forward the fan-led plans to secure the future of our national game - from the £230m investment to level up grassroots pitches to strengthening the voice of fans in the running of their clubs.

"Whether you're cheering on at home or away, the government will ensure fans are once again at the heart of the game."

Culture Secretary Nadine Dorries added that the government is now committed to "fundamental reform", and said: "Football is nothing without its fans and for too long the football authorities have collectively been unable to tackle some of the biggest issues in the game."

And vowing to establish a "strong, independent regulator", Sports Minister Nigel Huddleston said: "It's just over a year since the failed European Super League bid, but it is clear radical change is needed to protect the future of our national game."

https://news.sky.com/story/football...ill-get-a-greater-say-in-their-clubs-12598493