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Lifted from the Villatalk forum. Long, but excellently written, interesting and well worth a read.
http://www.villatalk.com/index.php?name=News&file=article&sid=4152
Football has changed for me, I find myself dreaming about contracts and revenues not headers and volleys, ones and zeroes not hopes and heroes – money has moved the heart of football and I wonder when we might see it move back. I want to know where we are as a club, how we got here and where we might end up.
This land is the land of ours; this river runs red over it.
In the Autumn of 2006 our club’s heart moved to Cleveland, and more specifically to that city’s banks – we weren’t alone in that, a lot of clubs have changed hands in the last few years; what’s more we got lucky as our club was rediscovered by our very own Moses of Cleveland.
Mr Lerner has bought into a strange game though, a game with a background of instability, unpredictability and debt – a silted, muddy river with an unsure future.
It started with the small and the weak, with Stockport, Rotherham, Luton, Chester, Bournemouth, Gillingham, Southend, Preston, Cardiff, Sheffield Wednesday, Crystal Palace – all into debt, into administration, facing winding up orders and uncertain futures. It affected the foolish when Leeds United overstretched and fell over, but nobody in the Premiership really noticed or cared what was happening upriver, it couldn’t happen here, not on the gravy train.
And then it did, Portsmouth achieved the unthinkable and went bust in the Premier league. The Pompey chimes were an alarm bell across the country. The effluence came down the river and reached the affluence at it’s end – Manchester United suddenly found themselves under an avalanche of debt, Liverpool in danger of drowning in theirs with interest of £110,000 a day and finally, right at the very top, Barcelona discovered they were no longer able to pay their players this summer and had to extend their own debt by another €100m or so.
Football is in danger of bursting its banks - the money that once flowed through the game from club to club no longer does, it goes out of the game in extraordinary salaries, it pays bankers, accountants and lawyers and it simply isn’t sustainable. The river is slowing up, polluted and blocked by greed and choked in debt.
Take a picture here; take a souvenir.
Back home in the shadow of the expressway an idea seemed to have grown up that suggested we were somehow immune; that Randy Lerner had somehow lifted us to higher ground – this summer has been a reminder that the environmental damage done to our league impacts on us all.
Like every other club in the league, as a business, Aston Villa are a poor proposition – we’re in debt – that seems to come as a surprise to some people, but our football club had debts of over £100m in October 2009. By the end of the season just gone, our debt might well have been as much £150m.
In fact, in the financial year 2008-09, we paid over £4m in interest on the debt from our loans, that comes out at almost £11,000 a day and this year it will be more. We pay our interest more than we pay any player at Villa Park.
Much of that interest is paid on loans given to the club by Randy Lerner, and those interest rates are extremely kind - this isn’t a Hicks and Gillette situation where the owners milk the club dry by having it pay huge amounts of interest on money they borrowed form themselves.
And don’t get me wrong, I’m not about to lay blame at the owners door, far from it - in the four years since he took over the club the total investment by Mr Lerner is estimated at £270m if you include the purchase of the club, the money he’s shovelled in and those generous loan arrangements. Our American friend has done more than his share in helping keep us afloat.
Imagine where we’d be without him – imagine the ambitions of a club £270m worse off – imagine Doug Ellis rowing against this tide – yet still our overall losses in the year ending in May 2010 were placed at £46.2m.
Strangely, while we were under Ellis the risk was that he wouldn’t leave and we’d wither away, with Lerner it’s that he could and we’d implode. For all that it might be true to say that Ellis held the club back – Randy Lerner is holding it up; if you’re one for praying, put one in for Randy’s health, wealth and happiness this evening.
I was going to ask you where all of this money is going, but I suspect you already know – it’s flowing steadily into the pockets of players and their agents.
Last year our wage bill went up by over £20m and the figures from the last published accounts show us paying out over £70m in salaries each year. Famously, that’s more than Tottenham and scarily it doesn’t include the small gaggle of players we picked up at the end of last summers transfer window. In 2007 it was just £25m.
Not too long ago, the Premier League rather grandly recommended that clubs should attempt to restrict their wage bill to 50% or less of their turnover. Not many managed it. Last season Manchester United managed 44% and Arsenal 46%, the ratio of our wages to revenues was a sobering 83.7%.
That means every time you spend £3 on a beer at Villa Park, £2.50 of it goes straight into the player’s pockets and straight out of the club.
What’s more, we’ve got a number of good players who’ve reached a stage in their careers where if we want to keep them we need to offer them new and more expensive deals; Ashley Young and Gabriel Agbonlahor join James Milner in having just two years remaining on their contracts. If our current wage bill is high, keeping hold of the talent that we have will stretch us still further – to keep those three would cost a club £12m a year, if not more. Sell-to-buy might be this summer’s strap line, but as things stand don’t be too surprised if we’re selling Peter just to keep Paul.
Controlling costs is clearly the club’s key focus this summer and we’ve certainly built up a collection of costly footballers, many of whom can be accused of not offering full value. I’m sure I’m surprising no one here in emphasising the importance of cutting some of the wage bill from the fringes of our bench. Flotsam and jetsam they may be but some of our fringe players are far too expensive to be allowed to drift through their contracts.
Costs are not our only focus though and in the longer term, the future of the club is bound more tightly to our revenues.
Last year the club brought in a record £84m in revenues – TV money, shirt sales, matchday hospitality and good old-fashioned bums on seats – we were better at it than we’ve ever been and it’s nice to know that some of that big wage bill is being very wisely spent on folks who know how to operate a football club.
It’s nowhere near enough though.
According to the latest Deloitte financial report on the Premiership, Manchester United’s revenue was at £279m last year, with Arsenal and Chelsea also up at over £200m – more worryingly Spurs made almost £30m more than us, bringing in £113m. That gives them a big advantage - that £30m is the money it would take to keep Milner, Agbonlahor and Young, it could bring down our debt and it could finance our future.
It’s easy to point to Spurs ticket prices and take the moral high ground (and fun too) but whilst we can be justifiably proud of our record of fairness in pricing, it’s not ticket prices that make the big difference – you could put £100 on the price of every season ticket at Villa Park and add less than £3m to our incomes.
There are three key areas of revenue in a football club, matchday income, television and broadcast rights and commercial income. Last year, television and broadcast rights accounted for a whopping 59% of our total income at £50m; matchday income and commercial concerns trailed in with £23m and £12m respectively.
There are good signs that this can be increased in the coming season, there is more broadcast money coming and our shirt sponsorship deal will help drive commercial income - I wouldn’t be surprised to see us post revenues in excess of £100m next time around.
Of course it doesn’t seem to matter much at the moment, good housekeeping isn’t enough to keep any clubs head above this dirty water. When £50m of TV money can’t keep Portsmouth afloat, you have to wonder if all’s well in the world of football, you have to ask ‘Is this right, can it carry on?’
In a recent interview with the Independent, Randy Lerner said this - "It's my sense that we're at something of a crossroads for English football just now, I think there's a palpable frustration among football fans that I believe we in the football business should be conscious of. Fans see TV revenues going up, wages going up, the price of their tickets going up and they're thinking: 'Hey, it's the same round ball, the same number of players and still two 45-minute halves. We don't get it.’ ”
I don’t get it.
Rewrite the book and rule the pages.
I think it started in 1992. In February of that year every club in England’s top division resigned from the football league and that autumn they broke out on their own – forming a new league whose sole aim was to make money for its members.
The Premier League has always been about money, it was born for TV’s bounty and from day one it spoke of commerce and of profit, of a global market – not sport, not even entertainment, only product. It’s never really changed, only got better at what it does ‘Buy now because next year we’ll all be richer’ it said, and when it found itself needing more, it re-invented some other competitions, ‘Goodbye unprofitable, unpredictable cup competition, hello Champions League!’ it shouted, and the money rolled in.
And out. Suddenly fourth was a big prize, and every club gambled on that extra pot of gold. Once you were in you were rich, and once you were rich it was hard to fall out. In ten years English football went from being a sport where having a good team could make you rich to a business where being rich could get you a good team. Players became incredibly, ridiculously, stupidly wealthy – TV loved them, they were the new rock and roll and they knew it – the first million pound a year football became the first five million pound a year footballer, and they and their agents let everyone know that if you wanted to compete you needed to pay.
Those clubs that earned money could afford better players and those with better players could afford to earn money – somewhere, quietly a balance changed and nobody noticed (except maybe Leeds). These big beasts needed feeding and the natural progression of the model was the arrival of the billionaires; if you could afford the best you could still make money and what’s more people would love you for it – fame and fortune awaited.
I don’t think you can blame the biggest fish in the river for the quality of the water, when Manchester City’s Sheiks arrived, some said it was the death of the game – I see it as just another evolution of February 1992.
We’re now left in a situation where a club that doesn’t have an owner capable of putting in £100m a year faces a stark choice; try to compete and go bust or slowly fade away – that’s got to be wrong somewhere. As Mr Lerner points out, things keep going up, players wages, your Sky subscription, your season ticket, this years home shirt – it’s become an expensive pastime and for the money you want some excitement – ironically it’s money that has stopped us getting it.
As strange as it might seem now, it was once the case that a team could be promoted, finish sixth in their first season, then harbour dreams of winning the title the following year. In the early nineties we finished 7th, then 2nd, then 10th – the season after we last won the title in 1981 we finished 11th – that’s unimaginable nowadays. The unpredictable nature of the art of building a side has been replaced by an altogether more stable, staid financial pecking order.
Unpredictability and dreams, these are the things that light a flame under fans, they are why the FA Cup third round still retains its glory, they are why we keep coming back; because we can win this one, we can beat these, because possibility should be tangible. Possibility. The real chance that this could be our year; it’s not quite so believable as it used to be. This year in the Championship, there are fourteen teams who have odds of 20-1 or shorter to take the title, in the Premier League there are just five.
This is how it ends.
Three quarters of the league have nothing to play for, attendances are dropping, a day out at the match is something you need to save up for and when you get there you’re mostly paying to watch a team you know will win against a team you know won’t.
People are switching off - £59m of our £84m of revenue last season came from broadcasting and television and people are switching off.
Burn the river down.
In 1969, Cleveland’s Cuyahoga River caught fire. In the first half of the century it had become the city’s dumping ground and the success of the regions industries had meant that businesses dumping oil, waste and rubbish slowing the rivers flow. In the aftermath of the fire, TIME magazine published a story about it that woke America up. It was ultimately responsible for the birth of the American environmental movement, the introduction of the Clean Water Act and the creation of the US Environmental Protection agency.
"Anyone who falls into the Cuyahoga does not drown," the story exclaimed, "He decays."
The Premiership is much the same; it’s dirty, polluted and flammable. Portsmouth’s fire hasn’t gone unnoticed and the unmanageable debts at the top have fanned the flames. Our footballing river is burning.
It’s slowed down too, with the weight of player salaries and the cost of competing at the right end meaning that it is now impossible for an English Premier League club to function well as a business and be successful. Clubs require constant infusions of cash from their wealthy benefactors if they want to compete in the upper half of the table and even those lucrative Champions League revenues are unlikely to result in a profit nowadays.
For the owners, there is status and the opportunity to make a single hit profit through buying a club and selling it on, but as an opportunity to own a business that makes money on an ongoing basis, a Premier League football club is a dead fish.
Trying and failing used to mean disappointment as a standard and relegation at worst, increasingly it now means putting the long term future of a club at risk, even its very existence – it’s a fire that burns brightly enough for the taxman to refer to it as a sham, to have accountants shaking their heads and even finally it appears to even have the ability to get those who run football to spot the flames.
Richard Scudamore, Chief Executive of the Premier League, and Michel Platini, President of UEFA have each made a significant move towards changing the game in the last twelve months.
Firstly and most surprisingly, Mr Scudamore put into place a rule that restricted every Premier League team to a squad of 25 players. It’s not quite as strong a rule as it sounds, as it doesn’t include players under the age of 21, but it’s a significant step in the right direction.
The media’s focus on the rule has been on its homegrown element, but I firmly believe that the genesis of this rule is in finance. Players under the age of 21 don’t tend to be earning the sort of money that older players do, and in limiting clubs to 25 players of a certain age, Mr Scudamore has placed the first real limitation on clubs spending since the Premier League began.
It’s a rule that stands against the very ethos of what the league has stood for since it began - that money was the most important thing in football and that those with the most money should win. It isn’t the strongest limit, but it’s a start and it represents a sea change in thinking, this is a rule designed to limit the influence of money and secure the future of the product – it’s the first hose aimed at the fire.
For his part Mr Platini has introduced his Financial Fair Play initiative, which requires clubs to break even or be self-supporting in order to compete in European competition. As he puts it:
“It is to stop clubs making losses consistently, and having a backer to pay them off. That way of funding clubs, from outside owners, inflates players' wages, and too often an owner finds he cannot fund the losses any more and the club is in crisis. Only the English Premier League clubs, and clubs in Italy, have this sugar daddy model, and it is not sustainable for football”.
That’s us by the way, but I think you can see his point – the model doesn’t work and if we want the sport to survive, we’re going to need to adjust. There’s an element of maintaining the status quo in this rule and it’s certainly got its heart in protecting the establishment - if you make money, you can spend it; if you don’t, you can’t change that – but ultimately it will also help to drive down costs and force clubs to reconsider how they operate.
Neither of those initiatives is going to change football overnight and indeed for the most part, they won’t even be immediately noticeable, but it’s not their detail that interests me, it’s their intent; the intent seems to have shifted from unregulated competition to a more sustainable flow.
Today Portsmouth football club will find out if they survived the fire. The High Court will decide whether to uphold Her Majesty’s Revenue and Customs appeal against the clubs Compulsory Voluntary Agreement and call in its outstanding tax debt of £13m. If the Courts find against them, then in all likelihood the club will face liquidation, and the state of the modern game will have claimed its first victim.
Mr Scudamore has emerged as an unlikely hero in this case, firstly as it was revealed that he persuaded the leagues owners to make the payments that kept Portsmouth in business last season when the clubs were happy to see them go to the wall, then in pushing through a raft of new measures to support clubs promoted and relegated from the Premier League and strengthen the financial testing of any new owners.
Mr Scudamore it would seem has begun to appreciate that left unchecked; the behaviour of its clubs will kill the Premier league. Portsmouth’s near collapse mid-season threatened the product, the league itself, and ultimately it is the future of the Premier League that interests him, not its individual members.
Changes are not here yet and I don’t expect the English footballing environment to change overnight – but it seems that there is a will starting to build that might see a clearer more sustainable future – an environmental movement is growing.
Let’s try to fill it in.
So that’s where we are, how we got here and how the landscape might be changing.
Aston Villa Football Club – over a hundred million pounds in debt, unable to operate as a business in the way that other businesses would consider as successful, but still better off than many of our contemporaries thanks to our owner and patron.
Thankfully Mr Lerner’s commitment to the cause is currently beyond question. This year he’s built a house in the midlands, he’s a more regular visitor than ever before and he’s become a little more hands on.
Martin O’Neill recently said “Aston Villa is not a plaything for Randy Lerner. He's really genuine about this club. As far as I can see, he has absolutely no intention of selling the club to make a profit”.
Long may that continue, without him we’d be in a very dangerous position indeed and it’s fair to say that never in its long history has the continued existence of this club been quite so reliant on one man.
If you take a cold look at what we have, there’s not much of a physical return on Randy’s investment, we’ve got a squad that with the exception of three or four players doesn’t have a great resale value, there are no new stands at Villa Park and no new stadium, but for his £270m he’s currently got a club that’s most likely worth at least that and a business with better prospects than our accounts might lead us to believe.
Our income is heading upwards, new deals with Forex and Fiat, an additional £7m in TV revenues and the potential redevelopment of the North Stand should see us continue to build our revenues over the next few years and give us a fighting chance to progress.
For now though as Mr O’Neill (again) says “We are not looking at players at this minute, because we have to sell. Do I have to sell to buy? We wouldn’t be the only club in that position” and we’re not, not by a long shot. Wages have put every Premier League club barring one or two exceptions on hold.
Our wage bill is too high and needs to be reduced and because we’re certainly not alone in that it isn’t going to be easy. This summer we needed to make a decision on whether we would stick with a solid base and a sustainable business or twist and go for it at the top with another big investment in players and more debt.
We’ve chosen to stick and I for one think it’s the right decision, the Premier League is all wrong and just starting to right itself and now isn’t the time to gamble. It’s a strange game, and right now the only winning move is not to play.
Of course, that’s a strategy we’ve pursued before and there are many who see the echo of Mr Ellis in the clubs current position – I’d disagree.
Our current situation and our strategy of long term investment, improvement and progress even at the expense of our current performance is a policy that Mr Ellis alluded to but never followed up on, under Mr Lerner there is a systematic, clearly visible plan in action to increase our revenues and give us the ability to compete, no matter where the game finds itself. For me the difference is clear, I hope I’m right.
In that recent interview with the Independent, Randy Lerner said, "The international breadth of the game, from players to owners, is uniquely distilled in this country. But, at Villa, we're very much concentrating on developing a sustainable local business. One that can function and grow."
In that sentence is exactly where we’re going, it tells us that the Premier League is currently a game that can’t be won from where we are, so we’ll develop our own way one step at a time - if our destination moves closer while we’re on the journey then so much the better – but we will not rush headlong into the night; the madness can take some other victim.
If you’d like it more clearly, here’s what General Charles Krulak said yesterday:
“Randy is as committed to the Club and Fans as I have ever seen him. His passion is sky high and the amount of time he has spent in the UK this summer should show that to everyone. Our goal has not changed....yes, the playing field has altered a bit with the amount of money being thrown around but we believe that all will even out and success will go to those who play their cards smartly and with a view towards financial wisdom.”
Personally speaking and considering the state of the league, the condition of our accounts and the balance of our squad, I’m much more positive than I thought I’d be, maybe I was born sunny side up but I still believe we’ve got a good owner, a good plan and a bright future.
This season will be hard, let’s not kid ourselves otherwise. An adjustment must be made and it will take time, I don’t believe we’ll compete for fourth this season and I’m not sure where we’ll end up in the table, but then the table might not be the best indicator of our progress. It’s important that as fans we don’t get disillusioned at the first hurdle, that we see the bigger picture and trust in the plans of a Cleveland family from the banks of the Cuyahoga.
There are difficult times ahead for football, but we can take pride in the fact that right about now we’re in a better position than most to live up to the promise that’s made just under the Lion on our badge.
Prepared.
I hope.
http://www.villatalk.com/index.php?name=News&file=article&sid=4152
Football has changed for me, I find myself dreaming about contracts and revenues not headers and volleys, ones and zeroes not hopes and heroes – money has moved the heart of football and I wonder when we might see it move back. I want to know where we are as a club, how we got here and where we might end up.
This land is the land of ours; this river runs red over it.
In the Autumn of 2006 our club’s heart moved to Cleveland, and more specifically to that city’s banks – we weren’t alone in that, a lot of clubs have changed hands in the last few years; what’s more we got lucky as our club was rediscovered by our very own Moses of Cleveland.
Mr Lerner has bought into a strange game though, a game with a background of instability, unpredictability and debt – a silted, muddy river with an unsure future.
It started with the small and the weak, with Stockport, Rotherham, Luton, Chester, Bournemouth, Gillingham, Southend, Preston, Cardiff, Sheffield Wednesday, Crystal Palace – all into debt, into administration, facing winding up orders and uncertain futures. It affected the foolish when Leeds United overstretched and fell over, but nobody in the Premiership really noticed or cared what was happening upriver, it couldn’t happen here, not on the gravy train.
And then it did, Portsmouth achieved the unthinkable and went bust in the Premier league. The Pompey chimes were an alarm bell across the country. The effluence came down the river and reached the affluence at it’s end – Manchester United suddenly found themselves under an avalanche of debt, Liverpool in danger of drowning in theirs with interest of £110,000 a day and finally, right at the very top, Barcelona discovered they were no longer able to pay their players this summer and had to extend their own debt by another €100m or so.
Football is in danger of bursting its banks - the money that once flowed through the game from club to club no longer does, it goes out of the game in extraordinary salaries, it pays bankers, accountants and lawyers and it simply isn’t sustainable. The river is slowing up, polluted and blocked by greed and choked in debt.
Take a picture here; take a souvenir.
Back home in the shadow of the expressway an idea seemed to have grown up that suggested we were somehow immune; that Randy Lerner had somehow lifted us to higher ground – this summer has been a reminder that the environmental damage done to our league impacts on us all.
Like every other club in the league, as a business, Aston Villa are a poor proposition – we’re in debt – that seems to come as a surprise to some people, but our football club had debts of over £100m in October 2009. By the end of the season just gone, our debt might well have been as much £150m.
In fact, in the financial year 2008-09, we paid over £4m in interest on the debt from our loans, that comes out at almost £11,000 a day and this year it will be more. We pay our interest more than we pay any player at Villa Park.
Much of that interest is paid on loans given to the club by Randy Lerner, and those interest rates are extremely kind - this isn’t a Hicks and Gillette situation where the owners milk the club dry by having it pay huge amounts of interest on money they borrowed form themselves.
And don’t get me wrong, I’m not about to lay blame at the owners door, far from it - in the four years since he took over the club the total investment by Mr Lerner is estimated at £270m if you include the purchase of the club, the money he’s shovelled in and those generous loan arrangements. Our American friend has done more than his share in helping keep us afloat.
Imagine where we’d be without him – imagine the ambitions of a club £270m worse off – imagine Doug Ellis rowing against this tide – yet still our overall losses in the year ending in May 2010 were placed at £46.2m.
Strangely, while we were under Ellis the risk was that he wouldn’t leave and we’d wither away, with Lerner it’s that he could and we’d implode. For all that it might be true to say that Ellis held the club back – Randy Lerner is holding it up; if you’re one for praying, put one in for Randy’s health, wealth and happiness this evening.
I was going to ask you where all of this money is going, but I suspect you already know – it’s flowing steadily into the pockets of players and their agents.
Last year our wage bill went up by over £20m and the figures from the last published accounts show us paying out over £70m in salaries each year. Famously, that’s more than Tottenham and scarily it doesn’t include the small gaggle of players we picked up at the end of last summers transfer window. In 2007 it was just £25m.
Not too long ago, the Premier League rather grandly recommended that clubs should attempt to restrict their wage bill to 50% or less of their turnover. Not many managed it. Last season Manchester United managed 44% and Arsenal 46%, the ratio of our wages to revenues was a sobering 83.7%.
That means every time you spend £3 on a beer at Villa Park, £2.50 of it goes straight into the player’s pockets and straight out of the club.
What’s more, we’ve got a number of good players who’ve reached a stage in their careers where if we want to keep them we need to offer them new and more expensive deals; Ashley Young and Gabriel Agbonlahor join James Milner in having just two years remaining on their contracts. If our current wage bill is high, keeping hold of the talent that we have will stretch us still further – to keep those three would cost a club £12m a year, if not more. Sell-to-buy might be this summer’s strap line, but as things stand don’t be too surprised if we’re selling Peter just to keep Paul.
Controlling costs is clearly the club’s key focus this summer and we’ve certainly built up a collection of costly footballers, many of whom can be accused of not offering full value. I’m sure I’m surprising no one here in emphasising the importance of cutting some of the wage bill from the fringes of our bench. Flotsam and jetsam they may be but some of our fringe players are far too expensive to be allowed to drift through their contracts.
Costs are not our only focus though and in the longer term, the future of the club is bound more tightly to our revenues.
Last year the club brought in a record £84m in revenues – TV money, shirt sales, matchday hospitality and good old-fashioned bums on seats – we were better at it than we’ve ever been and it’s nice to know that some of that big wage bill is being very wisely spent on folks who know how to operate a football club.
It’s nowhere near enough though.
According to the latest Deloitte financial report on the Premiership, Manchester United’s revenue was at £279m last year, with Arsenal and Chelsea also up at over £200m – more worryingly Spurs made almost £30m more than us, bringing in £113m. That gives them a big advantage - that £30m is the money it would take to keep Milner, Agbonlahor and Young, it could bring down our debt and it could finance our future.
It’s easy to point to Spurs ticket prices and take the moral high ground (and fun too) but whilst we can be justifiably proud of our record of fairness in pricing, it’s not ticket prices that make the big difference – you could put £100 on the price of every season ticket at Villa Park and add less than £3m to our incomes.
There are three key areas of revenue in a football club, matchday income, television and broadcast rights and commercial income. Last year, television and broadcast rights accounted for a whopping 59% of our total income at £50m; matchday income and commercial concerns trailed in with £23m and £12m respectively.
There are good signs that this can be increased in the coming season, there is more broadcast money coming and our shirt sponsorship deal will help drive commercial income - I wouldn’t be surprised to see us post revenues in excess of £100m next time around.
Of course it doesn’t seem to matter much at the moment, good housekeeping isn’t enough to keep any clubs head above this dirty water. When £50m of TV money can’t keep Portsmouth afloat, you have to wonder if all’s well in the world of football, you have to ask ‘Is this right, can it carry on?’
In a recent interview with the Independent, Randy Lerner said this - "It's my sense that we're at something of a crossroads for English football just now, I think there's a palpable frustration among football fans that I believe we in the football business should be conscious of. Fans see TV revenues going up, wages going up, the price of their tickets going up and they're thinking: 'Hey, it's the same round ball, the same number of players and still two 45-minute halves. We don't get it.’ ”
I don’t get it.
Rewrite the book and rule the pages.
I think it started in 1992. In February of that year every club in England’s top division resigned from the football league and that autumn they broke out on their own – forming a new league whose sole aim was to make money for its members.
The Premier League has always been about money, it was born for TV’s bounty and from day one it spoke of commerce and of profit, of a global market – not sport, not even entertainment, only product. It’s never really changed, only got better at what it does ‘Buy now because next year we’ll all be richer’ it said, and when it found itself needing more, it re-invented some other competitions, ‘Goodbye unprofitable, unpredictable cup competition, hello Champions League!’ it shouted, and the money rolled in.
And out. Suddenly fourth was a big prize, and every club gambled on that extra pot of gold. Once you were in you were rich, and once you were rich it was hard to fall out. In ten years English football went from being a sport where having a good team could make you rich to a business where being rich could get you a good team. Players became incredibly, ridiculously, stupidly wealthy – TV loved them, they were the new rock and roll and they knew it – the first million pound a year football became the first five million pound a year footballer, and they and their agents let everyone know that if you wanted to compete you needed to pay.
Those clubs that earned money could afford better players and those with better players could afford to earn money – somewhere, quietly a balance changed and nobody noticed (except maybe Leeds). These big beasts needed feeding and the natural progression of the model was the arrival of the billionaires; if you could afford the best you could still make money and what’s more people would love you for it – fame and fortune awaited.
I don’t think you can blame the biggest fish in the river for the quality of the water, when Manchester City’s Sheiks arrived, some said it was the death of the game – I see it as just another evolution of February 1992.
We’re now left in a situation where a club that doesn’t have an owner capable of putting in £100m a year faces a stark choice; try to compete and go bust or slowly fade away – that’s got to be wrong somewhere. As Mr Lerner points out, things keep going up, players wages, your Sky subscription, your season ticket, this years home shirt – it’s become an expensive pastime and for the money you want some excitement – ironically it’s money that has stopped us getting it.
As strange as it might seem now, it was once the case that a team could be promoted, finish sixth in their first season, then harbour dreams of winning the title the following year. In the early nineties we finished 7th, then 2nd, then 10th – the season after we last won the title in 1981 we finished 11th – that’s unimaginable nowadays. The unpredictable nature of the art of building a side has been replaced by an altogether more stable, staid financial pecking order.
Unpredictability and dreams, these are the things that light a flame under fans, they are why the FA Cup third round still retains its glory, they are why we keep coming back; because we can win this one, we can beat these, because possibility should be tangible. Possibility. The real chance that this could be our year; it’s not quite so believable as it used to be. This year in the Championship, there are fourteen teams who have odds of 20-1 or shorter to take the title, in the Premier League there are just five.
This is how it ends.
Three quarters of the league have nothing to play for, attendances are dropping, a day out at the match is something you need to save up for and when you get there you’re mostly paying to watch a team you know will win against a team you know won’t.
People are switching off - £59m of our £84m of revenue last season came from broadcasting and television and people are switching off.
Burn the river down.
In 1969, Cleveland’s Cuyahoga River caught fire. In the first half of the century it had become the city’s dumping ground and the success of the regions industries had meant that businesses dumping oil, waste and rubbish slowing the rivers flow. In the aftermath of the fire, TIME magazine published a story about it that woke America up. It was ultimately responsible for the birth of the American environmental movement, the introduction of the Clean Water Act and the creation of the US Environmental Protection agency.
"Anyone who falls into the Cuyahoga does not drown," the story exclaimed, "He decays."
The Premiership is much the same; it’s dirty, polluted and flammable. Portsmouth’s fire hasn’t gone unnoticed and the unmanageable debts at the top have fanned the flames. Our footballing river is burning.
It’s slowed down too, with the weight of player salaries and the cost of competing at the right end meaning that it is now impossible for an English Premier League club to function well as a business and be successful. Clubs require constant infusions of cash from their wealthy benefactors if they want to compete in the upper half of the table and even those lucrative Champions League revenues are unlikely to result in a profit nowadays.
For the owners, there is status and the opportunity to make a single hit profit through buying a club and selling it on, but as an opportunity to own a business that makes money on an ongoing basis, a Premier League football club is a dead fish.
Trying and failing used to mean disappointment as a standard and relegation at worst, increasingly it now means putting the long term future of a club at risk, even its very existence – it’s a fire that burns brightly enough for the taxman to refer to it as a sham, to have accountants shaking their heads and even finally it appears to even have the ability to get those who run football to spot the flames.
Richard Scudamore, Chief Executive of the Premier League, and Michel Platini, President of UEFA have each made a significant move towards changing the game in the last twelve months.
Firstly and most surprisingly, Mr Scudamore put into place a rule that restricted every Premier League team to a squad of 25 players. It’s not quite as strong a rule as it sounds, as it doesn’t include players under the age of 21, but it’s a significant step in the right direction.
The media’s focus on the rule has been on its homegrown element, but I firmly believe that the genesis of this rule is in finance. Players under the age of 21 don’t tend to be earning the sort of money that older players do, and in limiting clubs to 25 players of a certain age, Mr Scudamore has placed the first real limitation on clubs spending since the Premier League began.
It’s a rule that stands against the very ethos of what the league has stood for since it began - that money was the most important thing in football and that those with the most money should win. It isn’t the strongest limit, but it’s a start and it represents a sea change in thinking, this is a rule designed to limit the influence of money and secure the future of the product – it’s the first hose aimed at the fire.
For his part Mr Platini has introduced his Financial Fair Play initiative, which requires clubs to break even or be self-supporting in order to compete in European competition. As he puts it:
“It is to stop clubs making losses consistently, and having a backer to pay them off. That way of funding clubs, from outside owners, inflates players' wages, and too often an owner finds he cannot fund the losses any more and the club is in crisis. Only the English Premier League clubs, and clubs in Italy, have this sugar daddy model, and it is not sustainable for football”.
That’s us by the way, but I think you can see his point – the model doesn’t work and if we want the sport to survive, we’re going to need to adjust. There’s an element of maintaining the status quo in this rule and it’s certainly got its heart in protecting the establishment - if you make money, you can spend it; if you don’t, you can’t change that – but ultimately it will also help to drive down costs and force clubs to reconsider how they operate.
Neither of those initiatives is going to change football overnight and indeed for the most part, they won’t even be immediately noticeable, but it’s not their detail that interests me, it’s their intent; the intent seems to have shifted from unregulated competition to a more sustainable flow.
Today Portsmouth football club will find out if they survived the fire. The High Court will decide whether to uphold Her Majesty’s Revenue and Customs appeal against the clubs Compulsory Voluntary Agreement and call in its outstanding tax debt of £13m. If the Courts find against them, then in all likelihood the club will face liquidation, and the state of the modern game will have claimed its first victim.
Mr Scudamore has emerged as an unlikely hero in this case, firstly as it was revealed that he persuaded the leagues owners to make the payments that kept Portsmouth in business last season when the clubs were happy to see them go to the wall, then in pushing through a raft of new measures to support clubs promoted and relegated from the Premier League and strengthen the financial testing of any new owners.
Mr Scudamore it would seem has begun to appreciate that left unchecked; the behaviour of its clubs will kill the Premier league. Portsmouth’s near collapse mid-season threatened the product, the league itself, and ultimately it is the future of the Premier League that interests him, not its individual members.
Changes are not here yet and I don’t expect the English footballing environment to change overnight – but it seems that there is a will starting to build that might see a clearer more sustainable future – an environmental movement is growing.
Let’s try to fill it in.
So that’s where we are, how we got here and how the landscape might be changing.
Aston Villa Football Club – over a hundred million pounds in debt, unable to operate as a business in the way that other businesses would consider as successful, but still better off than many of our contemporaries thanks to our owner and patron.
Thankfully Mr Lerner’s commitment to the cause is currently beyond question. This year he’s built a house in the midlands, he’s a more regular visitor than ever before and he’s become a little more hands on.
Martin O’Neill recently said “Aston Villa is not a plaything for Randy Lerner. He's really genuine about this club. As far as I can see, he has absolutely no intention of selling the club to make a profit”.
Long may that continue, without him we’d be in a very dangerous position indeed and it’s fair to say that never in its long history has the continued existence of this club been quite so reliant on one man.
If you take a cold look at what we have, there’s not much of a physical return on Randy’s investment, we’ve got a squad that with the exception of three or four players doesn’t have a great resale value, there are no new stands at Villa Park and no new stadium, but for his £270m he’s currently got a club that’s most likely worth at least that and a business with better prospects than our accounts might lead us to believe.
Our income is heading upwards, new deals with Forex and Fiat, an additional £7m in TV revenues and the potential redevelopment of the North Stand should see us continue to build our revenues over the next few years and give us a fighting chance to progress.
For now though as Mr O’Neill (again) says “We are not looking at players at this minute, because we have to sell. Do I have to sell to buy? We wouldn’t be the only club in that position” and we’re not, not by a long shot. Wages have put every Premier League club barring one or two exceptions on hold.
Our wage bill is too high and needs to be reduced and because we’re certainly not alone in that it isn’t going to be easy. This summer we needed to make a decision on whether we would stick with a solid base and a sustainable business or twist and go for it at the top with another big investment in players and more debt.
We’ve chosen to stick and I for one think it’s the right decision, the Premier League is all wrong and just starting to right itself and now isn’t the time to gamble. It’s a strange game, and right now the only winning move is not to play.
Of course, that’s a strategy we’ve pursued before and there are many who see the echo of Mr Ellis in the clubs current position – I’d disagree.
Our current situation and our strategy of long term investment, improvement and progress even at the expense of our current performance is a policy that Mr Ellis alluded to but never followed up on, under Mr Lerner there is a systematic, clearly visible plan in action to increase our revenues and give us the ability to compete, no matter where the game finds itself. For me the difference is clear, I hope I’m right.
In that recent interview with the Independent, Randy Lerner said, "The international breadth of the game, from players to owners, is uniquely distilled in this country. But, at Villa, we're very much concentrating on developing a sustainable local business. One that can function and grow."
In that sentence is exactly where we’re going, it tells us that the Premier League is currently a game that can’t be won from where we are, so we’ll develop our own way one step at a time - if our destination moves closer while we’re on the journey then so much the better – but we will not rush headlong into the night; the madness can take some other victim.
If you’d like it more clearly, here’s what General Charles Krulak said yesterday:
“Randy is as committed to the Club and Fans as I have ever seen him. His passion is sky high and the amount of time he has spent in the UK this summer should show that to everyone. Our goal has not changed....yes, the playing field has altered a bit with the amount of money being thrown around but we believe that all will even out and success will go to those who play their cards smartly and with a view towards financial wisdom.”
Personally speaking and considering the state of the league, the condition of our accounts and the balance of our squad, I’m much more positive than I thought I’d be, maybe I was born sunny side up but I still believe we’ve got a good owner, a good plan and a bright future.
This season will be hard, let’s not kid ourselves otherwise. An adjustment must be made and it will take time, I don’t believe we’ll compete for fourth this season and I’m not sure where we’ll end up in the table, but then the table might not be the best indicator of our progress. It’s important that as fans we don’t get disillusioned at the first hurdle, that we see the bigger picture and trust in the plans of a Cleveland family from the banks of the Cuyahoga.
There are difficult times ahead for football, but we can take pride in the fact that right about now we’re in a better position than most to live up to the promise that’s made just under the Lion on our badge.
Prepared.
I hope.
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Replies: 9
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Does it come in audio..
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Interesting read and gloomy times ahead, but as mentioned its not just happening to villa, could well be come the end of the season quite a few clubs find themselves in trouble..
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A sobering article. Thanks.
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A very interesting read cj,well done SIR
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You're welcome BN. I didn't know how the thread would go down myself, but am surprised by the lack of comment especially in light of the importance of the topic. That article should be included with every season ticket book this year, because everyone involved with the club needs a reality check.
I am a long standing defender of Ellis, (in a tiny minority at VP) sure he had his failings, but he knew how to run the club as a business. The debt Lerner has loaded onto the club is frightening, I hope things change and Villa are one of the clubs that make a stand against this salary madness. We know that we cannot win the league, in fact we know we can't finish in the top 4, so really what are we gambling with our future for? (the Europa League, gimme a break!). I've said all close season that we should not be buying, we have an excellent academy and this is where our future lies. MoN has been given plenty to rebuild after O'Leary's disaster but now he needs reining in before the situation worsens. If he decides to look elsewhere for employment so be it, because in this instance a good chairman is worth ten times the value of a good manager, and in Lerner we have a gem. |
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it was a very good read.
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Great read. I think some of the plans Lerner has put in place, expansion of the ground, getting a shirt sponsor, increasing season ticket prices will all help increase revenues in future seasons which should help us reduce the debt/decrease the wage bill as a percentage of our turnover.
Also agreed that our academy is the future. Alot of people mention the Man Utd youngsters, but I think ours can be just as successful IF given a chance to prove themselves. If MON doesn't want to risk Bannan, Lichaj, Albrighton etc then he should loan them out to one of the premier league new boys, say Blackpool or West Brom so that they can gain experience in the top flight. |
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I could have wrote that lot in one sentence.
Football's farked unless someone figures out how to implement a wage cap. |
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CJ is right about Ellis. He gave all of his managers a good amount to spend but the clubs solvency was his first priority. Much maligned.
Also agree with agentS. We have hit the jackpot with with the kids coming through and if I were Lerner I would be asking Mon if any of the people he's thinking of buying are really better than Delfounso, Albrighton, Bannan, Lichaj. |