Post by QPR Report on Apr 2, 2010 6:56:32 GMT
The Times April 2, 2010 - Oliver Kay
Premier League must accept age of austerity
Adam Pearson, the Hull chairman, has admitted there are very tough times ahead for the club
To inspect the accounts of the 20 Premier League clubs is to peer through a window into their souls.
It is not just the numbers, it is the words. Arsenal are “superbly positioned”, Everton bid to “punch above our weight if you like”, West Ham United’s new board call their inheritance “unsatisfactory”, while Hull City allow their auditors to paint a fairly terrifying picture of the challenges ahead.
Portsmouth, you will not be surprised to discover, have yet to file their latest accounts to Companies House, having been the one club to miss the Premier League’s deadline of March 1 under new financial regulations, but the extent of the disarray at Fratton Park is well known.
What has, until now, been rather less clear is the way in which clubs such as Aston Villa, Blackburn Rovers, Fulham, Sunderland and Wigan Athletic stretch themselves, in most cases using loans — whether from the banks or their benefactors — to allow them to invest in their playing staff and, in most cases, to perform above or in accordance with expectations.
The financial landscape of the Premier League could hardly be more varied. Even within the boundaries of Greater Manchester, an area covering 493 square miles, there is the leveraged ownership of the Glazers at Manchester United, the largesse of Sheikh Mansour at Manchester City, the tight ships run by Bolton Wanderers and Wigan Athletic, albeit with assistance behind the scenes. A little farther afield in East Lancashire, there are the mill-town clubs of Blackburn and Burnley, both cutting their cloths in different ways in their bids to sustain top-flight football in the 21st century.
This is the era of austerity in the Premier League, though you would be forgiven for having not noticed. The extravagance of Sheikh Mansour at Manchester City is breathtaking — a pre-tax loss of £89.7 million in the financial year ending May 31, 2009, which does not begin to reflect a net expenditure of £117 million in the transfer market last summer — but elsewhere belts have been tightened in anticipation of an economic crisis. It has not happened yet, of course, with attendances holding firm and broadcast revenues expected to rise again next season, but the downturn of the past 18 months has brought what chairmen and chief executives call “challenges”.
At Portsmouth, the only challenge now is to keep the club afloat. Alexandre Gaydamak, the owner who bankrolled them to FA Cup glory in 2008, lost a fortune in the global economic crisis and soon made it clear he was unwilling to invest any more money in a club that had huge debts to pay to other football clubs, to banks in England and in South Africa and, of course, to Revenue & Customs, who, under the terms of football’s peculiar hierarchy, joined the grocers, the wholesalers and everyone else at the bottom of the list of creditors.
Winding-up petitions have been served and, although the club is now in the safe haven of administration, the few remaining employees at Fratton Park, outside of the dressing-room, know that the battle for survival is only just beginning.
Already, perhaps in view of the calamity that has unfolded on the South Coast, the battle lines have been drawn at Hull City. Hull’s auditor, Deloitte, has, for the second year in a row, raised doubts about the club’s ability to continue as a “going concern”. Liverpool were aggrieved to be subjected to a similar slur in last year’s accounts — this year’s have yet to be submitted to Companies House — but at Hull, nobody is in denial. The difference between survival and relegation in the Premier League over the coming weeks is the difference between hardship and catastrophe.
Hull’s impending financial crisis, which their auditors calculate will leave them with a shortfall of £21 million next year if they are relegated and £16 million if they stay up, is a result of one of football’s deadly sins: overspending.
Three years ago they were a Coca-Cola Championship club with a wage bill of £4 million. That figure rose to £13.7 million in their promotion campaign, 2007-08, then to £33.6 million in the Premier League last term. They stayed up, against all expectations, but their wage bill now is £38 million and, with alarming sums frittered on transfer fees and agents fees, Adam Pearson, their chairman, who returned to the KC Stadium last autumn, has admitted there are very tough times ahead.
The curious thing about the Premier League landscape is that, in an era where big-city clubs, with vast support bases, should surely have become the norm, Bristol, Coventry, Derby, Leicester, Newcastle, Nottingham and Southampton are represented in the Championship — or, more shocking still, in League One in the case of Leeds and Norwich — small-town clubs such as Blackburn, Burnley and Wigan are competing in the Premier League.
Blackburn, in many ways, are a phenomenon. They came to prominence, at least in the modern age, under the ownership of a local multi-milllionaire, Jack Walker, and won the Premier League in 1995 with the kind of big-spending philosophy, relatively speaking, that Roman Abramovich has enjoyed at Chelsea and Sheikh Mansour is attempting to impose at Manchester City. Almost ten years after Walker’s death, though, and with his trustees no longer bankrolling the club, Blackburn, a town with a population of 105,000, are somehow tenth in the Premier League.
John Williams, the chairman, knows that his club’s financial policy represents the kind of financial highwire act that football’s authorities are so keen to put a stop to, but the risk, he says, is calculated. “The ratio of wages to turnover is high,” Williams says. “But we are a town where one-fifth of the indigenous population comes to watch us. In absolute terms, our wage bill is significantly lower than many of our peer clubs, including those with 35,000 fans every home match, with season-ticket prices twice as high as ours.
“By good management and by investing in good players. Blackburn Rovers has been around for 135 years. We all know that we are just stewards, just passing through. We think that, with good management, this is the best way to preserve our future.”
And that is the thing about the Premier League. It is not just one rich tapestry. It is 20 rich tapestries. All of them utterly desperate to ensure that they do not end up unravelling. Because if they do, the wider product will not be far behind.
www.timesonline.co.uk/tol/sport/football/premier_league/article7085267.ece
Premier League must accept age of austerity
Adam Pearson, the Hull chairman, has admitted there are very tough times ahead for the club
To inspect the accounts of the 20 Premier League clubs is to peer through a window into their souls.
It is not just the numbers, it is the words. Arsenal are “superbly positioned”, Everton bid to “punch above our weight if you like”, West Ham United’s new board call their inheritance “unsatisfactory”, while Hull City allow their auditors to paint a fairly terrifying picture of the challenges ahead.
Portsmouth, you will not be surprised to discover, have yet to file their latest accounts to Companies House, having been the one club to miss the Premier League’s deadline of March 1 under new financial regulations, but the extent of the disarray at Fratton Park is well known.
What has, until now, been rather less clear is the way in which clubs such as Aston Villa, Blackburn Rovers, Fulham, Sunderland and Wigan Athletic stretch themselves, in most cases using loans — whether from the banks or their benefactors — to allow them to invest in their playing staff and, in most cases, to perform above or in accordance with expectations.
The financial landscape of the Premier League could hardly be more varied. Even within the boundaries of Greater Manchester, an area covering 493 square miles, there is the leveraged ownership of the Glazers at Manchester United, the largesse of Sheikh Mansour at Manchester City, the tight ships run by Bolton Wanderers and Wigan Athletic, albeit with assistance behind the scenes. A little farther afield in East Lancashire, there are the mill-town clubs of Blackburn and Burnley, both cutting their cloths in different ways in their bids to sustain top-flight football in the 21st century.
This is the era of austerity in the Premier League, though you would be forgiven for having not noticed. The extravagance of Sheikh Mansour at Manchester City is breathtaking — a pre-tax loss of £89.7 million in the financial year ending May 31, 2009, which does not begin to reflect a net expenditure of £117 million in the transfer market last summer — but elsewhere belts have been tightened in anticipation of an economic crisis. It has not happened yet, of course, with attendances holding firm and broadcast revenues expected to rise again next season, but the downturn of the past 18 months has brought what chairmen and chief executives call “challenges”.
At Portsmouth, the only challenge now is to keep the club afloat. Alexandre Gaydamak, the owner who bankrolled them to FA Cup glory in 2008, lost a fortune in the global economic crisis and soon made it clear he was unwilling to invest any more money in a club that had huge debts to pay to other football clubs, to banks in England and in South Africa and, of course, to Revenue & Customs, who, under the terms of football’s peculiar hierarchy, joined the grocers, the wholesalers and everyone else at the bottom of the list of creditors.
Winding-up petitions have been served and, although the club is now in the safe haven of administration, the few remaining employees at Fratton Park, outside of the dressing-room, know that the battle for survival is only just beginning.
Already, perhaps in view of the calamity that has unfolded on the South Coast, the battle lines have been drawn at Hull City. Hull’s auditor, Deloitte, has, for the second year in a row, raised doubts about the club’s ability to continue as a “going concern”. Liverpool were aggrieved to be subjected to a similar slur in last year’s accounts — this year’s have yet to be submitted to Companies House — but at Hull, nobody is in denial. The difference between survival and relegation in the Premier League over the coming weeks is the difference between hardship and catastrophe.
Hull’s impending financial crisis, which their auditors calculate will leave them with a shortfall of £21 million next year if they are relegated and £16 million if they stay up, is a result of one of football’s deadly sins: overspending.
Three years ago they were a Coca-Cola Championship club with a wage bill of £4 million. That figure rose to £13.7 million in their promotion campaign, 2007-08, then to £33.6 million in the Premier League last term. They stayed up, against all expectations, but their wage bill now is £38 million and, with alarming sums frittered on transfer fees and agents fees, Adam Pearson, their chairman, who returned to the KC Stadium last autumn, has admitted there are very tough times ahead.
The curious thing about the Premier League landscape is that, in an era where big-city clubs, with vast support bases, should surely have become the norm, Bristol, Coventry, Derby, Leicester, Newcastle, Nottingham and Southampton are represented in the Championship — or, more shocking still, in League One in the case of Leeds and Norwich — small-town clubs such as Blackburn, Burnley and Wigan are competing in the Premier League.
Blackburn, in many ways, are a phenomenon. They came to prominence, at least in the modern age, under the ownership of a local multi-milllionaire, Jack Walker, and won the Premier League in 1995 with the kind of big-spending philosophy, relatively speaking, that Roman Abramovich has enjoyed at Chelsea and Sheikh Mansour is attempting to impose at Manchester City. Almost ten years after Walker’s death, though, and with his trustees no longer bankrolling the club, Blackburn, a town with a population of 105,000, are somehow tenth in the Premier League.
John Williams, the chairman, knows that his club’s financial policy represents the kind of financial highwire act that football’s authorities are so keen to put a stop to, but the risk, he says, is calculated. “The ratio of wages to turnover is high,” Williams says. “But we are a town where one-fifth of the indigenous population comes to watch us. In absolute terms, our wage bill is significantly lower than many of our peer clubs, including those with 35,000 fans every home match, with season-ticket prices twice as high as ours.
“By good management and by investing in good players. Blackburn Rovers has been around for 135 years. We all know that we are just stewards, just passing through. We think that, with good management, this is the best way to preserve our future.”
And that is the thing about the Premier League. It is not just one rich tapestry. It is 20 rich tapestries. All of them utterly desperate to ensure that they do not end up unravelling. Because if they do, the wider product will not be far behind.
www.timesonline.co.uk/tol/sport/football/premier_league/article7085267.ece