Post by QPR Report on Dec 3, 2008 7:32:32 GMT
Three pieces from David Conn in today's Guardian of some considerable significance and makes one wonder about QPR wages (and a number of players we signed, we gave long-term contracts) .
David Conn/The Guardian
Salary cap back on agenda for Championship•
Recession fears fuel calls for financial restraints
Game close to meltdown says Derby chairman
Championship clubs are considering a salary cap to help prevent spiralling financial losses as the economy heads into a recession. Most clubs in the division are losing significant money because they pay what one chairman described as "unsustainable" wages on players they hope will win them promotion to the Premier League.
Without the cushion of the multimillion-pound television deal enjoyed by the 20 Premier League clubs, Championship clubs are reporting tougher economic conditions, with away gates beginning to suffer and sponsorships and corporate hospitality harder to secure.
Adam Pearson, the chairman of football at Derby County, warned that football is inadequately prepared for the economic downturn. "The game is close to meltdown at all levels," he said. "Club boards are under pressure to gain success and that leads to them paying ridiculous wages. It cannot carry on or it will end in disaster. There is a growing feeling now that some sort of wage cap has to come in."
A salary cap for the Championship has been discussed theoretically ever since the 2002 collapse of ITV Digital, which plunged many Football League clubs into financial difficulties. In the reforms which followed, League Two clubs did agree in 2003-04 to limit their spending on wages to 60% of their turnover. That has lasted ever since but League One clubs jettisoned the same system after just a single season, 2004-05.
The Football League's chairman, Lord Mawhinney, is a confirmed advocate of a salary cap in all three divisions, particularly the Championship where wage inflation, trickling down from the Premier League, is more acute and several big clubs are making annual losses of £4m-5m. In a series of meetings of Championship clubs during the past year Mawhinney is understood to have pressed the case for a salary cap and called for votes, but failed to gain the support of a majority.
Now many club chairmen and chief executives are reporting that the mood has changed, prompted by alarm at the effect the recession is having. Many clubs are preparing to seek sponsorship for next season, a task one senior club source said is proving "difficult" because it is "grim out there". Second-tier sponsors especially, who do not have their name on team shirts but pay to advertise or sponsor matches or stands, tend to be more local businesses than the big companies attracted by the Premier League, and many of those are struggling so have less money to spend on football.
Mawhinney, who is understood to have lined up a series of meetings with club owners to press his case, will, however, have to persuade some who accept that wages must come down, but do not favour a league-wide restriction.
Rupert Lowe, Southampton's chairman, said: "The British economy is in dire trouble and it is seriously going to affect football. Players' wages are at unsustainable levels in a recession, and our ticket sales, corporate hospitality and sponsorship are down. Boards should keep wages below 60% of turnover, but I have never been in favour of a cap."
Informed sources say that as clubs assess the scale of the downturn, more than half are now in favour of introducing a salary cap. Some are debating the level it should be placed at, with a feeling growing that 60% is too high and arguing that the limit should be set at 50% of turnover.
Ray Ranson, the Coventry City chairman, said he believes football will be relatively resilient in the recession because people traditionally remain loyal to their clubs in difficult economic times, but clubs should nevertheless rein in their excessive spending on players' wages.
"A salary cap should not limit individual players' wages," he argued. "But restraining wages to a proportion of turnover would be a good thing and in today's climate, people should think seriously about it."
David Conn/The Guardian
Fear of bust has clubs looking for a salary ceilingThe recession allied to high costs means more teams in the Championship are backing a limit on wages
Support is growing for a salary cap in the Championship as clubs face up to spiralling players' wages, mounting financial losses and the onset of a recession to which the clubs are a great deal more vulnerable than those in the gilded circle of the Premier League. In the muscular, fiercely competitive Championship, which has no booming television deal and is skewed by the presence of relegated sides with £12m per season parachute-payments, clubs are seriously overspending as they chase the gold of Premier League promotion.
Adam Pearson, chairman of football at Derby County - who lost £12.5m in the year to June 2007 - warned starkly that clubs need to bring wages under control. "The game is close to meltdown at all levels," he said. "Boards are under pressure to gain success and that leads to them paying ridiculous wages. It cannot carry on or it will end in disaster. There is a growing feeling now that some sort of wage cap has to come in."
As the recession begins to bite, he said, Derby's home crowds are holding up well, but away gates are "dwindling" and it is "much harder" to sell corporate boxes and secure sponsorship. That same story is being told across the country. When the credit crunch first hit, all attention was on how the Premier League clubs would cope, but they are cushioned by their record £2.7bn TV deal, which runs until May 2010. Championship clubs, by contrast, receive only £1m each from TV this season (although the league's new £264m three-year deal begins next season) and just £1m from what the Premier League, with straight-faced spin, terms "solidarity" payments.
At Championship level, sponsors are more local than the blue-chip companies paying for their association with Premier League names, and with many having problems in their own businesses, money is tight for spending on football.
One senior figure at a prominent Championship club, who did not want to be named because the club still needs to secure next season's sponsorship deals, said: "The recession will see a hell of a lot of clubs go into administration unless football gets some common sense into its finances. We would certainly support a salary cap."
This sudden bout of realism will help the Football League's chairman, Lord Mawhinney, in his long-term campaign to have a salary cap introduced throughout the league. Its most likely form is for clubs to agree to limit wages to a sensible proportion of their overall income. Such a system has operated since 2003-04 in League Two, where clubs agree not to spend more than 60% of their turnover on wages, but it lasted just one season, 2004-05, in League One, whose clubs ultimately rejected it because they felt it restricted their freedom.
Mawhinney is understood to have been lobbying for more than a year for Championship clubs to introduce a salary cap, attending meetings and even calling for votes, without gaining the support of a majority. Now the mood has changed and he is believed to have lined up meetings with club owners in the new year to press his case.
Not all clubs are prepared to say publicly what their attitude is, but informed sources suggest that more than half are now in favour. Neil Doncaster, the chief executive of Norwich, proposed a cap last year and it is thought the issue will be raised again at the league's meeting on December 18.
The Championship has been in a financial pincer ever since the Premier League was formed in 1992 by the then First Division clubs breaking away from the Football League's system of TV money being shared between all four divisions. As the second-tier clubs strain desperately for the payday of promotion, the wages of players who might get them there have inexorably increased. Since the Premier League clubs began gorging on their current record TV deal, club sources say wages have soared again. Solid players towards the top of the Championship are said to be paid £10,000-15,000 a week basic and £35,000 a week is commonly believed to be the top wage in the division. Clubs go into the red in order to find the money for the players they hope can help them compete.
Last week, Sheffield United, in their second year of receiving parachute payments following relegation in 2007, nevertheless announced an operating loss of £3.5m. At Coventry City, the new chairman, Ray Ranson, has invested about £15m, provided by the private equity group Sisu Capital, to turn round a club which was £40m in debt. Coventry lost £4.2m last year and expect to lose money heavily again this year.
"A salary cap should not limit individual players' wages," Ranson argues. "But restraining wages to a proportion of turnover would be a good thing and, in today's climate, people should think seriously about it."
Few disagree with the need to staunch losses and prepare for economically straitened times, but some clubs will not agree formally to restrain wages. Southampton lost £5m in 2007-08 despite having sold Kenwyne Jones for £4.8m and Chris Baird for £3m, and having received £5m for Gareth Bale and £3.1m in further instalments on Theo Walcott the previous year. While Rupert Lowe, who rejoined the club as chairman in May, is vitriolic about the previous board's management, he does not believe in general wage restraint.
Burnley's chief executive, Paul Fletcher, said the club makes a loss deliberately, carrying a high wages bill in order to "punch above its weight" against richer clubs. The loss is covered annually either by selling a player or by directors' loans, and Fletcher said they would not favour a league-wide wage policy.
"It would work against us because our turnover is perhaps only half that of, say, Birmingham," Fletcher said. "We are never going to go for broke or do a Leeds United, but we would not vote to limit what we can pay players."
Peter Ridsdale, determinedly rebuilding Cardiff City and his own reputation in the Championship, similarly argues against a salary cap. Cardiff also lost £5m last year and Ridsdale is budgeting to lose about the same this year, but like Burnley, Cardiff plan to cover their losses by selling players - including, in recent seasons, Cameron Jerome and Aaron Ramsey. Ridsdale said that in the past three years Cardiff's wages have almost doubled, from an average £4,000 to £7,000 a week. He described "mind-boggling" wages being paid by competing clubs in the division.
"I do not agree with a wage cap, though," Ridsdale added. "It would mean the rich clubs with the high turnover will have the success and get richer."
That is the counter-argument which Mawhinney must overcome if his view of common sense and good management is to prevail. The Football League has made great strides since the financial crisis precipitated by Carlton and Granada's infamous refusal to honour the contract of their failed ITV Digital venture in 2002. The league's executive will be dismayed if the clubs fail to react sanely to this downturn and hurtle collectively into meltdown.
Guardian/David Conn - Gold: Cut prices or else
The Guardian, Wednesday December 3 2008
The Birmingham City chairman, David Gold, has called on clubs in the Championship to reduce their ticket prices in an effort to maintain crowds during the recession and attract the next generation of fans.
Gold believes crowds are becoming noticeably more middle-aged as young people are being priced out. 'The fans have been raped and pillaged,' he said.
'If young people don't come to the grounds they will watch football on television and lose the tradition of supporting their local club. We need to reduce prices, but it cannot work unless all clubs do it across the board.'
Sheffield Wednesday have reacted to the economic downturn by announcing a series of cut-price deals, including £10 adult tickets for the match against Charlton on January 17.
Championship clubs will launch their 2009-10 season tickets in the new year and many are bracing themselves for a reduced take-up.
David Conn/The Guardian
Salary cap back on agenda for Championship•
Recession fears fuel calls for financial restraints
Game close to meltdown says Derby chairman
Championship clubs are considering a salary cap to help prevent spiralling financial losses as the economy heads into a recession. Most clubs in the division are losing significant money because they pay what one chairman described as "unsustainable" wages on players they hope will win them promotion to the Premier League.
Without the cushion of the multimillion-pound television deal enjoyed by the 20 Premier League clubs, Championship clubs are reporting tougher economic conditions, with away gates beginning to suffer and sponsorships and corporate hospitality harder to secure.
Adam Pearson, the chairman of football at Derby County, warned that football is inadequately prepared for the economic downturn. "The game is close to meltdown at all levels," he said. "Club boards are under pressure to gain success and that leads to them paying ridiculous wages. It cannot carry on or it will end in disaster. There is a growing feeling now that some sort of wage cap has to come in."
A salary cap for the Championship has been discussed theoretically ever since the 2002 collapse of ITV Digital, which plunged many Football League clubs into financial difficulties. In the reforms which followed, League Two clubs did agree in 2003-04 to limit their spending on wages to 60% of their turnover. That has lasted ever since but League One clubs jettisoned the same system after just a single season, 2004-05.
The Football League's chairman, Lord Mawhinney, is a confirmed advocate of a salary cap in all three divisions, particularly the Championship where wage inflation, trickling down from the Premier League, is more acute and several big clubs are making annual losses of £4m-5m. In a series of meetings of Championship clubs during the past year Mawhinney is understood to have pressed the case for a salary cap and called for votes, but failed to gain the support of a majority.
Now many club chairmen and chief executives are reporting that the mood has changed, prompted by alarm at the effect the recession is having. Many clubs are preparing to seek sponsorship for next season, a task one senior club source said is proving "difficult" because it is "grim out there". Second-tier sponsors especially, who do not have their name on team shirts but pay to advertise or sponsor matches or stands, tend to be more local businesses than the big companies attracted by the Premier League, and many of those are struggling so have less money to spend on football.
Mawhinney, who is understood to have lined up a series of meetings with club owners to press his case, will, however, have to persuade some who accept that wages must come down, but do not favour a league-wide restriction.
Rupert Lowe, Southampton's chairman, said: "The British economy is in dire trouble and it is seriously going to affect football. Players' wages are at unsustainable levels in a recession, and our ticket sales, corporate hospitality and sponsorship are down. Boards should keep wages below 60% of turnover, but I have never been in favour of a cap."
Informed sources say that as clubs assess the scale of the downturn, more than half are now in favour of introducing a salary cap. Some are debating the level it should be placed at, with a feeling growing that 60% is too high and arguing that the limit should be set at 50% of turnover.
Ray Ranson, the Coventry City chairman, said he believes football will be relatively resilient in the recession because people traditionally remain loyal to their clubs in difficult economic times, but clubs should nevertheless rein in their excessive spending on players' wages.
"A salary cap should not limit individual players' wages," he argued. "But restraining wages to a proportion of turnover would be a good thing and in today's climate, people should think seriously about it."
David Conn/The Guardian
Fear of bust has clubs looking for a salary ceilingThe recession allied to high costs means more teams in the Championship are backing a limit on wages
Support is growing for a salary cap in the Championship as clubs face up to spiralling players' wages, mounting financial losses and the onset of a recession to which the clubs are a great deal more vulnerable than those in the gilded circle of the Premier League. In the muscular, fiercely competitive Championship, which has no booming television deal and is skewed by the presence of relegated sides with £12m per season parachute-payments, clubs are seriously overspending as they chase the gold of Premier League promotion.
Adam Pearson, chairman of football at Derby County - who lost £12.5m in the year to June 2007 - warned starkly that clubs need to bring wages under control. "The game is close to meltdown at all levels," he said. "Boards are under pressure to gain success and that leads to them paying ridiculous wages. It cannot carry on or it will end in disaster. There is a growing feeling now that some sort of wage cap has to come in."
As the recession begins to bite, he said, Derby's home crowds are holding up well, but away gates are "dwindling" and it is "much harder" to sell corporate boxes and secure sponsorship. That same story is being told across the country. When the credit crunch first hit, all attention was on how the Premier League clubs would cope, but they are cushioned by their record £2.7bn TV deal, which runs until May 2010. Championship clubs, by contrast, receive only £1m each from TV this season (although the league's new £264m three-year deal begins next season) and just £1m from what the Premier League, with straight-faced spin, terms "solidarity" payments.
At Championship level, sponsors are more local than the blue-chip companies paying for their association with Premier League names, and with many having problems in their own businesses, money is tight for spending on football.
One senior figure at a prominent Championship club, who did not want to be named because the club still needs to secure next season's sponsorship deals, said: "The recession will see a hell of a lot of clubs go into administration unless football gets some common sense into its finances. We would certainly support a salary cap."
This sudden bout of realism will help the Football League's chairman, Lord Mawhinney, in his long-term campaign to have a salary cap introduced throughout the league. Its most likely form is for clubs to agree to limit wages to a sensible proportion of their overall income. Such a system has operated since 2003-04 in League Two, where clubs agree not to spend more than 60% of their turnover on wages, but it lasted just one season, 2004-05, in League One, whose clubs ultimately rejected it because they felt it restricted their freedom.
Mawhinney is understood to have been lobbying for more than a year for Championship clubs to introduce a salary cap, attending meetings and even calling for votes, without gaining the support of a majority. Now the mood has changed and he is believed to have lined up meetings with club owners in the new year to press his case.
Not all clubs are prepared to say publicly what their attitude is, but informed sources suggest that more than half are now in favour. Neil Doncaster, the chief executive of Norwich, proposed a cap last year and it is thought the issue will be raised again at the league's meeting on December 18.
The Championship has been in a financial pincer ever since the Premier League was formed in 1992 by the then First Division clubs breaking away from the Football League's system of TV money being shared between all four divisions. As the second-tier clubs strain desperately for the payday of promotion, the wages of players who might get them there have inexorably increased. Since the Premier League clubs began gorging on their current record TV deal, club sources say wages have soared again. Solid players towards the top of the Championship are said to be paid £10,000-15,000 a week basic and £35,000 a week is commonly believed to be the top wage in the division. Clubs go into the red in order to find the money for the players they hope can help them compete.
Last week, Sheffield United, in their second year of receiving parachute payments following relegation in 2007, nevertheless announced an operating loss of £3.5m. At Coventry City, the new chairman, Ray Ranson, has invested about £15m, provided by the private equity group Sisu Capital, to turn round a club which was £40m in debt. Coventry lost £4.2m last year and expect to lose money heavily again this year.
"A salary cap should not limit individual players' wages," Ranson argues. "But restraining wages to a proportion of turnover would be a good thing and, in today's climate, people should think seriously about it."
Few disagree with the need to staunch losses and prepare for economically straitened times, but some clubs will not agree formally to restrain wages. Southampton lost £5m in 2007-08 despite having sold Kenwyne Jones for £4.8m and Chris Baird for £3m, and having received £5m for Gareth Bale and £3.1m in further instalments on Theo Walcott the previous year. While Rupert Lowe, who rejoined the club as chairman in May, is vitriolic about the previous board's management, he does not believe in general wage restraint.
Burnley's chief executive, Paul Fletcher, said the club makes a loss deliberately, carrying a high wages bill in order to "punch above its weight" against richer clubs. The loss is covered annually either by selling a player or by directors' loans, and Fletcher said they would not favour a league-wide wage policy.
"It would work against us because our turnover is perhaps only half that of, say, Birmingham," Fletcher said. "We are never going to go for broke or do a Leeds United, but we would not vote to limit what we can pay players."
Peter Ridsdale, determinedly rebuilding Cardiff City and his own reputation in the Championship, similarly argues against a salary cap. Cardiff also lost £5m last year and Ridsdale is budgeting to lose about the same this year, but like Burnley, Cardiff plan to cover their losses by selling players - including, in recent seasons, Cameron Jerome and Aaron Ramsey. Ridsdale said that in the past three years Cardiff's wages have almost doubled, from an average £4,000 to £7,000 a week. He described "mind-boggling" wages being paid by competing clubs in the division.
"I do not agree with a wage cap, though," Ridsdale added. "It would mean the rich clubs with the high turnover will have the success and get richer."
That is the counter-argument which Mawhinney must overcome if his view of common sense and good management is to prevail. The Football League has made great strides since the financial crisis precipitated by Carlton and Granada's infamous refusal to honour the contract of their failed ITV Digital venture in 2002. The league's executive will be dismayed if the clubs fail to react sanely to this downturn and hurtle collectively into meltdown.
Guardian/David Conn - Gold: Cut prices or else
The Guardian, Wednesday December 3 2008
The Birmingham City chairman, David Gold, has called on clubs in the Championship to reduce their ticket prices in an effort to maintain crowds during the recession and attract the next generation of fans.
Gold believes crowds are becoming noticeably more middle-aged as young people are being priced out. 'The fans have been raped and pillaged,' he said.
'If young people don't come to the grounds they will watch football on television and lose the tradition of supporting their local club. We need to reduce prices, but it cannot work unless all clubs do it across the board.'
Sheffield Wednesday have reacted to the economic downturn by announcing a series of cut-price deals, including £10 adult tickets for the match against Charlton on January 17.
Championship clubs will launch their 2009-10 season tickets in the new year and many are bracing themselves for a reduced take-up.
