Is Football Immune To Economic Pressures?

There were some pretty dire economic figures on the news last week.

Many shops were slashing prices by up to 70% in a desperate bid to attract sales and takings on the high streets are down this Christmas on what they were last year.

The figures still sound pretty impressive, though. Up to £4bn taken this weekend, with some reports saying Britain was spending upwards of £1.5m a minute on Christmas stuff and popular toys at risk of being completely sold out.

However it is a curious economic picture, with takings in shops across the country down by £20m a week compared to October this year and it does look as though times are tough on the High Street.

About the only sector of the country not feeling the economic pinch, it seems, is top level football.

Read the gossip columns each morning and teams are said to be spending astronomical sums on players in the January window. Manchester United are to be close to spending nearly £40million on players, if you believe what is on there today at any rate, with Chelsea also set to buy all sorts of players.

When the spending in the last transfer window – which ended on August 31^st -  was totted up, clubs had spent something in the region of £485 million.

That in itself represented a significant increase on the previous year’s spending with some putting it as a 33% rise – hardly in keeping with the general economic picture.

So are the big clubs totally removed from economic reality? The answer on the face of it is yes – with many clubs breaking their transfer records in the last 12 months and players wages reaching what seems to be astronomical levels, some players again reportedly, are believed to be on £200,000 a week.

But that maybe doesn’t tell the whole story. Outside the top level teams are struggling as badly – and perhaps worse than they have done -  for years and even within the top tier there is only certain teams that are doing any spending at all. Everton for example have hardly signed a player for a cash sum in years.

Football expert at accountancy firm Deloitte, Dan Jones explained recently "This summer's spending [was] largely focused amongst the top end Premier League clubs most strongly competing for domestic and European success and the consequent financial rewards.”

So the big six teams, then, and the likes of Stoke City, who spent £22m on the back of their rich owners benevolence are the only ones to really splash the cash.

But then of course, even those clubs aren’t totally immune from High Street pressures. Hardly any of the Premier League Clubs have raised ticket prices in the last few years (indeed my own, at a mid table Premier League outfit has been the same price since 2008). Now, those prices were too high anyway, and they remain so, but at least those fans that are already forking out too much for their clubs aren’t being asked to pay even more.

Many fans are now opting to stay away all together, as pubs are offering live games from foreign channels – a practice that was thought to be illegal until a Portsmouth landlady won her case the other week.

The problem that football will have in the future is that largely, as we have written on these blogs before, clubs aren’t self-sufficient, with many relying on their rich owners to sign cheque’s and although the UEFA financial fair play rules, which come into force soon are meant to stop the sort of massive losses that the likes of Manchester City have recorded, there are ways around it, as the deal to sponsor City’s ground has shown.

So it could be some time yet for the economic austerity that is affecting so much of life elsewhere truly hits football.

All that remains to say is to wish all our readers and customers a very Happy Christmas. We are open throughout the Christmas period, but the blogs will return in the New Year.

Thursday Night's, Channel Five - And The Hotel Owners Hopping Mad

There was a lot of bluster and nonsense surrounding Manchester United’s Champions league exit. A lot of people said some pretty stupid things.

It was “embarrassing” said Patrice Evra. It was a “penalty” according to Sir Alex Ferguson. And the headline writers went into overdrive.

And in fairness to Evra, the players probably should feel embarrassed, they are highly paid and excellent footballers and ones who should have managed to qualify from the group in which they found themselves.

You have to have less sympathy with Sir Alex, as his comments were a little bit ridiculous and met with short shrift from UEFA president Michel Platini who said: 'The world does not revolve around England, I like England a lot, it's football is fantastic, it's supporters are wonderful but you shouldn't criticise the Europa League just because you've played in three Champions League finals.”

But one fact that came out of all fluff and conjecture did make us take notice it is that Manchester United stand to lose around £20m in TV money as a result of their dismissal from the group.

That £20m is before, you suspect, the lost ticket revenue, the prize money the programmes, the shirts, the merchandise is taken into account – in short it is a big loss.

Dan Roan, Sports News Correspondent at the BBC paints a bleak picture, on his blog he wrote: "Given the interest repayments United have to pay each year to service their vast debt, an exit from the Champions League is highly damaging. Being condemned to what many fans will see as the Thursday night purgatory of the Europa League is an embarrassment for a club of such ambition. The defeat also raises serious questions about the Glazers' ownership and will intensify the pressure on them to invest in a blockbuster midfield signing.”

Now, that might just be hype, but whatever financial pressures are, it is quite clear it is a situation that would have been best avoided, and one which has wider implications than might have been first imagined.

It is not just the football club’s that are worried about lost revenue. The City of Manchester itself relies on football income to help its tourist industry – an industry that is worth £5.4bn annually, or to put it another way, the equivalent of 75,000 full time jobs.

The previous occasion when Manchester United didn’t qualify for the latter stages of the Champions League was back in 2005-6 and according to the Chair of the Manchester Hoteliers Association there was a marked drop off in hotel bookings in that period, of course this year there is the fall back – for both United and City – of playing on the Europa League, but are those games as attractive?

The average champions league visitor, it seems would spend on average £776 on their visit to the city and that is revenue that might be missed out on. Depending, of course on how seriously the two clubs take the competition.

So it seems that whilst the Manchester teams are smarting at the results last week, it is the City of Manchester as a whole that may have to pay the “Penalty.”

Welcome to Channel Five on a Thursday night – its not that bad, you know.

Chin Up Pompey, Chin Up Pompey

To describe Portsmouth supporters as “long suffering” rather misses the point.

Since they won the FA Cup in 2008, it’s been a pretty hideous time for the club. They purchased a lot of players, which it turned out they might not have been able to afford and they went down in pretty ignominious circumstances in 2010.

Throughout the entire time the fans of the famous old club maintained their dignity and support for Portsmouth Football Club and earned themselves much credit as they made the FA Cup Final again the year they got relegated.

However, if those supporters thought things were going to get easier following their relegation and subsequent buy-out then the fans were sadly wrong.

They managed to purchase enough players for a good, if small squad after some wheeler-dealing from then Manager Steve Cotterill who led them to a mid-table finish and it might have been expected that, with a period of stability and some what looked like astute strengthening, a play-off push might be on the horizon.

However, recent history has taught fans to expect only the unexpected, so their manager did a flit to Nottingham Forest in October then came last weeks news – seemingly out of the blue – that the company that owns Portsmouth FC (2010) Ltd, CSI, has gone into administration.

The Administrator that helped stabilise the club before, Andrew Andronikou has been appointed to a joint role to do the same for the parent company and he apparently is hopeful that the club can be sold again telling the Daily Telegraph “there is always a solution.”

In the meantime the Pompey faithful have all the worry of not only whether they will have a club at all to support, but whether that club, assuming it does survive, will face a points deduction for going into Administration.

Andronikou believes they can avoid this fate because it’s the parent company that has gone bust. The Football League board will sit on this matter soon, but were forced to clarify their own rules regarding Parent Companies, ironically enough, after events just down the road at Southampton. In 2009 when The Saints hit the skids they made the same argument – that they should have been spared a points deduction, because it was not the football club itself that was having money troubles.

The League rejected this plea and found that the two organisations were “inextricably linked as one economic entity”. The Telegraph reports that this does not “appear” to be the case at Fratton Park.

All of which is fine, but does beg the question of how on earth this has been allowed to happen again?

Are there not rules to stop football clubs falling into the wrong hands? And if there is - and it’s the Fit and Proper Persons Test, the test that all prospective owners of football clubs have to pass, the problem is that time and time again it seems to fail the fans of these clubs who are used almost as playthings by these owners.

The FA needs to make sure that its own regulations are rigorous and fit for purpose, or else the whole thing is a pointless façade.

Surely we need to learn lessons so that this is the last time these type of stories are associated with this famous old club.