Bury: Another brick in the wall


Guinness Book of Records announces new entrant in ‘World’s Smallest Fan Club’ category

The company has taken advantage of legislation for small businesses to avoid publishing full financial statements. This means that there is no profit and loss account or income/wage details.

No accounts have been published for the year ended 31 May 2018, in breach of company law, making the directors guilty of a criminal offence.

Losses accelerated for the company from 2013 onwards, following the acquisition of the club by Stewart Day.

In the two years when the club did publish fuller sets of accounts, wages exceeded income.

Income details

Bury’s income increased in 2015/6 and 2016/7 when the club was in League One. This is partially due to increased broadcasting revenues which are 50% higher for clubs in League One compared to League Two.

Compared to other League One teams Bury generated low levels of income. Detailed breakdown of income is not given, but clubs in the division earn about £1.4 million a year from broadcasting and the balance is from matchday and commercial sources.


Bury’s wage bill has only been published twice, but there was a 29% increase in 2015/16 following promotion. In 2014/15 Bury paid £129 in wages for every £100 of income in League Two in 2014/15 and were still paying £100 in wages the following season despite the boost to income following promotion.

Compared to other clubs in the division Bury’s wage bill was moderate. There is a commonly held view that Stewart Day was trying to ‘buy’ promotion via paying unsustainable wages, and this some merit on a proportion of income basis but not on in terms of the total wage bill.


Bury have been losing about £50,000 a week in the last few years, although figures for the period since 2016/17 are not available.

The deterioration in Bury’s profitability started when Stewart Day acquired the club, with losses exceeding £50,000 a week in the last three years.

Bury had the fourth highest losses in League One in 2016/17.

Stewart Day/Mederco

Investors can either lend money to a business or buy shares. In the case of Stewart Day and Mederco there has been a combination of both. Day has historically said that loans would be converted into shares where necessary and this appears to have been the case. There were of course other loans from lenders with a less benevolent attitude to the club.

Bury’s level of borrowing was modest by League One standards, however the key issue in respect of debt is the ability of the borrower to repay sums due to lenders.


Bury’s financial performance and position deteriorated under Stewart Day. His ambition to make Bury a competitive team at the top of League One with the aim of promotion was based on having the ability to underwrite the losses. Once Day’s other businesses, which were the means by which the losses were covered, went into administration then the excess spending meant the club was no longer viable.

As Day needed to sell the club to relinquish responsibilities for the £50,000 a week losses, he didn’t/couldn’t take too much notice of the background of Steve Dale, to whom he sold the club for £1.

Dale displays characteristics of a sociopathic narcissist, similar traits to those of Ken Anderson at Bolton. Combine those character traits with a history of asset stripping and it was sadly no surprise that Bury’s financial problems multiplied under his ownership to date.

Football Finances: Serpent’s Kiss

Out of 92 football clubs in the Premier League and the EFL, 61 made a net loss in their most recent accounts. The total losses made by those clubs came to £589 million and that’s after some, especially those in the Premier League, receiving the riches of bumper TV and sponsorship deals as well as player sales.

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Manchester United’s losses are distorted by Trump related tax changes in the US, where the company’s shares are traded, but it’s noticeable that all three clubs relegated that season lost money too.

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In the Championship loss making is the norm, with the three promoted clubs in 2017/18 being in the top five loss making.

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Promotion bonuses contribute to those losses, but also suggests that owners are prepared to gamble on trying to buy promotion via big transfer fees and wages. Remember those losses are AFTER the receipt of £250 million of parachute payments and Derby and Sheffield Wednesday selling their stadia to themselves at huge profits to ensure compliance with FFP.

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In League One there’s still a gambling mentality. There is a £7 million difference in broadcast income between this division and the Championship, so some owners will do the equivalent of twisting on 19 in relation to getting promoted. The Venkys at Blackburn, initially reviled by fans, have been very generous in their financial support, though fans will point out that money has been spent poorly, with a series of ‘advisors’ seemingly more interested in lining their own pockets than recruiting players who will improve things on the pitch.

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Budgets are tight in the bottom two divisions and this does mean that there are a few more clubs who have broken even, but overall this is a loss making division. Notts County’s implosion, partly due to owner Alan Hardy’s social media todger related antics, has meant they still have not published their 2018 accounts.

Recent events at Bury and Bolton, the former expelled from the league and the latter rescued at the eleventh hour, have focussed attention on other clubs who are also struggling to survive. Whilst Bury and Bolton’s troubles more to do with sociopathic asset-stripping owners than inherent financial issues, there are clubs whose balance sheets are showing signs of distress. Here are five examples of the types of stresses impacting upon individual clubs.

Club: Coventry City

Loss for 2017/18: £2,480,000

Reason for concern: Homeless and owners not football fans

Playing this season at Birmingham City’s ground after a dispute between hedge fund owner Sisu Capital and stadium landlords Wasps rugby club. Sisu’s motives for buying Coventry are no clearer than when they acquired the club in 2007 the club has lost £64 million.

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Sisu have spent a lot of time and money trying to buy the Ricoh Arena where the club started playing matches when in opened in 2005. Sisu and a similar mysterious organisation based in the Cayman Islands called the Arvo master fund have lent the club £37 million but there seems to be little chance of repayment. If either Sisu or Arvo decide to demand their loans back, then the club has no assets from which they can be repaid. Coventry have been successful in developing stars in recent years who now play in the Premier League such as James Maddison and Callum Wilson, but this is a hit and miss way of generating cash. A screenshot of a cell phone

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Club: Scunthorpe United

Loss for 2017/18: £3,605,000

Reason for concern: Wages far exceeding income

Currently at the bottom of League Two, Scunthorpe United’s finances are as concerning as their form on the pitch.

In recent years the club has paid out substantially more in wages than it has generated in income.

With wages exceeding income there is nothing left to pay for the day to day running costs and so the club has incurred losses averaging £50,000 a week over the last six years.

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Scunthorpe’s owner Peter Swann has underwritten these losses to date but the clubs outstanding borrowings have ballooned. Should relegation occur then there would be a substantial fall in income as it would lose solidarity payments from the Premier League as well as the EFL broadcasting monies halving as the club only receives parachute payments for a short period.

Club: Macclesfield Town

Loss for 2017/18: £250,000

Reason for concern: Winding up order

Sol Campbell performed a minor miracle last season in helping Macclesfield avoid relegation to the National League from League Two, but the club’s financial problems are more pressing. The club failed to pay wages more than once occasions in 2018/19. It is now facing a winding up order due on 11 September due to former players suing The Silkmen for unpaid wages. This dispute is now settled but HMRC have taken over the winding up order as Macc lurch from pillar to post.

Macclesfield’s losses might seem relatively low at an average of £4,000 a week in recent years compared to the millions elsewhere, but the club is a classic case of any losses are too much if you can’t afford to cover them.

Club: Charlton

Loss in 2017/18: £10,450,000

Reason for concern: Owner threats

Charlton’s Belgian owner Roland Duchatelet has been trying to sell the club for some time, but to date no one has come near his asking price. Duchatelet has even demanded that the EFL itself buy the club from him as his relationship with fans has deteriorated since be bought Charlton in January 2014.

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Charlton lost money both before and since Duchatelet’s arrival at The Valley, but the extent of the losses has been significant, with only the sales of Lookman, Gudmunnson & Pope in 2016/17 allowing the club to break even. Under Lee Bowyer Charlton have made an excellent start to the present season and will be hoping for promotion and access to the riches of the Premier League, but with debts exceeding £60 million there could be problems if the owner gets fed up and tries to recoup his investment, which is the stumbling block with prospective buyers at present.

The owner has invested significantly in the player wages, but if Charlton fail to make progress from the Championship how long he will continue to underwrite the losses is uncertain.

Club: Morecambe

Losses in 2017/18: £452,000

Reason for concern: Losing money despite lowest wage bill in English football

Many football fans would struggle to name any Morecambe player, the colour of their home shirt or the name of their stadium. The club had the lowest wage bill in League Two in 2018 of those clubs who reported such details (many clubs use legal loopholes to reduce their transparency in this regard).

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Even with a wage bill so low it has failed to pay them on time at least four times in recent years, the last time being November 2018.

The average wage paid by The Shrimps is less than £1,000 a week, but with crowds averaging only 2,000 per home match they still lose money on a regular basis.

Clubs such as Morecambe are reliant on the goodwill of owners and with new owners in place and Jim Bentley being the longest serving manager in all four divisions, they hopefully can put such issues behind them.

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Whilst we’ve chosen five clubs the list could be easily have been added to by that number again. The likes of Oldham, Reading, Oxford and Southend have also were late with wage payments last season and whilst this is a feature they share with Bury and Bolton hopefully they will not end up getting so close to ceasing to exist at those two historic clubs.

Bury: Minutes to Midnight

Summer 1976 and I’m gathered around a bed with my mum and my eleven-year-old sister, watching my dad, full of tubes, breath slower and slower.

The priest has just given him the last rites, the consultant has just explained he’s done all he can, my mum is weeping, I’m holding my sister’s hand.

Even then I was obsessed with numbers and I’m staring at the heart rate monitor, watching it count down and hoping for a miracle*.

Very sad you might say, but why the melodrama, and what the Dickens has this got to do with Bury football club?

Emotional blackmail this isn’t though, Bury fans are watching their own life support machine run down as the EFL have set a final, final, final, final deadline of 5pm on Friday in terms of the club’s existence.

Down at Gigg Lane fans have been consuming rumours, counter-rumours and website pronouncements as owner Steve Dale has blamed everyone (apart from himself) for the potential demise of the club.

A look at the club’s accounts in recent years shows that Bury have been living beyond their means for some time, but that doesn’t give the full explanation as to why they, and not one of perhaps a dozen or more clubs in the lower leagues, are facing extinction.

Losses in recent years accelerated following previous owner Stewart Day’s ambition being based on his other businesses being successful and underwriting Bury’s day to day losses.

Except those other businesses weren’t successful and Day’s Mederco, which, depending on your viewpoint was either a daydreamer’s folly or a Ponzi scheme, went into administration with Bury owing Mederco nearly £4.3 million according to the most recent published accounts dated 31 May 2017.

In the most recent administrator’s report Mederco’s debt from Bury had ballooned to £7.1 million and may have allowed Steve Dale to force through the Creditors Voluntary Arrangement (CVA) that allows him to still run the club on a day to day basis.

Strictly Bury’s biggest creditor per the CVA is due to a company called RCR Holdings, which was formed on 16 July 2019, but apparently was owed £7.1 million by Bury on 18 July 2019, when the CVA proposal was forced through.

A minimum of 75% of all creditors in terms of the value of the sums due must vote in favour for a CVA for it to be accepted, and with RCR Holdings debt being so large it meant that 84% of all creditors were in favour.

Who is in charge of RCR is a mystery, the director is listed as Kris Richards an identical creditor claim of £7.1 million from Steve Dale has been conveniently ignored by Steven Wiseglass, the person in charge of the CVA, RCR paid £70,000 for the £7.1 million debt.

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An adjustment is made in terms of approving a CVA if a connected party to the business ownership is a creditor to them, and if these debts are excluded there still must be at least 50% of creditors in favour of the CVA.

Not voting for the CVA was HMRC, due over £1 million by Bury, who had been petitioning for the club to be wound up due to Steve Dale’s refusal to pay PAYE and NI contributions, as well as failing to pay the wages of players and staff on a regular basis since February.

Kind words are few and far between for Dale, who bought Bury for £1 in December 2018 and has had a string of former companies dissolved in recent years, leading to accusations of being an asset stripper.

Perhaps the most damning indictment of Dale comes from his running of the company Terrapin Limited where workers went unpaid and Steve Dale washed his hands of any responsibility.



Under Dale’s reign at Bury two new companies were created in the first few days as Bury FC Leisure Limited and Bury FC Heritage Limited.

Fearing bailiffs acting on behalf of creditor taking Bury’s assets is the reason that Dale has given for the creation of these companies, who apparently have had some of the football club’s assets transferred to them.

Football clubs aren’t attractive to regular banks as they rarely make profits, which perhaps explains why Bury took out a loan from Broad oak Finance Limited recently

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In addition, The Guardian’s football finance sleuth David Conn uncovered the club had borrowed money whilst Stuart Day was in charge and interest was clocking up at 138% a year.


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No one seems to have much knowledge of Capital Bridging Finance Solutions although a look at its accounts reveals that it owns a property development subsidiary company…and now has a loan secured on Gigg Lane.

Where does this leave Bury? The club was poorly run by Stewart Day originally, with wages exceeding income as he tried to buy success for the club.

Steve Dale inherited a mess, but unlike Andy Holt at Accrington and Mark and Nicola at Tranmere, took the club backwards rather than forwards.

His beratement of the EFL, staff at the club, fans and others who have queried his decisions has alienated the whole of the fanbase and anyone who had goodwill towards him.

The EFL, whose reputation plummeted during the leadership of Shaun Harvey, is under resourced and unable to do much apart from implore Steve Dale to show he has the means to fund the club, which to date he claims to have done but this is at odds with the EFL’s reading of the situation.

Using a disgraced insolvency practitioner to conduct Bury’s CVA has not helped Dale’s cause either. Steven Wiseglass has twice been found guilty of misconduct in recent years by his governing bodies, who usually are reluctant to discipline their members. This allows critics to claim that the insolvency practitioner is in Steve Dale’s pocket, although there is no hard evidence to support this viewpoint.

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The representative of RCR Holdings at the CVA meeting, has also been before the beak in relation to prior behaviour and has appeared with Tommy Robinson in the past. Again there is nothing wrong in employing whoever you choose to represent you, but given the high profile nature of Bury’s current position it opens people to criticism.

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Back to 1976 and my old man miraculously survived that summer. He had no interest in football, but knowing I was mad on the subject the last thing we did together as dad and lad was to go to a match at the Goldstone Ground. I still cherish that day, and for many families football provides a bond and memories that cover generations.

Steve Dale also has no interest in football but has the power to allow similar memories and bonds to take place between families friends and generations for the regulars of Gigg Lane.

For the sake of those good people and the sake of our national game, do the right thing Steve and let the club live.

Selling your stadium to yourself: It’s not cricket


Sale and leaseback is the latest buzz phrase in the world of football finance, as Derby County, Aston Villa and Sheffield Wednesday have used this mechanism to avoid points deductions in the EFL Championship.

How does it work, is it legitimate and what the benefits to the clubs involved (and their owners) in terms of FFP ‘compliance’ will be covered in this article?

What is sale and leaseback?

Accountants have used sale and leaseback for a long time to help companies raise money and it is usually a transaction arranged with a bank or other lender effectively mortgaging an existing property owned by a business.

Under present accounting rules when a company sells a property it can book a profit, calculated as the difference between the sale proceeds and the book (not market) value of the asset.

New owners of the stadium (which in the case of both Derby and Villa (and probably Wednesday too) is a new company set up by club owner) pays an agreed amount for the stadium then agrees a rental agreement with the ‘tenant’ (i.e. the football club).

How the price in relation to the sale of the stadium is agreed has provoked some raised eyebrows from other Championship club chairmen as there is a suspicion this has been inflated to maximise the profit on the disposal.

Applying the rules

As the ultimate ownership of the stadium is unchanged then what is effectively happening is that Mel Morris (in the case of Derby), Wes Eadons and Nassef Sawiris (at Villa) and Dejphon Chansiri (at Wednesday) have simply shifted large amounts of money from one of their bank accounts to another, but their respective clubs have had a FFP boost as a result.

Referring to the Derby accounts for the three years ending 30 June 2018 shows the club had an accumulated loss before tax of £23.7 million, seemingly well within the Profitability and Sustainability limit of £39 million.

Viewing the accounts of parent company SevCo5112 Ltd revealed that the loss of £1.1 million in 2018 was partly due to the sale of Pride Park at a price of £81.1 million, which generated a profit of £39.9 million as a result.

Every Derby fan will claim that the transaction was within the rules and based on the pre-tax figures in the accounts the three-year loss was ‘just’ £23.7 million.

Yet these losses can be reduced further by clubs spending money on ‘good’ activities, such as infrastructure, academy, women’s football and community schemes as these are excluded from FFP calculations.

If these costs are included then Derby would have had a P&S loss of £11.1 million, well within the allowable limit.

Should the profit on the sale of the stadium have been disallowed (as per the original FFP rules) then the loss would have been £39.1 million higher at £50.2 million and a probable eight-point deduction in 2018/19 meaning Middlesbrough, rather than Derby, would have made the playoffs.

Aston Villa had a much lower ‘sale’ price of Villa Park, which initially seems odd given that the stadium site is much larger, but this allowed the club to state that it complied with FFP for 2018/19, although based on our calculations there would probably have been only a three point deduction and Villa would still have made the playoff.

Compliance is very much the watchword in relation to P&S rules and the use of such creative accounting is surely more to do with the appallingly lax set of rules created by the EFL rather than clubs cheating, as has been accused by fans of other clubs.

Over at Hillsborough the stadium was ‘sold’ for £60 million and a £38.1 million profit booked although this is further confused by Land Registry still showing in July 2019 that it still belonged to the club even though the accounts in which the sale is shown are for 2017/18.

Have they done anything wrong?

Middlesbrough owner Steve Gibson has been the most vocal critic of the sale and leaseback transactions and has threatened legal action but whilst the actions of the Derby et al aren’t cricket we don’t think they have broken any rules.

Potential legal action by Gibson is therefore unlikely to succeed, although it will make for another tense meeting of club chairmen when they have their next EFL meet up.

Less clear is whether Gibson’s suspicion that the sale price of the stadia ‘sold’ has been at an inflated price.

Each club who has made such a sale has presumably used a firm of surveyors to determine the value although critics will point out that given the club chairmen are effectively paying the surveyors’ fees there will be a conflict of interest.

Those of you who watch daytime TV will have seen the likes of Dion Dublin take about a yield on properties which are bought to let, and this principle could be applied in relation to the three clubs involved.

Every company that has a rental agreement should in theory show the rents due in future years in the footnotes to the accounts.

Buried away in the Derby footnotes on page 33 is a note showing that Derby’s rent for the following year was increasing by about £1.05 million and the club appears to be committed to paying a total extra rent of £23 million in future years, far less than the £80 million sale proceeds.

Entering those numbers into our big calculator gives the new owner of Pride Park a 1.3% yield, which is unlikely to be given a thumbs up from Dion Dublin and co.

Looking at the accounts for Sheffield Wednesday gives equal confusion as the club does not appear to have any rental cost for Hillsborough in future years despite selling the ground for £60 million and so the new owner could have a zero yield.

Leasing football grounds, it must be stressed, is perfectly legitimate (Manchester City have such an arrangement with the local council for the Etihad, West Ham similar with the London stadium).


Each Championship club that has taken such an approach in the last couple of years has benefitted in terms of their ability to compete on the pitch as a result of these transactions and this has caused resentment from other club owners who have not used such mechanisms.

No one seemed to notice the change to the P&S Rules initially in 2016 and this is where the crux of the problem lies, as someone should take responsibility and explain whether the change was simply a cock up or a deliberate dilution of P&S.

Don’t expect anyone at the EFL to hold their hands up though, given the record of the organisation claiming to be ‘only a competition organiser’ whenever the flak starts flying.

Under the old EFL FFP rules profits on sales of tangible fixed assets, such as stadia, were specifically excluded from the calculations, which would have had a huge impact upon the ability of the clubs involved to trade. Derby, for example, spent over £15 million in 2017/18 on new players and a further £18.5 million in 2018/19, albeit with sales of players bringing in £16 million over that period too. Sheffield Wednesday were able to spend £168 on wages in 2017/18 for every £100 of income and Villa kept the superb Jack Grealish at Villa Park on the back of a lucrative new contract and were rewarded with promotion to the Premier League.

The new P&S rules make no reference to profits on asset sales and therefore they are legitimately included in the calculations. Why the change was allowed to go through has never been explained, although we have heard on the grapevine that the EFL simply cut and pasted the Premier League P&S rules (which have always allowed asset sales) without looking at the small print for any changes, unlike the accountants and lawyers at Derby.

The overall lesson learnt, as some are finding out with the present FaceApp photo ageing application, is that if you don’t read the small print someone else will, and they can make you look fairly stupid as a result, as the EFL is probably privately conceding at present.

Our view from day one of FFP is that it’s an artificial construct that has earned large sums for accountants and lawyers (the EFL’s legal costs for the QPR ruling are estimated to be £3 million and presumably QPR’s silks didn’t do it for free either) and looking at Bolton, Bury, Notts County, Oldham, Macclesfield etc hasn’t achieved much in the way of financial restraint.

Middlesbrough 2017/18: Babylon’s Burning

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To attempt promotion to the Premier League is an expensive business as revealed when Middlesbrough submit their accounts to the government registrar for the 2017/18 season and reported a £20.2 million operating loss

Only the receipt of parachute payments and some player sales prevented these losses from being too damaging for Boro, who are fortunate to have a benevolent owner in Steve Gibson to fund the club’s operations.

Key Financial Highlights for year ended 30 June 2018

Turnover £62 million (down 49%)

Wages £49 million (down 25%)

Pre-player sale losses £20.2 million (2016/17 profit £10.3 million)

Player sale profits £15.3 million (up from £11.3 million)

Player signings £66 million (up from £48 million)


Nearly every club in its accounts splits income into three categories to comply with EFL League recommendations, matchday, broadcasting and commercial.

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Year on year Middlesbrough’s matchday income fell by 18% last season to £7.1 million.

Premier League attendances averaged 30,499 and this fell to 25,544 in the Championship despite Boro having a relatively successful season and reaching the playoffs before losing to Villa.

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Until parachute payments run out Middlesbrough are not hugely dependent upon matchday as an income source, as it only represents one pound out of every nine generated by the club last season.

Losing its Premier League status was a blow for the club and the town last season and being relegated in the first season after promotion means that Boro only are entitled to parachute payments for two seasons instead of three as would have been the case had they avoided relegation.

Income for clubs in the Championship from matchday varies depending upon ticket prices, attendances and the number of corporate seats each club is able to sell, with the likes of Villa and Leeds having an advantage in the latter two categories.

Such is the magnitude of the Premier League TV deal that Middlesbrough received over £41 million from parachute payments out of total broadcast income of £46.3 million in 2017/18.

Having another parachute payment this season will generate about £35 million, but Boro are promoted they will then revert to the EFL deal with Sky, which is worth about £2.3 million a year plus a £4.3 million ‘solidarity’ payment from the Premier League, this can then be topped up by £100,000 for each home fixture and £10,000 if the club are playing away if chosen for live broadcast.

A lot of clubs in the Premier League are reliant on the BT/Sky deal for the majority of their income and Boro are no exception, even in 2017/18 TV was still providing three-quarters of their revenue.

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So, looking at the Championship as a whole it appears that parachute payments have created a two or three tier division, with those clubs who have just come down earning the most and then this tapers for those who have been relegated for two or three seasons.

Getting commercial partners to sign up for deals is more difficult in the Championship than the Premier League as sponsors prefer to see the names of their products when a team is playing Liverpool or Manchester United compared to Barnsley or Burton.

In Boro’s case commercial income fell nearly 30% to £8.6 million, which is less than two seasons previously when the club was promoted to the Premier League, although there may have been promotion bonuses paid that season.

Nevertheless, commercial deals can be significant and Boro are earning over £170,000 a week from such arrangements, which puts them into the top half of the table in the Championship sponsor-wise.

Growing commercial income is the best way for a club to increase overall income as broadcast income is negotiated centrally and matchday income can only go up if prices are raised (not popular with fans) or ground capacity increased (time consuming and expensive).

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Earnings overall halved last season to £62 million and will fall by about a further £10 million in 2018/19 as parachute payments decrease, before returning to the £20m a year level unless ‘Boro are successful in being promoted by May.


Player costs

Running a football club is an expensive business and Middlesbrough’s main costs, like those of nearly all clubs, were in relation to players, in two forms, wages and amortisation.

Paying players a competitive wage is a challenge as owners and fans want promotion and to achieve that means acquiring top talent in an industry where small improvements in the quality of players doesn’t come cheap.

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Usually when clubs are promoted they give players improved contracts with relegation clauses should the worse happen and Middlesbrough appear to have applied this principle to a degree as wages fell by a quarter in 2017/18.

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Boro players still earned an average of £23,000 a week from our formula (we have no inside knowledge so this is an educated guess) as the club invested heavily in new signings as owner Steve Gibson tried to recruit players to help the club bounce straight back to the Premier League.

Earning so much from parachute payments meant that Middlesbrough ‘only’ paid out £79 in wages from every £100 of income last season, which is low by Championship standards, although this could rise substantially in 2019/20 should they fail to be promoted, unless there is a major clear out of highly paid players.

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Sanity is in short supply in the Championship when it comes to wage control, with the division overall paying out £101 in wages for every £100 of income and Birmingham last season under I’m A Celebrity favourite Harry Redknapp somehow paying out twice that sum.

Player Amortisation

This is how a club deals with player transfers in the profit and loss account by spreading the cost over the contract period. For example, when Middlesbrough signed Britt Assombalonga from Forest in the summer of 2017 for £15 million on a four-year deal, this works out as an annual amortisation cost of £3.75 million (£15m/4). The amortisation cost in the profit and loss account represents the total for all players signed for fees in previous seasons.

Middlesbrough’s total amortisation surprisingly increased in 2017/18 compared to their season in the Premier League due to the club investing heavily in buying players in a bid to achieve owner Steve Gibson’s desire to ‘smash the league’ and ‘go up as champions’.

Consequently ‘Boro have the highest amortisation total of any club in the Championship for last season, although this could be overtaken when Villa eventually publish their results. Even so it is clear that Gibson has backed his managers in the transfer market.

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Adding amortisation and depreciation together gives total player costs for Boro of £118 for every £100 of income.


Profit is income less costs, but it contains lots of layers and estimated figures. Middlesbrough, like all clubs, show a variety of profit measures in their accounts, so they need a bit of explanation.

Operating profit is income less all the running costs of the club except loan interest. It is a ‘dirty’ profit measure in that it includes one-off non-recurring costs that are a bit bobbins when trying to work out long term sustainable profitability.

Despite the benefits of parachute payments Middlesbrough lost nearly £100,000 a week last season using this measure, although it is far lower than when the club previously was in the Championship.

Total operating losses in the Championship in 2016/17 were £260 million, so Middlesbrough’s finances appear to be far healthier than those of their competitors.

If these profits were invested wisely in the playing squad then the club should have been in a strong position to compete this season, but this does not appear to be the case.

A bit driver of Middlesbrough’s financial success here is profits from player sales. The likes of de Roon, Rhodes and Ramirez were sold and this helped to reduce the losses to tolerable levels for Steve Gibson.

Stripping out player sale profits and other non-recurring items (redundancies, legal cases, debt write offs etc.) gives a more valid profit measure called EBIT (Earnings Before Interest and Tax).

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For Middlesbrough this was a loss of nearly £400,000 a week in 2017/18, despite the benefits of parachute payments.

Nearly every club in the Championship has significant EBIT losses, which were £392 million in 2017, as many owners gambled on spending big to try to secure promotion to ‘the promised land’ of the Premier League, which in reality is a series of severe spankings by big clubs interspersed with celebrating like a loon when beating the likes of Swansea and Bournemouth.

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If non-cash costs such as amortisation and depreciation (depreciation is the same as amortisation except this is how a club expenses other long-term asset such as office equipment and properties over time) then another profit figure called EBITDA (Earnings Before Income Tax, Depreciation and Amortisation) is created. This is liked by professional analysts as it is the nearest thing to a cash profit figure.

Middlesbrough’s EBITDA profit was £7.1 million which shows that the club is generating cash from its day to day activities, although as said before, this is mainly driven by parachute payments. This suggests the club was making money which could then be invested in player transfers.

Once trading costs have been paid, many clubs also have to pay interest on their borrowings, which cost Boro £30,000 a week in 2017/18.

Player Trading

Middlesbrough spent £66 million on new players in the year to 30 June 2018 as the club recruited Assombalonga, Braithwaite, Fletcher, Howson, Randolph, Shotton, Christie and Johnson in multi-million pound deals.

The large spend on players is why the amortisation charge in the profit and loss account is so high. Fans often point out that clubs also sell players and that net spend is a better measure of a club’s investment in talent.

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Steve Gibson did bankroll a net spend of over £20 million which showed his faith in the managers, although Boro fans might question the quality, if not the quantity, of the recruitment.

The player recruitment does seem to have been funded on credit though, as amounts owing to other clubs increased to over £56 million, compared to just £1.5 million in 2013.

In the footnotes to the accounts it shows that the big spending on 2017/18 has subsequently been reversed as the club had net income of £27.7 million in summer 2018 from selling Traore and Gibson.


Clubs can obtain funding in three ways, bank lending, owner loans (which may be interest free) or issuing shares to investors. Historically Steve Gibson has lent ‘Boro over £93 million as well as about £90 million in shares, although this did not increase during 2017/18. Instead it looks as if the club bought most of its signings during the season on extended credit terms, which will result in significant payments being made for them over subsequent years.


Middlesbrough went for broke in 2017/18 in trying to immediately return to the Premier League. The failure to achieve this objective has resulted in cost cutting in the present season but if the club is not promoted this season there will be a tough challenge ahead as income will halve again likely to lead to a player exodus to balance the books unless Steve Gibson is willing to invest substantial amounts of cash once more.

Rangers: Phoenix from the ashes or new dawn fades?

Rangers won the Scottish Premier League five times between 2003 and 2011, as well as reaching the final of the UEFA Cup in 2008, which on the face of it was an impressive achievement as the club went toe to toe with a resurgent Celtic during that period.

To compete with Celtic the club was however prepared to take steps that would ultimately lead to the liquidation of the club’s operating company and had to apply for membership of the Scottish Third Division. It would take four years out of the top flight before the club was once again able to face its rivals in a league match.

The high profile recruitment of Steven Gerrard as manager in the summer of 2018 has whetted the appetite of fans and pundits, but is the club a phoenix from the ashes, or are its new foundations made of sand?

During the 1990’s Rangers were the dominant force in Scottish football, the wealth of owner David Murray allowed the club to recruit the likes of Paul Gascoigne, Tore Andre Flo, Brian Laudrup and Mo Johnston, and the club won nine titles in a row. Murray claimed ‘for every five pounds Celtic spend we will spend ten’ and the dynasty seemed unstoppable, but it was built on debt.

Celtic were however improving their finances thanks to the backing of Irish billionaire Dermot Desmond, with managers such as Wim Jansen and Martin O’Neill the battle for supremacy in the Scottish game became more balanced on the field, and the investment in infrastructure at Celtic Park plus more regular progress in UEFA competitions meant that the club’s income was ahead of that of their rivals.

Because Celtic were generating more money in the early 2000’s, it meant they could sign better players to compete with their rivals in terms of recruitment. Rangers were during this period generating large losses as they had a smaller capacity stadium and were generating less matchday income.

The only way to underwrite these losses was to borrow money, which the club did with enthusiasm such that by June 2004 Rangers owed £74 million to financial institutions.

Behind the scenes Rangers were also trying to compete with Celtic by some creative tax activities. This involved the creation of Employee Benefit Trusts (EBTs) where the club paid money into a trust.

The EBT then ‘lent’ money to players who in theory promised to pay it back, but there was no or little effort to ask for that money back from the players, who effectively therefore treated it as regular income.

The advantage to Rangers in taking this approach was that the club did not pay National Insurance contributions on the payments to the players, who also did not pay income tax on these loans from the trusts.

The players were happy because they ended up with the net pay they were seeking, so everyone was a winner…apart from the government.

This policy worked to the extent that Rangers won the Scottish Premier League five times from 2003 to 2011, but critics will argue they were abusing the tax system in the process and those titles were at best tainted and some even go as far as to say those achievements should have been stripped from the club’s list of trophies.

The global financial crash of 2007, created by the financial community who lent money to people and businesses who had no ability to repay the sums advanced, hit Rangers in two ways.

Owner David Murray’s business struggled and so was unable to provide the club with further financial support, and the main external lender, the Bank of Scotland, (now part of Lloyd’s Group) effectively went into public ownership following its own financial meltdown, and there was a far less relaxed approach towards Rangers from the bank’s new senior management as a result.

Furthermore, the UK tax authorities became increasingly unhappy with Rangers’ use of EBTs, which had been originally sanctioned for non-employees, which was not the case in respect of the club and its players. The tax authorities saw the approach taken by the club as extreme tax avoidance and pursued Rangers for a tax bill of up to £49 million.

An increasingly desperate David Murray therefore sold the club to Craig Whyte for just £1. Whyte promised to settle the tax issues and the bank loans but did neither and as more and more creditors were issuing writs for unpaid debts the club appointed administrators in February 2012.

This angered HMRC, who had wanted to appoint their own administrators to investigate Rangers’ affairs. HMRC therefore refused to agree to a deal with the administrators, leading to Rangers operating company going into liquidation, provoking a constitutional crisis in Scottish football.

A new company, Sevco Scotland, was set up and bought Rangers’ assets from the liquidator, although players were allowed to leave the club for free as their contracts were with the old club.

Most SPL clubs voted that SevCo, now called Rangers Football Club Limited, was not allowed to take the place of Rangers in the top flight, and instead the newly formed company was allowed instead to join the Scottish Third Division, giving people in small towns such as Peterhead and Elgin the opportunity to learn about seventeenth century Irish history through the songs sang by Rangers fans when their club visited.

  • Rangers had income of £19 million in 2012/13 in the Scottish Third division, which was more than double than that of the other nine teams in the division combined as the club unsurprisingly won the division and Rangers had similar success in the Scottish Second division the following season.

During this time Rangers was falling further behind Celtic in terms of generating income and signing players, which meant that when Rangers were finally promoted to the SPFL and had their first season there in 2016/17 they generated only a third of Celtic’s revenue.

Rangers have also returned to using debt as a means of funding the club, although as there is great suspicion from banks towards the club, the lending is almost exclusively from directors.

At the last count Rangers owed lenders £21 million in June 2018, although subsequently some of this has been written off as lenders converted the IOU’s from the club, which some consider to be worthless, into shares instead.

The arrival of Steven Gerrard has introduced a feel-good factor to the club, and there were million pound plus signings such as Barisic, Goldson and Murphy, along with loans from Liverpool as Stevie G used his contact book to try and improve the quality of the playing squad.

The club is now competing with their rivals in an SPFL that has greater uncertainty than has been seen for many years. For this to be achieved the board has admitted it will need a further £4.6 million to survive this season and has gone cap in hand to investors for extra funds.

The recent elimination from the Europa Cup will not have helped Rangers’ financial position although reaching the group stages has helped generate greater income than in 2017/8.

In addition largest shareholder Dave King seems to spend more time in court arguing with the likes of Mike Ashley and The Takeover Panel, who believe he should buy out remaining shareholders, than focussing on issues on the pitch.

Whether King has the wealth that he claims to buy the shares from these shareholders is as yet unproven, as are many issues in relation to the club’s activities.

Even if King himself does not have funds there appear to be other backers to underwrite the club’s losses, although this could lead to another power struggle.

Furthermore, there are squabbles and threats of litigation between the administrators, liquidators, former owners, HMRC and former players, which could result in large sums being payable by some of them, but the only guarantee is that the lawyers, as always, will be rich on the pickings between the disputes between these parties. The club however is unlikely to bear these potential costs.

One of Rangers’ fans most popular songs is ‘Follow Follow’, but given the club’s present predicament, perhaps this should be renamed ‘Borrow Borrow’.

Bolton Wanderers: What’s the frequency Kenneth?

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Ken Anderson, Bolton Wanderers Swiss/Monaco resident rogue chairman until the club went into administration, has been in the firing line recently from fans, players, other clubs, unpaid creditors and the local media.

Even before Anderson was involved with the club Wanderers had been struggling financially, despite once heady days in the Premier League and a benevolent former owner.

Nat Lofthouse, the Lion of Vienna, is no doubt spinning in his grave as a series of damning stories have been publicised over the running of the one club he played for during his whole career.

A look at Bolton’s most finances over recent years shows highlights the club’s decline that has led to the present debacle as Burnden Leisure Limited, the parent company that owns both the football club and a nearby hotel, has posted the following figures in the year ended 30 June 2017.

Burnden Leisure Limited Key Figures

Income £14.7 million (down 52%)

Wages £13.8 million (down 38%)

Trading losses £13.5 million (up 67%)

Player signings £0.0 million

Player sales £6.3 million

Borrowings £22 million (down 19%)


Nowadays most clubs divide their income into three main categories, Bolton are slightly different in they own a hotel via Burnden Leisure and so have four sources of revenue.

Day to day income is rare for a football club, which realistically is only open when a match is played.

Earning money from matches becomes more important as clubs drop down the divisions due to lower TV revenues and this impacted upon Wanderers in 2016/17 as they spent a season in League One.

Revenue from matches held up in 2016/17, partially due to average attendances, despite relegation, rising from 15,194 to 15,887, but is significantly lower than the final season in the Premier League in 2011/12.

Some clubs in League 1 don’t publish their profit figures, but from the ones that are available Bolton were towards the top of the matchday income table.

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Overseas TV viewers don’t have a huge appetite for third division English football, and whilst there’s a bit more interest domestically there are few live matches shown either, which explains why broadcast income is so low in this division and has fallen 96% since Bolton were in the top flight.

Nevertheless, Bolton were in receipt of parachute payments for four seasons following relegation, but the ending of these, combined with a further drop into League One, was catastrophic for the club in 2016/17.

Hotel income fell by 16% in 2016/17, probably due to a combination of fewer away fans making overnight stays for weekends in Bolton as away followings tend to be lower, along with general economic trends in the hospitality market.

As the club was on live television far less often in 2016/17 and the nature of the opposing teams was less glamourous, it made it more difficult for the commercial department to sell sponsorship deals, and this was why commercial income more than halved.

Sponsors are often local companies and they are also less likely to be keen to have a large marketing and entertainment budget for events such as football given Brexit uncertainty.

Although a club such as Bolton doesn’t have the global appeal of the likes of Manchester United or Liverpool, it can still be seen when Championship games are broadcast internationally and so expect this to rise in 2017/18.

Some fans think that shirt sponsorship deals are worth a fortune to clubs, but in the Premier League these are sometimes worth no more than £1.5 million a season, in League One it is likely to be in the tens of thousands.

Merging all the income sources together results in Wanderers having the highest total in League 1, but if hotel income is excluded this fall to £8.3 million, which shows that it was a decent achievement for the club to be promoted that season.

At least by being back in the Championship Bolton will be earning more TV money, as the EFL deal and solidarity payments from the Premier League work out at about £7million a season compared to League One.


League One income is lower than that of the Championship, but costs don’t necessarily fall as swiftly.

Like all clubs, Bolton’s main expense is in relation to players, in the form of wages and transfer fees.

Wage costs fell by a third to £13.8 million and were about a quarter of the amount that Wanderers were paying when they were in the Premier League in 2011/12.

Included in the wage total is about £1.2 million relating to the hotel, which should be noted if comparing Bolton to other clubs in the division.

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League One clubs (excluding those that use a legal loophole to avoid disclosing their costs) had an average wage bill of £6.1 million in 2016/17 and whilst Bolton’s costs were twice this it would have partially due to promotion bonuses, as well as some players being on Championship contracts that didn’t contain large relegation reduction clauses.

Love them or hate them, player wages are a regular topic for discussion amongst fans and based on a rough and ready formula we estimate that Bolton’s first team squad would have been averaging £335,000 a year.

You often hear fans saying that they ‘pay player’s wages’, but this isn’t the case in reality. The matchday income for Bolton for 2016/17 worked out at 25 pence for every pound of wages.

Transfer fees are dealt with in the accounts by something called amortisation. This takes the total transfer fees paid by the club and spreads it over the number of years of the contract signed by the player. So, when Nicolas Anelka signed for Bolton in 2006 for £8 million on a four-year contract it worked out as an annual amortisation cost of £2 million.

As the club’s finances have deteriorated in recent years it has had to reduce the sums paid for players and this impacted upon the amortisation total.

Bolton’s amortisation cost has fallen by 97% since being in the Premier League, which reflects the nature of loans and free transfers that are the most common methods of signing players in League One.

Bolton also paid £33,000 a week in 2016/17 in interest charges, partly due to an unusual arrangement with a company called Sports Shield BWFC Limited, controlled by Dean Holdsworth, which charged a Wonga-Tastic 24% interest per annum before going into liquidation.

It looks as if the interest due to Sports Shield will not be paid following a dispute with the club, so there should be a £1m reversal of interest charges in the 2017/18 accounts.

Further costs related to Ken Anderson, the club owner who was previously barred from being a company director in the UK for eight years.

As someone who used to work in the insolvency industry, you would have to irritate the authorities a huge amount just to get a telling off, so his behaviour in achieving an eight-year ban (which expired a few years ago) must have been spectacular in terms of poor governance and transparency. David Conn, The Guardian’s superb rottweiler like investigative journalist, uncovered some of Anderson’s past that does not paint him in a particularly good light.

Bolton’s ‘rogue chairman’ Ken Anderson puts EFL ownership rules under scrutiny | Football | The Guardian

Anderson was paid £525,000 for his services via Inner Circle Investments Limited, a company he set up in 2015 with an investment of £1 of shares.

By having such an arrangement, it allows him to legitimately say that he is not being paid a salary by Wanderers.

Inner Circle Investments Ltd appears to be little more than an investments vehicle, as the only asset it owns is a 95% share in Burnden Leisure.

In addition, £125,000 was paid to another member of the Anderson family, which appears to Ken’s son Lee Anderson, via something called the Athos Group. A trawl of Company’s House reveals that Athos Group is a services company that seems to have no executive called Lee Anderson. It would therefore appear that Lee was paid for consultancy or other work, such as modelling BWFC leisurewear. Whether a future career on the catwalk for Lee is going to arise is less certain.

Profits and Losses

There is a common misconception that football clubs, especially those in the Premier League, are a licence to print money. Research shows that clubs in the Premier League only started to make profits from 2014/15 when Sky and BT increased the sums paid for broadcast rights by 70%. Clubs outside the top flight, especially in the Championship, lose large sums, and Bolton are no exception to this.

Over the course of the last decade Bolton lost £178.5 million, despite spending the first half of that period in the Premier League. These losses were initially absorbed by Eddie Davies, before he became too ill to continue. This is where Dean Holdsworth and Ken Anderson stepped in, although it seems the former was all fur coat and no knickers when it came to covering the day to day running costs, and the two fell out, resulting in Anderson obtaining majority control.

Ken Anderson deserves credit if he’s therefore been underwriting the trading losses, and cutting costs. There’s little evidence that Anderson has done anything than look after his own interests though.

His critics will no doubt point to the sale of players to offset these losses, the muddy waters on this should clear when the 2018 accounts are published.

If you are going to run a football club in the Championship then expect to incur substantial losses, as shown above. Ken Anderson has said that he’s not rich enough to take the club forward and is seeking external investment, but surely he must have known how much it costs to run a club in the Championship before becoming involved in Bolton.

Recent non-payment of wages (which Anderson claims to have now paid out of his own pocket), player strike threats and news of players loaned to Bolton having their wages paid by the host club, combined with a transfer embargo from the EFL suggest the club is struggling to pay the day to day costs.

Player trading

Bolton’s player purchases and sales history in recent years is a textbook analysis of a club that has fallen through the divisions.

In the Premier League the club was able to buy and sell players in multi-million-pound deals. Once relegated the initially the club buys players in an attempt to bounce back into the Premier League, and if this becomes unlikely then the purchases decrease and sales rise as the club needs to flog off the talent to pay the bills.


Football clubs can borrow from three broad sources, third party loans, director’s loans (which may or may not be interest bearing) and shares, which can in theory receive dividends if the club makes a profit, but in most cases don’t.

Whilst Eddie Davies was around Bolton were beneficiaries of his benevolence as he lent money interest free to the club he loved. This, as Tom Jones once said, is not unusual for local lads who have been successful in business, as clubs such as Huddersfield, Stoke, Brighton and Brentford will testify.

Another former director, Brett Warburton, (of the crumpet making baker family) has lent Bolton £2.5 million, but is charging interest at a rate that is far higher than he is likely to earn on his ISA.

Davies lent the club about £175 million, effectively summarised in the above table. He then in 2016 wrote off nearly all the sum due.

In September 2018, shortly before his death, Davies lent the club a further £4.8 million to allow it to pay off a loan due to Blumarble Capital Limited, a company with two employees and relatively few assets, apart from, according to its last recorded balance sheet, a loan due from another company of £4.8 million (almost certainly Bolton) and some cash. The Blumarble loan was arranged by Dean Holdsworth.

Blumarble effectively bought the loan from the liquidators of Sports Shield and have charged interest at 10% compared to 24% on the original loan.

Blu Marble was threatening to put Bolton into administration at the time. Eddie Davies’s loan came via a company called Moonshift Investments Limited based in the British Virgin Islands tax haven.

Ken Anderson has repeatedly said in his ‘notes from the Chairman’ column that Bolton have lower debts than most clubs in the Championship. This is true, but the credit for this should surely go to Davies rather than Anderson in writing off so large a sum, so it’s difficult why Anderson is so proud of himself over this issue.


Bolton’s is a tragic story, a historic and proud club whose name is continually being dragged into the mud. Fans just want to be able to see their team play some decent football with the certainty that there will still be a club in a month’s time, and that certainty is not presently guaranteed.

Ken Anderson claims that all is right, and that people should ignore his past in terms of running companies into the ground and being banned from being a director. Perhaps he is correct, all is Hunky Dory and HMRC, Stellar Football Limited (one of the world’s most successful sports agencies) the Insolvency Service, Forest Green Rovers, The Bolton News and all of the club blogs and fan groups have it wrong in terms of the club’s finances.

Straight answers are what are required to allay fears, but Anderson’s approach is one of snide whatabouttery in his Chairman’s notes column in the club program and website, which will I suspect result in a further loss of goodwill to a club that needs support from everyone in the game.

Anderson’s motives are unclear. If he wants to run the club then surely he should expect that it will lose money in the Championship, so whining about having to cover wages makes him no different to any other club owner in the division.

His other ambition may have been to flip the club by selling it at a profit to someone else, here we will have to wait and see the outcome.

As for his financial rewards from involvement with the club, they are high by League One standards but the club was promoted so he can argue were deserved.

If there were not subsequent alleged issues involving winding up orders and non-payment of staff or other clubs for loan fees payments to him become more difficult to justify.

One way to stop the brickbats is for Anderson to publish the 2018 accounts. Bolton will have had to submit them to the EFL for Profitability and Sustainability reasons (the new posh words for FFP), so there’s little reason to delay submission to Companies House. This could stop the criticism in its tracks if all is as rosy as Anderson claims, over to you Ken…

Manchester City and Der Spiegel: Second Skin

The Der Spiegel allegations in relation to Manchester City seem to have tongues wagging at present, but are City’s activities illegal, deceptive or just pushing the boundaries of what is within the regulations?

Never mind that, the good news is that legendary City fan Eddie Large is making a comeback with Sid Little

What are the FFP rules?

The short version is that clubs are allowed to make an FFP loss (which is an accounting loss excluding infrastructure, academy, women’s football and community scheme costs) of €5 million over three years. These losses can be extended to €30 million if the club owner is willing to inject the difference into the club by buying shares.

The long version is 108 pages long and not recommended unless you are on a particularly long train journey or a masochist.

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What are the punishments for breaking the rules?

UEFA has a full schedule of punishments from finger wagging, fines, wage caps, reduction in squad sizes for UEFA competition to the ultimate sanction of being banned from UEFA competitions.

Are these punishments legal and within EU competition law?

UEFA is confident that the rules are watertight, but they’ve not been tested in court to date. As we’ve seen with the QPR case, which cost the EFL £3 million (and presumably QPR similar) and took four years to resolve, the objective of the legal and accounting professions is to delay and argue as long as possible to maximise their fees. Manchester City were by all accounts prepared to use whatever legal means possible to prevent a competition ban.

Are there weaknesses in the rules?

All rules have strengths, weaknesses and loopholes. The rules were partially created by two employees of Deloitte, Martyn Hawkins and Alex Byars, who were sent on secondment to UEFA. Byars was then recruited by Manchester City in January 2012 and spent three years there, and Hawkins was recruited by City at the same time and is now the club’s Finance Director.

The Independent

It’s common in all industries to recruit from those with expert knowledge, so no wrong doing here from a legal standpoint, but if anyone is going to know where the bodies lie in terms of the weaknesses of FFP it is likely to be someone who was involved in writing the rules.

Smart thinking by City or an attempt to dodge FFP? It depends on which football team you support.

How can the rules be abused?

UEFA did fine City £49 million for FFP breaches in 2013, as well as imposing transfer and wage caps for two seasons. City appear to have accepted and applied these rules, and as a result had a refund of two thirds of the fine in accordance with the terms of the initial punishment.

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If a club thinks it is going to exceed the allowed losses it could, if it so desired, do one of two things.

(a) Artificially inflate income

Clubs have three main sources of income, matchday, broadcast and commercial. The first two are difficult to inflate, but commercial income could be boosted in relation to deals signed with sponsors who are connected to the club owner.

This is what is alleged in the Der Spiegel leaks, in relation to commercial contracts, such as the one with Etihad Airways, where the claim is that of the £60m a year sponsorship from Etihad, £52 million of this was coming from Abu Dhabi United Group, owned by City’s owner, Sheik Mansour. These claims have been denied.

The other claim is in relation to the sale of image rights to another company, Fordham Sports Image Rights Limited. (FSIR)

FSIR had by 30 June 2017 accumulated losses of £74.6 million in five years, which is an achievement for a company with two employees. These losses have been mainly funded by the company issuing shares for £59 million.

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At this stage you might be wondering what is the link to Manchester City?

Fordham Sports Image Rights Limited used to be called Manchester City Football Club (Image Rights) Limited and its registered address was the Etihad Stadium in Manchester.

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A look at the list of officers of FSIR includes Simon Cliff and John Macbeath.  They both resigned in July 2013. Simon Cliff is presently the legal counsel at Manchester City and was appointed to the board in May 2013 and John Macbeath is a non-executive director of the club, former interim chief executive and was appointed in January 2010.

FSIR is presently controlled by David ‘Spotty’ Rowland, a former Conservative party treasurer and major donor. Rowland is notoriously camera shy and isn’t known to be a football fan, although he once tried to buy Hibernian in the 1980’s.

Why Rowland would bankroll the losses of a company involved in sports image rights is unclear.

The allegation appears to be that FSIR paid City for the player image rights in 2012/13 when FFP was first applied, as well as other sales to parts of the City group empire, as a means of reducing losses.

City sell image rights

What has happened to the image rights subsequent to the sale to FSIR is unclear, but it is odd that the company has made such huge losses since 2013.

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(b) Reduce FFP costs

Manchester City are a subsidiary company of City Football Group Limited, which also has interests in football clubs in New York, Melbourne, Tokyo and Uruguay. City’s critics believe that this allows the group to allocate central costs (marketing, IT, legal etc) to the other football clubs and reduce the costs borne by Manchester City, helping it comply with FFP losses in the process.

A look at the income and costs of both Manchester City and City Football Group shows the following

Again, the conclusion is likely to be dependent upon your confirmation bias. A City fan would say that Manchester City generates 92% of income due to participation in lucrative competitions and that many overhead costs, such as rent, are fixed, and so would be borne to a greater extent by other members of the City group to a greater extent. Those who think there has been foul play will point out that Manchester City only bear 80.7% of the wage bill, and that the club would surely pay far higher wages than those in the MSL and A-League.


No one comes out of this with reputation intact. For those who are against City and their owners there is plenty of circumstantial evidence that there have been strange relationships and transactions taking place, but in the three days of reporting from Der Spiegel to date, no smoking gun. Some of the activities would be seen as good business practice in other industries, and football has a moral code of convenience whenever deeds are undertaken by a club to which one has a particular dislike.

City themselves, with the effective riposte of ‘Fake News’ to the allegations, give the impression of a club that does not want a light shone on it in terms of transparency and governance. If transactions have been undertaken with third parties that are unusual then the best thing, if innocent, is to show the evidence and the club could come out of this smelling of rose.

Der Spiegel’s allegations, whilst containing a few new snippets, doesn’t reveal any slam dunk information (although at the time of this being blogged only three days out of four of the story have been published).

Football is a grubby industry, and every time you hear about stories such as these which paint the game in a poor light (which apply to many, many clubs) it’s inevitable that you fall a little more out of love with the game, but not enough to stop watching, subscribing, discussing and consuming, and clubs, along with the likes of the Premier League, UEFA and FIFA, are fully aware of this.


The benefits and perils of taking a football club onto the stockmarket.

Football clubs have a choice of ownership models, here we will look at the two most common corporate identities for investors.

On 23rd August 2018 Manchester United plc became the first football club in the world to be worth $4 billion. We know this because their share price finished that day at a record high price of $24.60 on the New York Stock Exchange, where the club’s shares are publicly traded.


At around about the same time as United went through this price threshold there were rumours that Liverpool and Chelsea had been subject to takeover bids for about £2 billion, but the actual price is unknown, because both these clubs are private companies.

United’s share price boost at this time was partly based on the view taken by the markets that if Chelsea and Liverpoil were worth £2 billion then United were worth more than that and factored the difference into the share price.

Many people queried the logic of Juventus signing Cristiano Ronaldo, and whether the club would benefit from a €110 million transfer fee and wages for a 33 year old player.

Since joining Juve, the doubters have been proved wrong as the club’s value has more than doubled from €600 million to €1,400 million as the market digested the impact that CR7 has on the global commercial desirability of the club with sponsors.

The Juventus share price rise was a classic case of the market responding to a single factor in relation to a company, and that factor was Cristiano Ronaldo and his squeaky clean image that is so popular with sponsors of both the individual and the club for whom he plays.

When rape allegations in the media in relation to Ronaldo appeared the share price went into a hasty reverse.

What goes up…

A cynic might say that a short seller (someone who sells shares they do not own in the hope that the price will go down and they can buy them back at a lower price) would be very pleased with the accusations made, as it has allowed these people to make a fortune in the markets.

In the 1980’s and 90’s many clubs in the UK, as diverse as Spurs, Millwall, Southampton, Hearts and Sheffield United changed their status from private to public. Within 20 years the vast majority had reverted to being private companies, chastened by their experience to the additional scrutiny and costs of being members of a stock exchange.

All businesses, including football clubs, need finance. Before the first ball is kicked, the first ticket sold, the club will need to buy the land on which to play their matches, build a stadium, employ a manager and coach, sign players and so on. Cash will only come into the club at a later date as matches are played, commercial deals signed and broadcasting rights are sold.

Finance comes from two sources. Clubs can borrow from either banks, private institutions or owners or they can generate cash from issuing shares to investors.

Prior to being acquired by the Glazer family in 2005, Manchester United plc had its shares traded on the UK stock exchange and was debt free.

The situation changed when the Glazers borrowed substantial sums from financial institutions to fund the acquisition of shares from the market and take the company private.

Because United was seen by lenders as being a risky investment, banks charged interest rates of up to 16.25% on the borrowings. This has resulted in United paying out £767 million to banks since being acquired by the Glazers.

Interesting, very interesting

Critics argue that this money would have been better spent being invested in the squad rather than paid to banks, although it could be argued that the local branch manager of Barclays probably had a better chance of nutmegging a defender and sticking one into the net at the Stretford End than the likes of Memphis Depay or Bebe.

Like a puppet on a string…but who was the puppetmaster?

The alternative to borrowing money is for a company to issue shares to investors. A share normally allows an investor to vote on key decisions each year such as who are the company directors. There are broadly two types of company, although recently some clubs have gone down a third route of being community owned.

Public companies are able to issue shares to anyone, through what is called an IPO (Initial Public Offering). The company issues a prospectus, where it sets out its intentions in terms of a business strategy and budget.

The benefit to the club is that it can raise money from anyone and everyone, thereby broadening the number of people who are willing to invest and raising more money. This money could be invested in the playing squad, improved facilities for fans and so on.

The benefit to shareholders of buying shares in a public company is that they can easily sell their shares on an open market and know the price of those shares from day to day. From a fans point of view they could own anything up from a single share in the club.

The shareholders are not however involved in the day to day running of the club and are not consulted on strategic or operational decisions, which are delegated to the board of directors and the manager/coach.

Therefore, if a fan thinks that buying 100 shares in their favourite club will allow them to have a say in transfer, ticket price and away shirt colour policy they are wrong.

There are significant downsides to being a publicly quoted football club.

(1) The club is subject to greater compliance costs, as it is necessary to abide by the rules set down by the relevant stock exchange as well as more complex and detailed company law requirements.

Millwall estimated these costs to be about £100,000 a year when they made the decision to return to being a private company in 2011. At one stage Millwall had 78 billion shares in issue, but each one was worth 2/100 of a pence each, making the costs of maintaining records for each shareholder and sending out communications via the post prohibitive.

No one likes our share price, we don’t care.

(2) The club may have to answer to analysts and commentators in the media to a greater degree on its financial dealings. Analysts give advice to their clients as to which companies they should invest in, and so tend to want to know the intricacies of the club’s finances. The club directors may feel this is time wasted and prefer to focus on the day to day running rather than being grilled and observed with keen interest by a bunch of bankers.

(3) The majority of shares in publicly quoted companies are owned by institutions such as pension and insurance companies. These shareholders have little interest in the club as a sporting institution, their aim is to maximise a short-term financial return rather than the longer-term success of the club.

(4) For an owner, going public means potentially losing control of the club. The Glazers at Manchester United have prevented this by having two types of shares in the club. Class ‘A’ shares carry one vote each and are the ones traded on the New York Stock Exchange. Class ‘B’ shares carry ten votes each and are owned by the Glazers. This allowed the Glazers to generate £140 million in 2012 by taking United public. Half of this was used to pay down debt and the other half went to the Glazers.

The ‘A’ shares represent about 25% of the total number of shares in Manchester United, but carry just 3% of the votes. This allows the Glazers, provided they do not fall out with each other, to make whatever decisions they see fit without worrying too much about unhappy third-party investors.

The alternative is to be a private company. Here shares are not traded on a market and are not easily transferred from person to person. Most clubs have what are called pre-emption rights, where anyone wanting to sell must first offer the shares to existing shareholders before selling to a third party.

Private companies usually have a single or a few shareholders, who are often board members too. As such they benefit from not being answerable to outside parties, more relaxed company law and accounting filing rules but the club has fewer methods of raising finance.

Regardless of being public or When a business makes profits, which historically has been a rarity for football clubs, those profits belong to the owners.

The owners then have the choice of either reinvesting the profits back into the club or taking them out in the form of dividends.

Very few owners have taken the dividend route, one of the most famous however was Blackpool in 2011, where after being promoted to the Premier League, owner Karl Oyston saw fit to pay himself £11 million in dividends from the money generated that season. This has led to huge subsequent protests from Blackpool fans who felt that the money should have been used to improve matters on the pitch, as the club slowly fell through the divisions.

Manchester United, being a public company since 2012 and therefore the demands of the market, have paid dividends of over £64 million since that period.

Whilst this has caused grumblings amongst the United fanbase who have been happy that the club is paying less out to finance providers in the form of interest, but if this is simply being replaced by dividends will not be happy, neither will Jose Mourinho, having seen his transfer requests this summer rejected by Ed Woodward and the board, all of whom receive dividends on their shareholdings…


Manchester City and Etihad Airways: Economy plus?


The 2007/8 Premier League season could not finish fast enough for Manchester City. The final match under Sven-Göran Eriksson was a nine-goal thriller at Middlesbrough, where unfortunately City conceded eight of them.

The club’s reputation at the time was that of the Keystone Cops of English football, a bunch of mavericks in blue where the wheels were always on the brink of falling off.

In those days their hated local rivals at Old Trafford looked upon City with mocking contempt rather than as an enemy, saving their true loathing for Liverpool and Leeds United.

Behind the scenes things were even worse. Whilst City fans were excited at the start of 2007/08 at the prospect of new Thai owner Thaksin Shiniwatra’s promises of big spending and success, an investment in the likes of Rolando Bianchi, Felipe Caicedo and Elano didn’t prove to be successful, and the money from the new owner came from unreliable sources.

City borrowed £46 million in the one year of Shiniwatra’s ownership. Whilst borrowing money has some benefits, these loans came at a price, as City’s interest costs more than doubled to £10.7 million.

The acquisition of the club by Sheik Mansour in September 2008 saved City in more ways than one, as by this stage Shiniwatra had more pressing issues to deal with in the form of corruption charges from his homeland, and he disappeared from the scene with few regrets from City fans.

Mansour transformed City, with an initial scattergun spending policy on marquee signings such as Robinho and an audacious attempt to sign Kaka. At this time transfer fees and wages were an irrelevance to the owners.

This impacted upon City’s financial performance, which moved from a profit of £17 million in 2006 to a loss of £190 million in 2011.

These losses were sustainable because Sheik Mansour was willing to underwrite the losses through a combination of interest free loans and shares. Had FFP rules been in existence at the time then the investment would not have been possible. This allowed the Abu Dhabi owners to pump nearly £1.2 billion of cash into the club.

The threat to the Elite

The owner’s huge investment startled the existing elite of European football, who now saw City as a potential threat to their cartel at the top table of UEFA competitions.

These established clubs put pressure on Michel Platini, the UEFA president, to introduce some method of reducing the rise of ‘new money’ clubs such as Chelsea, City and PSG.

After much internal haggling and huge amounts of money being spent on accounting and legal fees by UEFA, Financial Fair Play rules relating to non-payment of transfer fees were introduced in 2011-12, and then extended in the 2013/14 season in the form of a breakeven model.

The rules are now so complex that the latest version takes up 116 pages of legal and accounting pontification and windbaggery.

UEFA claim that FFP can be summarised in one sentence “Financial fair play is about improving the overall financial health of European club football”.

We would describe that one sentence in one word, and that word is ‘Bollocks’. Businesses go bankrupt due to a lack of cash, not profit, which is an arbitrary accounting concept open to sleight of hand, estimates and manipulation.

The initial rules restricted clubs’ losses to €45 million over three years ending in that period, and then €30 million from 2015/16.

How does it work?

A breakeven model calculates losses as income less expenses. Clubs have three main sources of income, matchday, broadcasting and commercial.

It’s difficult (but not impossible) to manipulate matchday income, which is the number of tickets sold multiplied by the ticket price, and the same is true for broadcast income, which is negotiated and distributed centrally by individual leagues and UEFA itself.

Commercial income is different as represents deals signed by clubs and their business partners. The prices for these deals are open to negotiation.

In the years prior to the Abu Dhabi takeover City’s commercial income was far less than their rivals from Old Trafford, whose ability to negotiate deals on the back of the popularity and success brought by Sir Alex Ferguson was ruthlessly exploited by United’s American owners.

This is where eyebrows have been raised in relation to Manchester City. Etihad Airways, the national airline of Abu Dhabi, replaced Thomas Cook as shirt sponsor in 2009. This had an immediate impact on City’s commercial revenues, which increased by 126%.

In 2011 the Etihad deal was expanded to include naming rights for what had been previously known as the City of Manchester stadium, (less affectionately called the Council stadium by United fans, due to City renting it from the local government authority) which became the Etihad stadium, along with surrounding training facilities called the Etihad campus.

The agreement was for ten years, at an estimated value of £400 million, which included shirt sponsorship as well as the naming rights.

At the time the largest fee for naming rights was £2.8 million a year by Arsenal for the Etihad. Other clubs had tried and failed to secure high value sums from sponsors. Newcastle United had to accept two dozen pairs of Donnay socks and a signed Dennis Wise photograph as St James’ Park was briefly renamed the Sports Direct Arena, the main company controlled by owner Mike Ashley.

The accusation levelled at City is that the Etihad deal has been used to reduce the club’s losses and help it in satisfying FFP rules.

Because of the Etihad deal City’s commercial income initially matched that of United but has subsequently fallen behind as their rivals have managed to partner themselves with everyone from Japanese Tractor partner Yanmar to mattress partner Milly, although the latter may prove useful as Jose Mourinho’s tactics send United’s global fanbase to sleep.

City’s partnership with Etihad does however mean they have the second highest amount of commercial income in the Premier League, and the fifth largest of any football team globally.


Such was the extent of the Etihad deal that there were accusations of ‘financial doping’ from the likes of Arsene Wenger.

UEFA had tried to minimise the impact of deals signed by clubs with organisations connected to the owners through ‘related party transaction’ rules. A related party is one that is controlled by the club owner or a close relative.

In addition, UEFA have set up a Club Financial Control Body (‘CFCB’), the Supermen and Superwomen of financial investigations, effectively a group of accountants so powerful they wear their underpants over their trousers, to ensure that clubs do not overstate the value of commercial deals.

City tried to set up their deal with Etihad in such a way that it complied with the FFP rules, but such were their losses were put on the FFP naughty step in 2014, with the following penalties

  • A £49 million fine, part of which was conditional on improving the club’s business model. City duly received a rebate of two thirds of this sum.
  • An agreement to not increase the wage bill (excluding bonuses) for two seasons
  • A squad reduction for UEFA competitions from 25 to 21 players
  • A reduction in the amount spent on player signings, limited to a net £49 million spend.

City managed to comply with the sanctions and kept their wage bill, which had been £36 million before Shiniwatra in 2007 and zoomed to £233 million by 2014, in check until UEFA were satisfied that the breakeven target was being achieved. This coincided with Pep Guardiola’s arrival and gave City more wiggle room.

PSG were given a similar fine, in what was seen as a victory for the existing elite of European clubs.

Clubs can however dispute any rulings by the CFCB, and this is likely to trigger a long and expensive legal action, where the winners will be the accountants and lawyers.

A screenshot of a cell phone

Description generated with very high confidence

In 2015, under pressure from, you guess, a series of lawsuits from unhappy club owners, UEFA relaxed the FFP rules, allowing clubs to negotiate a voluntary deal althgouh this does involve an eventual breakeven target


The City and Etihad partnership was borne to an extent out of necessity on the part of the club, to satisfy UEFA FFP rules. If the value of the deal initially was excessive given the global position and reputation of City in 2011, then today, with the club having won the Premier League three times since Sheik Mansour acquired the club, the £400 million deal, which has been renegotiated since its original signing, is probably about right, and some even claim it is below the market rate, for Pep Guardiola’s team in the current market.