• Other Financial Issues

    Selling your stadium to yourself: It’s not cricket

    Introduction 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…

  • Other Financial Issues

    Middlesbrough 2017/18: Babylon’s Burning

    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…

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    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…

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    Bolton Wanderers: What’s the frequency Kenneth?

    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…

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    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? 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…

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    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. OnO 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…

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    Manchester City and Etihad Airways: Economy plus?

    History 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…

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    Newcastle: Opportunity Knocked

    Introduction Regular reference is made about the ‘Big Six’ clubs in the Premier League and the disproportionate amount of wealth, transfer spend and media exposure that they generate. These clubs (Manchester United and City, Spurs, Arsenal, Liverpool and Chelsea) seem to have created a glass ceiling which is almost impenetrable to break (with the notable exception of Leicester in 2015/16 as they jostle for Champions League (CL) positions, having taken 60 out of 62 places in the CL since 2004/5. One of my chums on Twitter, called @TheGingerPirlo_ , asked about Newcastle United, a club who had been successful in the early 2000’s, and an assessment of Mike Ashley’s reign…

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    QPR FFP Fine: Everything Counts in Large Amounts

    Imagine someone stealing £170 million from you, and the culprit eventually is fined a tenth of that sum having spent all the money elsewhere. That’s how Derby County and their fans are feeling following the EFL Financial Fair Play verdict against QPR. On 24 May 2014, in the 90th minute of the Championship play off final against Derby County, (Sir) Bobby Zamora scored the only goal of the game to achieve promotion for Queens Park Rangers. Had QPR complied with FFP properly, it is highly unlikely that Zamora would have been part of the QPR team, after the club was relegated the previous season from the Premier League, along with…

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    New TV Distribution Rules: Everyone’s A Winner…?

    On the same day that lots of people were getting giddy about Amazon buying one of the Premier League TV rights packages for 2019-22 for an ‘unspecified price’ (i.e. peanuts) the Premier League owners also sneaked through a new formula for the distribution of PL monies between clubs, in what was a textbook example of a slick PR operation choosing a good day to bury bad news for anyone outside of the Premier League. Q: What’s the problem? Some of the ‘Big’ clubs feel that they get a raw deal from the existing way that broadcasting monies are split in the Premier League, so want to change the rules. Q:…