Football and finance

The current state of football finances is absolutely bonkers.  Surely at some point the bubble will burst.  This has happened before - the 90s football boom ended with collapse of ITV Digital which showed that the interest in football wasn't quite as deep as people had assumed at which point banks called in loans and the asset value of players below the Premiership (which many clubs relied on) plummeted.  It seems that the way out of this for many clubs has been overseas investment with the promise that the asset of the football club could become worth a hell of a lot if it gets to the Premier League.  I can't help thinking that as some point this source of money is going to dry up and the kind of debts clubs are in now makes the situation in the 90s look like peanuts - where a lot of clubs were able to survive by falling back on temporary goodwill, fan investment and selling off grounds and training ground assets.  It's all fine when millionaire's from all over the world are competing to own English football clubs but if that stops then a hell of a lot of clubs are going under because there's no way they'll be able to muster up the finances to keep themselves going.  The financial health of English football is now pretty much entirely at the whim of overseas investors.

I Find it crazy that Man City Can pay £60m + £250k Wages per week for a player who 2 years ago was a reject from another Prem team 

Total Madness 

Really? Where have you been for the last 100 years?

Did my dissertation on this...Basically football is viewed like no other industry, in that the aim of being the best isn't to make a profit, therefore owners will spend a lot on it. The "loans" are just to appease rules that state you aren't allowed to just give the club money, you must have an "expectation" of receiving it back. Of course a lot then just wipe off the loans when it is feasible for them to do so.

Therefore this is just going to continue.

Only while English football club's continue to appreciate in value though and only while there's steady stream of these guys willing to come in and spunk their money on what amounts to a glorified vanity project with fringe benefits.  If those things change and English football ceases to be a worthwhile/fashionable investment to the newly minted in fast developing countries then it is hard to see how any of these clubs are going to survive.  It's easy enough to see a future in which quite a few clubs below the Premiership 'do a Portsmouth'.

I think people having a go at Lansdown are missing the point.  In some ways Lansdown is somewhat out of date.  He's more of your now old fashioned benign local benefactor who has made his pile and wants to invest in his local club to leave some form of legacy.  A bit like Jack Walker, Jack Heywood etc, the previous generation of these kind of people.  That's not the same as simply following a pattern for purchasing luxury assets among the global rich.  It's not that much better but at least underneath it all there's a genuine long-term commitment to the community you're investing in - I don't think Lansdown's money is going anywhere as much as we might like it to.  That's not the case for a lot of these guys - they do not care whether their club is situated in Bristol, Reading, Stoke, Portsmouth etc.  It matters not - the only thing they care about is the asset as a way of parking their money and as a status symbol.

This has surely been the story of the rather messy evolution of club ownership in English football which has always relied on the whims and fashions of a minority of wealthy people.  Our Professional clubs never were membership clubs unlike in many countries and they've always been linked to the vanity of the people that owned them.  They started by being owned by successful but fairly small time local businessmen in the main who in the era of the maximum wage and little competition for entertainment saw it as a way to make steady profit while being seen as upstanding members of their local community and making good business connections while they were at it.  This was a very mixed group of people who were generally pretty conservative in the sense that they wanted to protect this nice little insular world that served their interests.  They didn't invest much in moving the game forward or innovating commercially and they certainly didn't care much about the wellbeing of their players or the supporters in their grounds which they allowed to become dilapidated - they were on to a good thing and while it kept ticking over they were happy.  When football went into decline (as it came under pressure from other entertainment's and changes in expectations of players and supporters) that model no longer worked because greater investment was required so along came the seriously wealthy who saw the potential in football while it was a on its knees and picked up a ton of clubs very, very cheaply (the Martin Edwards, Robert Maxwells, Alan Sugar's, Jack Walker etc etc).  These were the people who eventually formed the Premiership and started the football boom by sanitising the game and therefore appealing to whole new audiences - many through TV.  When the football world they invented started to get beyond them and they couldn't finance it properly any more they cashed in and started selling clubs to not just the British super-rich but the global super-rich.

You can see the development as roughly local rich - national rich - global rich.  So what happens when this generation of owners have had enough or the model no longer works to their satisfaction (as happened with the previous set ups)? There's no guarantee the next generation will have the same liking for English football clubs - a lot of it strikes me as insecurity.  As if a lot of the new super rich feel they have the money but not the status - so they buy a football club in England in the same way a previous generation of industrialists would buy a Country Manor to show they were as good as any aristocrat and interestingly they get patronised in exactly the same way as being imposters and 'not one of us'.  Vincent Tan anyone? Probably the most powerful man in Malaysia and yet we like to mock him as a comic Bond villainesque bafoon who doesn't 'get football' and doesn't have a right to be involved in it.  I doubt that insecurity will effect the next generation of billionaire's from those parts of the world who will have grown up in an already advanced economy - are they really going to think they gain anything by buying Hull City? If anything they'll probably ask why there shouldn't be powerful football clubs in South East Asia/Middle East/Russia and it's peripheries where the potential for growth would be massive.  The point is, the big clubs are always going to be able to 'kick upwards'.  I can't imagine there'll ever be a time when Man United/Liverpool/Arsenal etc won't be able to attract mega-rich buyers.  But the idea that the rest of English football will be able to continue that when there's not really anywhere further upwards to kick strikes me as over-optimistic.

I asked DC about this after the Q+A. The Championship is rediculous, either you go for broke trying to reach the Prem, or you get relegated.

i meant in almost every other business its not acceptable but its normal in football,,i was aware of the financial history of football.