Football Finance: Time for the beautiful game to get its house in order

IN the first of a week long series of articles analysing football, its finances and future, TheBusinessDesk.com, in association with law firm Hammonds, sets the scene following a disappointing World Cup for England and turbulent summer for many regional clubs.

THE NEW football season may only be a couple of weeks old but there have already been enough twists and turns both on and off the pitch to keep fans chatting long into the night as they enjoy their post match pints.

At clubs in Yorkshire and the North West, managers have been sacked, chairmen have stepped down, takeover rumours have rumbled on and question marks have yet again been raised about the viability of some clubs to survive financially in an ever increasingly expensive profession.

Football finance has come under scrutiny in the spotlight of the recession with warnings that the current level of spending, especially in the Premier League, is not sustainable unless changes are made.

European football’s governing body UEFA has made plans to tackle the debt and clubs must not be running at a loss following a three year period starting from 2012.

Despite this, the new mood of austerity and spending cuts implemented by the coalition government outside the game, coupled with tougher stances by bodies including HM Revenue and Customs within it, have left some commentators certain that it will only be a matter of time before a professional club folds.

Additionally, the mega riches being spent by the likes of Manchester City in the Premier League has only led to the financial gap between the Football League and the elite 20 clubs, and the players who ply their trade in the world’s richest league, widening.

Manchester United boss Sir Alex Ferguson has attacked the huge spending by some clubs as ‘kamikaze’, while for some, the disparity in spending power and wealth between the divisions has only served to increase a sense of disillusionment in a game for some which still manages to entertain millions.

However, despite Manchester City’s transfer window spending exceeding £100m this summer, overall transfer spend has been down on recent years.

While the total Premier League net spend on players last summer was down 10%, the final total still reached £450m. This season the total so far is around £200m but is far less across the Football League.

Other factors have even seen senior figures within the game voice their concerns by taking action. Karl Oyston resigned as chairman of Premier League newcomers Blackpool last week after becoming disillusioned with player agents’ influence.

Ignoring the Premier League, Football League clubs paid out £12.7m in agents’ fees last season – a rise of £3.9m from the previous year.

And for those who drop out of the Premier League, including Hull City who were relegated from it last season, austerity measures have taken precedence as clubs battle fan expectation while attempting to balance the books.

But despite its detractors, Jonathan Jones, head of Hammonds in Leeds, believes football in the region is a “mainstay of the regional economy”.

Yorkshire boasts a number of clubs, including Bradford City, Barnsley, Doncaster Rovers, Huddersfield Town, Hull City, Leeds United, Sheffied United and Sheffied Wednesday, which is currently involved in transfer speculation.

In the North West, clubs including Liverpool, Blackpool, Manchester City, Manchester United, Wigan Athletic and Everton all play in the Premier League.

“Sport has the power to make people and a region ‘feel good’ and can be a driving force in attracting people to live and work in a specific area, as well as supporting the physical regeneration of a community,” Mr Jones said.

“Against this macro-economic background, clubs will have to demonstrate responsibility in how they run their club, many businesses are facing tough times and the business of football is no exception.

“But when it comes to the ‘Beautiful Game’, there are elements that aren’t a factor in other businesses, like relegation or fan loyalty. If a shop goes bust people go to another shop. That doesn’t happen with football clubs.”

Mr Jones said although a number of regional clubs struggled for survival last season because of the burden of their wage bills in a difficult economic climate, crackdowns by authorities could actually help their viability in the long term.

He said: “Governing bodies, the banks and tax authorities are beginning to impose regulations and make decisions which require clubs to live within their means.

“As the new football season gets underway the region is filled with excitement and possibly some trepidation as the region’s football clubs hope for a season of success.

“But as players are transferred and new managers and chairmen appointed, it is the ideal time for clubs to look back at previous seasons and learn to balance fans expectations whilst trying to weather the economic storm.”

Tomorrow: Football and immigration