By Tony Attwood
The new financial analysis of clubs’ finances for the season 2013/14 makes familiar reading. Manchester United with its world wide marketing earns the most and spends the most on salaries. Indeed the clubs vying for the top four places in the Premier League earn the most and spend the most on wages – although not necessarily in the order they will end up at, in the league.
Income and expenditure however is not an absolute guarantee of success, otherwise Man U would be walking away with everything. Buying the players and paying the players is only part of the deal.
Man U has a bigger turnover than Bayern, Barcelona, PSG, Chelsea and Arsenal, but is at the moment trailing behind each in various competitions where they might meet.
The table showing how much profit a club makes and how much it spends on players wages is something of a guide.
|Club||Wages £m||Turnover £m||Ratio %||Profit/loss £m||Debt|
The reason this is only part of the guide is that it doesn’t tell us the most important question is where are the figures going.
To run a business long term you either need so much money that nothing that you do matters, or you need a viable plan.
And in business part of that plan must be the buying of players and paying them. I noted this as a problem for Liverpool and Tottenham in an earlier article – it is not that Liverpool spend £22m a year less on players than Arsenal, it is that if they try to catch up with our expenditure, they will find our expenditure rising too, as we bring in more players in the mould of Alexis and Ozil.
To catch up the moving target you need a huge, huge, huge injection of capital – which could come from a new stadium, but only after much of the stadium is paid for.
The rise of Man U’s world wide marketing seems inexorable; they get the money they make the profit and they don’t spend more than they should on players’ wages. They have a plan, although not the nicest of owners, and really they ought to be top of the league and winning the cup each season.
More than that, they ought to be the second top club in Europe, given that in the European table they are second only to Real Madrid, and above Bayern, Barcelona, and PSG.
For the rest of English football, Man U are financially out of sight and look like they will stay that way for a while to come except for that very annoying debt given to them by the Glazer family who bought the club, and then took the club’s money out of the club to give it to themselves as a refund on buying the club. It hasn’t held them back yet, but one day…
Debt is only a problem if two conditions are met
a) you are required to repay it
b) you don’t have the funds to repay it and you can’t refinance it.
Arsenal’s debt is secure in that the stadium earns money to pay off the debt, and it gets less each year. Man U’s is secure because of world wide marketing and because the owners although not quite English gents, know that Man U is their best way of covering losses elsewhere.
But where the business model gets mixed up with one man or one family or even a country, there can be danger. A death, a coup, a sudden change in oil prices…
But now take Man C, they made a loss, which FFP doesn’t like, and they are at the top end of the spend ratio on players’ wages, which is always a danger sign because above everything else you need players. If you try to reduce your spend on players you tend to slip down the league.
They want to expand the stadium, to earn more money, but that will take a while. So how do they turn things around? Only by being more wily in transfers and on the pitch – the two hardest things to do. Especially as they are carrying a debt as well.
Chelsea have moved from being bulk spenders to sensible people, but their ratio of income spent on players is at the very top end, and they still don’t have a new stadium which is what they desperately need if their income will really accelerate.
They can afford to buy and build, of course, because of Abramovich’s billions, and stadium costs don’t affect FFP, but time is the one thing Mr A doesn’t control (at least I’ve never seen him lurking around the Doctor Who studios). Their debt is huge, but since no one is calling it in, it doesn’t seem to matter too much. The only issue is how Uefa wants to deal with clubs in debt.
Debt is an interesting if often ignored topic, for it was the Uefa report “The European Club Footballing Landscape” of 2010 which led to FFP, and which cited club debt as its major concern. They’ve gone quiet on debt, but one day…
So while Man U have got plenty of leeway to spend more, Chelsea don’t seem to have nearly so much. They are where they are – they just have to make the best of it – as indeed they have done this season.
Although Arsenal’s profits are modest, their ratio of money spent on players is satisfyingly mid-range, and these figures reflect only the very start the new marketing deals that are arriving following the end of the initial arrangements made to pay part of the stadium debt.
Arsenal are however still paying their mortgage, but that issue is diminishing.
Tottenham as we can see are debt free, but they are about to start work on their stadium, which will change that. (Amusingly there was a suggestion yesterday that Tottenham were going to get a grant from the local authority to do this, which could well put them in the same boat as WHU and Real Mad in terms of accepting illegal state aid).
So for Tottenham there will be a season without a stadium, and a number of seasons of being hampered by the debt for the stadium – which is going to end up as being a greater cost than Arsenal’s stadium.
Outside our list of the bigger clubs there are one or two snippets. QPR have a wages to turnover ratio of 195% (ie they pay almost twice out in wages than they earn). At Leicester it was 116%, and at Burnley it was 110%. Leicester and Burnley both lost money last year. QPR’s figures are odd because they got a £60m cash injection – I am not sure what the Football League will make of that.
These figures are for last year, so reflect attempts by the clubs to win promotion. The fun will start if the Football League seeks to impose fines for breaking its own FFP rules.
Certainly there is no shortage of clubs that are willing to take this risk – Bournemouth is clearly in this mould.
Two triumphs on this day in years gone by…
- 22 April 1933: Chelsea 1 Arsenal 3 in front of 72,000 and as a result Arsenal became champions with two games spare. Bastin got 2 and Jack the other. It was part of a run in which Bastin scored in five consecutive games and also Chapman’s final triumph.
- 22 April 1935: Two years to the day on from Chapman’s 1933 trophy Arsenal made it 3 championships under 3 different managers, again with 2 games to spare, beating Middlesbrough 1-0 with a goal from Drake (giving him 42 goals in 41 league games – Arsenal’s all time record). He failed to score in the remaining two games.
Please note the complete Arsenal on this day index is now here with around 5000 major events in Arsenal’s history recorded.