By Tony Attwood
This is the third and final part of the little series of articles answering the question “What determines if a club is well run or not?”
The series began with my own personal view of how I feel about the club I’ve supported from childhood with 10 ways measure Arsenal.
Then I took a peek at what Arsenal Supporters’ Trust is doing through its questionnaire in Measuring Arsenal’s success: asking silly questions, manipulating the figures.
Now finally I am turning back to the article in the Daily Telegraph a couple of days back which got me thinking along these lines.
In this article the Telegraph gave some examples of well run clubs, some of which I don’t agree with at all.
For example… .
Now it is true that for the last two years Everton have made a profit, but prior to that it was loss, loss, loss year after year after year. In fact, the only time you can find a profit before that was in 2004/5. That was the year they sold Wayne Rooney to Man U. Every other year until the windfall of the latest TV money it is loss-loss-loss.
This means that Everton, along with the other clubs I’ll highlight below, by way of example, are totally in the hands of the bidding process between Sky and BT. And just imagine for a moment that despite its mega investment, BT finds that actually it is not getting anything like the return it imagined it would get from football.
Of course that might seem fanciful, but just four days ago the Telegraph reported that the rights for Spanish football on UK TV was moving to BT Sport for next three years after Sky pulled out of the bidding. However at the last moment it seems the rights went to Sky after all.
We don’t know the ins and outs of this sort of thing but if these battles are anything like the battles between other duopolies in the business sector each company will have two strategies: one to get the rights, the other to undermine the opposition. In such battles the organisations affected by the sale (in this case the clubs) are very much at the whim of the bidders – which can lead to total turmoil.
So rising bids in recent years will not mean rising bids for TV rights forever. At some stage the amount being bid will decline and then… the clubs that have become reliant on the hand out will fall into one very big hole in the ground.
And as for Everton…
Well, between selling the manifestation known as “Rooney” and 2012 Everton lost £45 million. And they are still harping on about a new stadium. Indeed as the Liverpool Echo reported Everton will not “jeopardise” the club’s long-term financial “stability” to build a new stadium on Walton Hall Park. (I think they use the word “stability” differently up north).
Which is sensible in one way, but represents the lack of a chance of progress in another way. So what did the Telegraph say about Everton…
The reality is that Everton have done exceptionally well to remain a competitive Premier League club – consistently finishing higher in the table than clubs with higher annual revenues. The likes of John Stones and Ross Barkley represent further potential goldmines for the shrewd chairman Bill Kenwright, whose main priority is to find a bigger home for the club and take them to the next level.
And that after eight years of consecutive debt with relief turning up by chance from an outside party.
Ah well. Moving on…
They have been selling players like mad, which is fine when they can be replaced (which indeed for the moment they have been) but it doesn’t look like a sustainable model. They have taken £65m in the last three years from the sale of homegrown players, which is truly magnificent, but is it sustainable? No, not unless they have invested in a cloning institution – which would incidentally be illegal.
In 2009 the club was in administration, which meant that many small businesses were not paid the money they were old. Remember, only football creditors get paid. But last year they made a profit for the first time since 2005, this time through selling players (profit from player of £32 million) and had… new TV money.
So, good work in that period. But sustainable? Nope.
Tottenham have reported profits in eight of the 10 years since 2005, normally just above break-even, £28 million in 2007 and £33 million in 2009. Their latest accounts showed £80m profit due to the sale of Gareth Bale to Real Madrid and TV money.
Since then they have spent rather a lot on all sorts of players who haven’t quite worked out as they might have hoped, so maybe next time around they profit will be quite a bit down, but still, they have… TV money.
And we don’t quite know where all the money is coming from for the new stadium, so hard to make a judgement on that one.
19 years in the Champions League, a model stadium built and mostly paid for, achievements like the Unbeaten Season in the earlier part of the century, a double FA Cup / Charity Shield triumph in the last two years…
Only Manchester United, Real Madrid and Barcelona earn more on a matchday than Arsenal and that money is now going not to repay the loans on the stadium, but instead to buy the likes of £42.5m Mesut Ozil and £32m Alexis Sanchez.
12 years of profit in a row, the ground built, trophies in the last two seasons – and no dependence on the TV revenue. For Arsenal that money (which is outside their control) is simply a bonus that keeps them ahead of the rest, and that is the contrast. While the likes of Everton are secured by the chance arrival of TV cash, Arsenal are secured by all the investment in recent years.
Yes they were in the Telegraph list. Thirteen managers in five years, administrators in twice in two years, a ten point deduction, and then in 2014 a £23m pre-tax profit in 2014 due to… oh come on, you can guess now. I’ll give you a clue. It begins with T and then is followed by a letter between U and W.
The point for Palace is that on reaching the Premier League, revenue increased by £76 million from £14 million to £90 million. That is an astronomical increase, and much of it will be soaked up by higher salaries. But it doesn’t mean that everything is all right.
I could go on analysing clubs in this way, but my point is that the clubs selected above were from the Telegraph’s list of well run clubs. But let me end with my own favourite basket case: Liverpool, whose entire approach to money has always bemused me.
Liverpool reported a profit in 2007/08 of £10 million. The club then lost £176 million over the five years leading up to 2013/14, (which was careless) including an average of £47 million for the last three seasons.
Ah, say the apologists of the club, that is because of the failed attempt to build the earlier stadium, and the cost of paying off Kenny Dalgleish and Roy Hodgson, which alone was estimated at over £30m. Both were of course just down to bad management, but let’s set that aside because everything at Liverpool is now wonderful.
Or is it? Between 2005 and 2011 Liverpool made a profit on selling players of £106 million which is pretty damn impressive and to be admired. They came 5th, 3rd, 3rd, 4th, 2nd, 7th, 6th during that run which would have upset some supporters. And something that would have the Telegraph snarling about fan anger if it were Arsenal’s figures.
So they were kept alive with selling players, and as a result slipped down the table.
However, in the last three seasons the club has registered total losses of £15 million from this activity, and the losses seem to be carrying on. Liverpool like the rest, are being rescued by the new TV deals, but then so is everyone else.
This is not a case of proving anything you like with figures, this is looking for patterns and asking straightforward questions. And remembering that just because everyone gets more money, that doesn’t mean everyone will triumph.
Arsenal like many clubs got into severe financial trouble during the second world war and you can read something of how they pulled themselves through in the new publication from Arsenal Independent Supporters Association which will be sent to all members in the next few days.
Meanwhile if you want to know about Arsenal’s fall from financial grace and its total recovery these books tell the story…
Woolwich Arsenal: The club that changed football – Arsenal from 1893 to 1915
Making the Arsenal – how the modern Arsenal was born out of its collapse in 1910.