To recap and explain (or vice versa) Football 1.0 started when Preston North End were thrown out of the FA Cup in 1884 after a complaint from Upton Park FC that Preston had been paying their players.
As a direct result of this Preston got together with other northern clubs and formed the Football League wherein professionalism was legitimised, and the long period of growth of the professional game was launched.
In this era English clubs were owned by the professional classes, and were widely mismanaged, resulting in clubs often piling up huge debts and going into liquidation. I’ll be developing the story of Football 1.0 on the Woolwich Arsenal site in the coming weeks. The story of Arsenal’s own financial collapse is told in my book.
Football 2.0 took a long time to evolve, but might be said to have started with events such as George Eastham’s one man strike against his contract in 1960, and the ending of wage restraint (taking us through 2.1, and 2.2 and into 2.3)
The change was slow at first, but it was ultimately accelerated by issues such as the Bosman ruling, the EU freedom of employment legislation, the change from TV being seen as something to be kept at arms length to becoming the paymaster, and the power of the Champions League.
But these were in the end just mechanisms which enabled the biggest change of all – the change that brought about the collapse of Football 2 and the evolution of Football 3.0.
But this period was necessary because what Football 2 gave us was a totally different way of seeing the relationship between money and football.
During the Football 1 era, Directors were allowed to put money into clubs (Henry Norris spent the equivalent of millions and millions of today’s money in building the modern Arsenal at Highbury), but they were not able to take money out. (Norris was banned from football for having Arsenal pay for this chauffeur when he went to one particular away game, and for taking £130 out of the till when the club bus was sold.
But what brought down Football 2 were the changes that meant one could have the obscenely rich put in wealth as never seen before, and spend it on any player they wanted while other owners began to get the idea that they could make money out of football.
Football 2 also saw the end of life as we knew it in the lower reaches of football. Amateur football attended by big crowds, leading up to the Amateur Cup Final with a sell-out Wembley crowd, went by the wayside.
Likewise the smaller professional clubs that had existed on selling on one great potential player every now and then had to change their approach, as the big clubs were able to buy players in from Europe. (It is a style of existence that Everton cling on to – showing how much Football 1, 2 and 3 overlap).
But the biggest change of all was the attitude of the money men. Previously football in the UK had been seen as a mugs’ game. You put money in, and then you put money in. The local fans abuse you because your club is not top of the league, so you put money in. The club wins something and the fans salute the players, and then demand a repeat, so you put money in.
Under Football 2.0 however it became possible to get money out of clubs. Owners were able to write clauses into their ownership that meant they could take a percentage of each player sale. Marketing became a method of raising money. There could be all sorts of deals with TV companies that were never written into contracts at all.
And then along came the idea of asset stripping and leverage buy outs. In the former the new owner buys the club, takes over the land, sells it for development, and leaves the club sinking. (An alternative version I have just heard from France involves buying the club and selling all the top players, taking the money out, and then selling the land).
In the buy out approach the club is bought, the debt from the purchase is put into the club, and the owners have a club bought for zero. They then either asset strip (selling off the ground etc, as Manchester United now propose) or they sell to someone else. Either way they make money.
These people have been attracted in by the fact that shares in clubs can go up in value – buy a load of shares, and if they increase in value, you have your profit.
Meanwhile at the other end of the scale Chelsea and Man City have had the billions pumped in – money which served to raise the salaries of players and the cost of transfer fees. They of course did not invent the plan – that honour probably goes to Blackburn, who bought an early EPL title, but Chelsea and Man City are now synonymous with such activity.
The situation however is totally untenable in the long term. Football is subject to fashion as much as anything else, and anyone who has ever looked at the history of the game will know how attendances declined year on year after the second world war, and only started rising in general terms when the EPL gained world wide status.
Crowds can go up and down.
But fortunately for us all, in the background Football 3.0 has been growing. This is not to say that there are no clubs still following the 1.0 or 2.0 approach. But slowly a handful of open-minded clubs have in the last ten years seen the new way and started to follow it.
This evolution into a new way of doing football happened on many fronts.
First, it has been recognised that as in all other aspects of business, the aim is for the club to make a modest profit, and to make sure that any debts it has are manageable, and not based on wild speculation. This is because it is recognised that everything changes and the outcomes of changes cannot be predicted. UEFA and FIFA can change rules. Government can change tax rates. Public appetite can wane. TV audiences can change.
(I started writing this piece a few days ago, and just in the last two days there has been a change with Ofcom – the TV regulator in the UK – saying that Sky must radically slash the wholesale price of its sports channels. It may or may not happen but it shows how volatile the market is).
Second, given that individuals can lose interest, become ill, be arrested, be shot, or live in a country that is liable to a coup, it is good if the whole club is not owned by one person.
Third, the processes of the club need to be proven (rather just wild) ideas. In other words, it is not a bad start to acknowledge the insanity of the dot com revolution, and the insanity of bankers and see them as warnings, not as blue-prints.
And so the clubs that were bright enough to see a change on the horizon have looked forward to a new world, and started to build. Here are some of their areas of activity.
Academies. The idea is to bring in youngsters as early as possible and try and keep them together, playing in the way that the club plays. It might take eight years to get a result, and that is what marks out Football 2 from Football 3. Football 3 involves waiting, building, and looking at the longer term.
Attractiveness. Winning is good – and many fans are hooked on the propaganda they have been fed that winning is everything. But winning everything by a goal or two, and then playing defensively doesn’t bring in the crowds. Football 2.0 emphasised winning, no matter how you win. Football 3.0 emphasises attractiveness. In a sense it takes us back to the early days of football when it was fun.
World wide scouting. In Football 1.0 the transfer policy started out as taking players who turned up locally (see my thoughts on the various transfers that Woolwich Arsenal did on www.blog.woolwicharsenal.co.uk) and then moved into taking the occasional player from another club. In Football 2.0 it moved into a European wide search, with a few others brought in from non-EU countries. By Football 3.0 we are into the full development of world-wide scouting.
But this is not just about the stars – World Wide Scouting can bring in 16 and 17 year olds from the other side of the planet.
Reduced dependence on the transfer fee. In Football 3.0 it is recognised that a scouting network in a country that costs £1 million a year will save the club many more millions if it just turns up one decent player every could of years. It is such an obvious statement that it is almost impossible to understand why others have not set up the network. But under Football 2.0 they didn’t.
The return of the smaller clubs. Raped by their owners, mismanaged into destruction, and finally destroyed by Winding Up orders, a new type of club has started to arise… step up AFC Wimbledon and FC United. Not every venture flourishes – the Ebbsfleet experiment didn’t work out as planned, but there is hope. More experiments, more ideas… and in a way that is what Football 3.0 is about.
The old ways (winning at all cost and who cares about the bailiffs) are set aside, and new creative initiatives are brought forward.
The dinosaurs with their court cases in Jersey and their ownership in the Caymen Islands and Virgin Islands are doomed. Welcome to the new world.
Welcome to Football 3.0
Thankfully we are part of it.
Further reading:
Football 1.0 will be debated in the coming months on www.blog.woolwicharsenal.co.uk
Arsenal’s own financial crisis and liquidation are covered in Making the Arsenal. I have been saying that you can read extracts from and reviews of the book on this site. Sorry that was not so – this has been fixed now.
More about Football 3.0 in future blogs – and as always your ideas and input are most welcome.
(c) Tony Attwood 2010.
Good post Tony. The Ofcom decision is an extremely interesting one indeed. That could radically change the landscape for English Football as a whole. We have been saying “yes, Utd and Liverpool are in trouble but they wont go bust” but the Ofcom decision is definately something that could change that.
And meanwhile, over at Le Grove they are really squirming this morning. I cant believe the post they put up this today. They are all over the place now.
Great post (as usual) Tony!
good post as always toneser’s. le grove still cant admit that wenger has a big say in the current financial state of arsenal instead he is saying its all down to the board, what is his problem with the prof?
Great read, Tony. As to the whole OfCom thing, I will be following it with interest. The last thing the competition authorities got stuck into was international mobile phone rates, and these have fallen massively. Here’s to hoping for cheaper football on TV.
Lets not give that cyber dictatorship (Le G**ve ) more airtime than it needs. When you maintain that Leeds is not a big club, or that Portsmouth has won more than Leeds there is no more to be said about ignorance personified !
Another insightful post Tony. I am really interested to observe developments in football in the next 5 years as I see a fundamental shift. The model of going out and splashing huge sums on players is proving to be flawed. I have always said that every super star ever known to the world started as a nobody, therefore Arsenal’s method over the years whilst subject to ridicule recently will be proven as sound as Ali’s objection to the Vietnam War subsequently was
It seems Football 3 is a lot more attractive option than the first two. Hopefully, the Sugar-Daddy syndrome will be booted into touch never to reappear, ever.
The whole Ofcom issue seems to have jumped out of nowhere to be front page news in most places. There is talk that even if the Tories win the next election, David Cameron would not reverse any decision that Ofcom makes tomorrow no matter how much Rupert Murdoch may beg. I would imagine that Liverpool, Utd and Chelsea are nervously awaiting the news with “what, me worry?” looks agonizingly etched on their faces. The conservative estimate seems to be that it will cost each top club up to 20million a year in revenue if the ruling is given as expected. That is a big chunk of change and will have profound effects on English Football as a whole.
Hi Tony
An excellent and interesting post on the direction the game will need to take to compete in the coming years. If this pending OfCom ruling results in a big reduction in TV money for the clubs, then they must all stand strong. It will give the big clubs a greater impetous to break away and negotiate their own TV rights (similar to Barca & Real Madrid), but even if this did happen then there is still a big danger for the majority of clubs, who don;t have the world wide attraction of ManUSA, Arsenal etc to make this work. By being strong, they have to start by putting an end to the outrageous salaries they are paying to average players at the moment. The biggest reason IMO why so many clubs are in the sh*t is because of the wages they currently pay. Reducing wage costs significantly would help most EPL clubs, and if there is less money in the game then Agents will have to temper their demands. It may also force clubs to look more at developing scouting networks and improving their youth set-ups. So it may be a blessing in disguise really and perhaps the Ofcom ruling should be welcomed as a good thing – even if painful in the short term to the clubs that rely on Sky.
I personally think that also the league that will become strongest over the next 5 years or so will be the Bundesliga. German clubs are already much more sensibly run and regulated than ours (as with most things German really), but what makes them really stand out is their attendances. they are easily the best supported league in europe with average crowds of over 41,000 across the 18 teams. And we are starting to see more and more German clubs make an impact in the CL and europa competitions as well.
Great post as always Tony. I sometimes venture with some trepidation to other sites but have come to realise that this is my home. I only don’t post very much because usually by the time I read the posts I have nothing to add, pretty well spot on on the whole.
Agree AGS about the Bundesliga. Even their top teams like Bayern Munich don’t indulge in the sort of mad financial practices that EPL’s smaller teams like Portsmouth and Tottenham do over here. Let alone Man IOU and Liverpool Utterly Bankrupt. The result is that fans can watch high quality football in civilised surroundings (and stand up if you like to do so) for prices that ordinary people can afford. Hence the high gates and the fact that a Senior Citizen can pick up a season ticket at any of them for one or two hundred pounds (last I heard). That’s per year, by the way!
Nice piece Tony
To me, Football 3.0 has always been here and has always been practised by smart football clubs, not just Arsenal (Brian Clough was a firm believer in Football 3.0, as were Bill Shankly, Bob Paisley, and Matt Busby). Unfortunately, Football 3.0, because it is intelligent and “boring”, doesnt sell newspapers. Nobody buys the tabloids to read “Football Club A invested in its youth policy this summer”, instead they buy the tabloids to read “Football Club A spent 10million on player X”. So the tabloids, and indeed much of the mass media these days (newspapers like The Guardian, Times and Telegraph have become as bad as the tabloids when it comes to rumour and hype), go out of their way trying to fool the fans into thinking that there is only one way to do things, and that is by being “exciting” and spending money and paying big wages and taking risks. Unfortunately a large number of fans, the majority I would guess, actually believe that nonsense. Unfortunately, many of those fooled fans are Arsenal fans, and so Wenger and the Board have been ripped apart for being sensible and smart over the past five years. Even today, on the Guardian podcast, the commentators were talking about debt and Arsenal and the question was asked “can Arsenal afford their debt?” and you could see that everyone wanted the answer to be “No” but of course that isnt the case, so they had to conclude “Yes” and instead they turned their criticism as quickly as possibly to the poor squad depth that Arsenal have this season (this whole lack of depth thing is getting slightly ridiculous given the number of injuries we have – as others have pointed out RvP and Cesc have played fewer games for us this season than Gerrard and Torres have for Liverpool – and the fact we played and won against Bolton without RvP, Bendtner, Nasri, Walcott, Denilson, Ramsey, Song, Eboue, Clichy, Gibbs, Djourou).
There seems to be great resentment among the media that Arsenal, and Arsene Wenger, may actually turn out to have been correct about the financial implications of over-spending. I think they would much prefer that we were also on the verge of being bankrupt so that they could still gloat and say “see, either way was as bad as the other, so why not just spend and spend and be EXCITING for us to sell our newspapers?”
Paul C…
I’m most grateful to you for your piece, which adds another dimension to the argument.
When I started playing with the idea of 1.0, 2.0, 3.0 I did not think through the media implications, but as you rightly point out, they are there.
In Football 1.0 the media was initially reporting the simple facts (reading the reports of 80 to 100 years ago we get little more) and then issues of local interest – not least because there were so many local newspapers. The story of Arsenal and Fulham 100 years ago is often the story of two local papers – The Kentish Independent, and the West London.
In Football 2.0 we get what we consider to be the modern journalism of football – as with Arsenal to sign Crouch, Liverpool to sign Eduardo. This is just invented, as we’ve seen here a million times over, but it creates excitement, and it is now what the papers live off. Even the BBC pander to it with page 338 on teletext.
But in Football 3.0 we have news that is largely ignored (eg Arsenal’s two south American transfers this window.) Where they are reported, it comes with the caveat, “arsenal supporters will be worried as they were expecting big name signings.”
In other words if we can’t turn the clock back to Football 2.0 we can at least pretend that Football 2.0 is better and 3.0 is a wasteland.
Thank you for your addition to the analysis, I really appreciate it.
I can confirm that the financial climate in the Bundesliga is much better as there are strong financial rules over there.
I can only add: great article and great and intresting comments.
Dear Tony,
i enjoy reading your posts, because they always make me realise how lucky we are to have a manager with this kind of vision.
you surely know about stan kroenke.
i thought this season has been going well for us. we are picking up momentum at the right time, and i am secretly confident that we will win the league this season.
but i am worried about stan kroenke’s activities, and how it could disrupt the stability we have.
i personally don’t wish to see him take over the club, be it in the near future, at the end of the season(i hope any takeover moves would be left till the season is over), or forever.
i would like to hear your take on this issue.
Its a pleasure Tony. Thanks for providing a forum where people like myself can express their views without being labelled an AKB and made fun of. According to a couple of other blogs (I wont name which ones) I live in a dreamland and I am only one of the sheep. I have never actually thought of myself in that way since I always take time to try to explore every single side of the argument before forming my opinion, and always try to stay realistic about expectations. It is like the “spend 20-30million on a player” debate I am having with “neutral fan” on one of the other threads here. When people make statements like that, it almost seems as though they very rarely take into account the effects such signings will have on the clubs wage structure and wage expectations of every other player within the club (especially with the new 50% rate of tax). Fans seem to have been fooled into thinking that transfer fees are the only expense there is when buying players, and that can be blamed on the modern media as well. I am a firm believer that within ten years the entire transfer fee system will cease to exist, and I believe that clubs that rely on transfer fees will go bust. It is only the stupidity of agents and players that keeps the system alive, and surely that stupidity cannot be expected to last forever. Once players and agents realise the power in their hands and the potential salaries they could command, transfer fees will cease to exist and certain clubs (Everton anyone?) will have a rather rude awakening.
Hi Tony,
great article.
What do you think of Northern Rock’s decision to sponsor Newcastle United? According to them that’s in the “best interests of tax payers”.
http://www.telegraph.co.uk/sport/football/leagues/championship/newcastleunited/7018012/Newcastle-United-sponsors-Northern-Rock-defend-signing-new-deal.html
i think legrove’s problem is all too obvious. its in their name. thy obviously have a problem with the french and especially arsene. they claimed today that our financial position and therefore our general success was not down to arsene in any way.
i wonder if bigotry is part of fooball 1.0 or 3.0, but it deserves to be back at 0.001
About the Ofcom issue, could anyone give me some more information about what is going on ? As not living in the UK this somehting completely unknown to me. I never have heard of this before.
Walter,
Ofcom is the regulator in the UK. They feel that Sky, who pay the PL billions, is not competing in a proper way and are considering allowing competitors to tap into PL Football at lower prices, creating true competition. It is the exact same thing that happened in the telecommunications industry years ago, leading to cheap telephone. Google “Ofcom Sky Football” and read all about it.
I see it the other way around Paul.
I think once economic reality kicks in, then players will start to process reality the same way any normal person does.
Would you for instance prefer, say, 50K a year working for , say, BP
or 1 Million a year working for Joe and Johnny’s Online Get Minted Ltd PLC…………?
Likewise footballers: a long-term contract and 10k a week with Rocksteady FC will soon look a lot more attractive than 50k a week for Lala United.
Articles like this are why I voted you Best Team Writer, Tony. Absolutely brilliant, and a depth and line of discussion we don’t get on any other website. Bravo.
The idiot clubs give us a contrasting view which helps in our own policies planning. So deep inside I hope they eventually join the path of the mentally astute but do it slowly as i greed for a ten year domination at least. Attractiveness also include getting good looking players to attract lady spectators and then its full house.
Btw i love this site. And is glad to see Song playing with his uncle at the back.
Just like any D&G brigade would say “Wenger buy, buy and buy”, all we boring fans can say is “Tony more, more and more”. Great article and great comments.
Just like Paul C said the role of media is also another factor. I don’t know how media was in football 1.0 and football 2.0 but certainly sites like this are an integral part of football 3.0. The readers of sites like this (is there any one) would be much more informed and much more understanding. And when the views of the readers of this site starts proving right that we will see people coming more often to these sites than to some stupid gossip mongers(even I go there, but now for fun).
Great role Tony, hope to see your readership improve very soon.
Korihik…
Re Kronke, I have no inside information but can only look on from outside and draw conclusions.
First, he was invited onto the board – and for that to happen he must have talked to the board about his intention, and the board must have put their views and been satisfied. That would indicate a “no bid” agreement of some type.
Second, we know from public reports (that have not been denied) that he has not paid for his shares in full – again suggesting that he might not even have the money to make a full bid. The fact that he has bought shares from other board members without paying them in full backs up the first point.
Third, and putting this together we might take it that the deal is that he gets to 29.999% of the shares and sits. If Usmanov makes a move to buy over 30% of the shares then immediately there is a big block against him. It might also allow Kronke to get in first with a bid, although I am not sure what advantage there would be in that.
And do remember, bids at 30% are irrelevant if other people don’t want to sell to you. The rules in England say that at 30% you must bid for the shares at the highest price offered recently – and maybe a few people will sell, but if most don’t all you have done is bought a few shares at the highest price.
The chances are that in the next couple of years football share prices will drop (see my post on Football 3.0 for a discussion of the way football is moving).
So personally I can’t say “no he won’t bid” but I am not expecting a bid.
Tony
One interesting thing is that in the days of Football 1.0, two teams were known as non-English teams – Woolwich Arsenal and Liverpool. Both (for their own different reasons) had teams packed with Scottish players.
There was a lot negative comment on this.
When people comment about Arsenal not being an English club, I just tell them, that is how it was founded, and I don’t see why it should suddenly be forced to change after 124 years.
Thanks for the information on the ofcom both on and off this site. We also have such an organisation but we still pay the highest rates for mobile phones in the EU.
For seeing the EPL on my TV I have to pay some 15 euro/month (about the same in £ for the moment). And about 2/3 games we play in the EPL are broadcasted live fot that price.
And that price also includes the Spanish league (very nice), the Dutch league (lower level but some very attractive games), the Bundesliga (I don’t look at it much), the French ligue (hardly look) and some games from Italy which I never look unless the last 5 minutes when there is some other game coming on. And sometemis games from Brazil in the summer.
So I do think it is good value for money. Don’t think my wife really agrees on this… 😉
brilliant article…..to market arsene philosophy….
arsenal are not an english club…..lol….who wants it to be????critics, pundits, people who don’t have anything else to criticise arrsenal…..i certainly not….it might be a part of urs 3.0 version…arsenal can become more popular worldwide(it is) due to presence of players from all around the world…..certainly epl is watched all over the world mainly due to arsene philosophy of giving priority to quality rather than locality…..
thanks Tony,
your reply has reassured me. i am concerned because of the circus that is happening over at old trafford.
hope that we will never ever have to go through such a joke.
Gunners will surely take 3 points at Emirate Stadium but I expect them to play safe because they clearly understood Bolton’s ability. Wenger’s side is confident to control the match after leading so Gunners will stop fire after score 2s and Bolton may has a chance to steal a goal in last minute.
@Markus I get your drift on where you were going there. I often think of my past and use it as a means to analyze where I am and where I want to get to. Where I struggel is balancing it all out. How do you guys balance things out?