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By Tony Attwood
We have discussed the ManC case so often you are probably getting bored with it, and that means there is only one question left. Why has it taken the league so long to reach a resolution? As many have said, this is the biggest crisis to hit the Football Leagues in England ever, and yet it just sits there, not mentioned by the media, not resolved by the League, not affecting the ManC club.
Yet the opening question facing all parties is dead simple: “did ManC break any rules?” From that we can go to, “Which rules?” and from there we go to the question, “What benefit did they get?” Then it, “How disruptive is this to the whole of League Football in England?” And finally, “What are we going to do about it?”
But it seems none of this can be proceeded with, because a) Manchester City threatened to sue the League with court cases that would, in court fees alone, basically wipe out the funding of the majority of Premier League clubs (or at least those that are in debt).
Furthermore, it has become clear that ManC still owes a lot of the money it spent on players in recent years, to the clubs it has bought the players from, This isn’t unusual – clubs often might spend £50m on a player and then agree to pay that at a rate of £10m a year. Even so, this sis stretching things a bit.
But if, in response to ManC being taken to court, they simply stop paying the clubs to whom they owe all that money, many of those clubs might fall into administration. That means that the clubs either don’t pay off any of their debts, or pay only a small percentage of the money in each case. Which, given the amount ManC owes, means that the financial system collapses. ManC don’t pay Club A, so Club A can’t pay Club B, C and D and so on.
Now if one club defaults on debts, they can be thrown out of the league, and everyone takes a bit of a hit. But the level of debt of ManC is so great that it would bring down the whole league. So there is a big argument for finding a way to let ManC off – except that the club desperately need the money to pay not just each other, but also their players’ salaries and the regular bills of running a business.
Of course there is no evidence that ManC would do this – but given their refusal to agree that they have done anything amiss, it is hard to imagine that one day they would just stop dealing in players and say, “All right, we owe everyone, and we are paying up now.”
So the point is that when ManC said they would bring the league to its knees, they knew they could do it. And to a degree, that is the fault of the League because they all knew that running the League on credit was an incredibly dangerous thing to do.
Before my retirement, I was the chair of a very small plc with nothing like the turnover of a football club, but we worked with financial projections all the time, and yet we were tiny compared with the clubs in the Premier League. It is an inevitable conclusion that the clubs in the PL knew what could happen, and would have had their accountants warn, “If ManC ever go bust, you are in trouble.” And in essence, if ManC owes not just one club but lots of clubs, say £50m each, and they don’t pay, everyone is in trouble.
So City have a choice, for they also know they can win any fight because they have more money available to them than the rest of the league put together. I doubt their owners worry about their reputation in England – why should they? No matter what, we need their oil.
In essence, the league has let itself get into a position in which ManC is the controlling force; the source of the money. The only way out is for other clubs to start cancelling the debts they owe each other, and I very much doubt that they want to do that. So the case lingers on and on and on… and there is nothing in sight that looks like bringing it to an end.
