By Tony Attwood
There is a problem with the way football is reported in England and it is this. There is always an assumption that how things are now will be how things are next year. Only bigger.
It is curious because serious journalists working in other areas of reporting rarely fall into such a simplistic trap. They know that economics is a mish mash of causes and effects, and that the best laid plants of economists and governments are liable to fall over at a moment’s notice.
But in football there are grand assertions: The Premier League will remain the world’s richest league because, well, because.
Yes the PL clubs earns around €2bn (£1.7bn) more than the Bundesliga clubs each year and the last TV deal has taken the PL earnings even higher. And the assumption is that this will continue. For ever.
So why not? The simple answers are
a) nothing grows forever.
b) all markets are in essence chaotic.
c) the Premier League’s product is totally dependent on taste and technology – two of the most unreliable factors known to marketeers.
d) Although some Premier League clubs have very rich benefactors they themselves can come unstuck due to a sudden change in the market, a war, a revolution or indeed an assassination.
And what we have forgotten to a large degree is that one TV deal did collapse. Although it was ultimately sorted out a lot of lower league clubs did lose out heavily when ITV Digital went down.
The particular problem for the PL is that the clubs spend all their money as soon as they have it – or better said, before they have it. And they spend it mostly on foreign managers and foreign players. But let us remember that the current UK government is filled with people who have said, in relation to the European Union, “no deal is better than a bad deal.” If that happens I find it hard to believe that in the ensuing chaos the government will pause to think about 20 businesses and their 400 or so extraordinarily highly paid non-UK nationals who suddenly have no right to work in the UK. If you think that the government will then quickly push through a “footballers can stay” bill, then your thought patterns run along different channels to mine.
What makes the PL so different from the old Football League Division 1, is that last season Chelsea were given £151m by the Premier League just for being in it. Go back 25 years or so and the amount given by the League was nothing compared to that. Money came from selling players at a profit (that will stop) and gate receipts.
So the owners could suddenly stop investing, and the TV companies could suddenly find themselves going out of business (because people are watching in different ways), and who is out there to tidy matters up? The government? The FA. OK you can stop laughing now; the former won’t care and second is congenitally incompetent.
Already we have seen a dramatic decline in the value of the pound against the euro following the vote to leave the European Union. If the negotiations fail that will go further. And add to this the tiny detail that the PL has for years been trading on the fact that Germany and Spain make it very easy for non-EU citizens to enter their countries to play football. Two years on they can get a local passport, that makes the EU citizens and so they can play in England. Except they can’t after we leave. Even if EU citizens are allowed to stay that will only protect us for about three years. After that it will be a league full of British players.
The finances in the Leagues below the PL should be much more stable – as the Football League receives about 4% of the amount the PL gets. But even here there is chaos as the League clubs pay more in wages than they earn in total. They survive on loans from their owners.
Worse, over 50% of the income of the Championship clubs comes from the Premier League in terms of parachute payments. Even worse again the PL pays solidarity payments to all the football league clubs. One wonders what cuts would come in first, if everything falls apart.
How is Arsenal affected?
Arsenal is profitable, and its minor level of debt is in the final moments of being paid to the banks for the stadium. It is still highly exposed to very expensive player contracts, but of course over between one and four years these all run down. Bank borrowing against the asset of the ground would see them through a total collapse.
But there is something else in the locker – and we have touched on this recently: home grown youth players.
Let us imagine chaos as a result of the UK leaving the EU with everyone talking up to the end about the need to put Britain first, and the desire to stand up to the horrible Johnny Foreigner chaps. And with the foreign players fleeing, the TV deals collapse. What then?
What Arsenal have is a youth team made up of players, many of whom are English, and others who probably will be allowed to stay because they have come to England to learn their trade rather than being grown up economic migrants, here because England pays better wages and able to claim citizenship.
So Arsenal would still have a quality team available. Not many in the PL have that double bonus of a lot of youngsters who can really play, and a relatively debt free club. Also Arsenal have a good stadium that is paid for and which they own.
Tottenham might get into their stadium in time before the crash, but would have so much debt no bank would lend them a penny. West Ham have a stadium that cost them nothing, but they now have no security to borrow the money against. Chelsea have their owner and he has seemed very willing to lend money as long as he is not turned away for being foreign.
Manchester City likewise except… their owners are, back home, embroiled in a political dispute that looks like it is not going away any time soon and could boil over into all out war, and may well have by the time you read this. Manchester United are of course safe financially – as long as their owners can reign in their desire for ever more loot.
Of course it might not come to this. Maybe the growth will go on forever with salaries continuing to rise at the current rate. On that basis my basic maths suggests that in nine years time the salary bill of Manchester City FC will be larger than the gross domestic product of the UK.
Something to ponder.
- Are Arsenal really making progress, or are we starting to slip back?
- Luton 3 Arsenal 4: maybe it is time to say positive things
- Luton v Arsenal – the referee, the team, Saka and Cliff Bastin
- Luton Town – how do they play the game. The tackles, fouls and cards.
- Luton Town v Arsenal: Grim football, fewest goals, lowest possession rate