Speculate to accumulate is a sound business model, but not for football

By Tony Attwood

Businesses that want to grow and last over time need to take risks, try out new ideas, explore new avenues, venture into something different.

Not all businesses do – some stick rigidly to what they know on the grounds that it has always worked until now, so “if it ain’t broke…”   But increasingly such firms find they come unstuck in the end, and by the time they realise change is needed they’ve left it too late.

The trouble is that endlessly looking for new ideas is both tiring and expensive, because one may often need new equipment, investment in new people, new advertising etc… and in the end it might not work.

As for those looking in from the outside, they will be quick to criticise the firms that have got it wrong, and will just as easily notice those who have got it right.

Except for one thing.  What the customer never sees is the profit and loss account.  Yes one firm might be flying, doing everything right… and that might seem to be the model to follow.  But until you see several years of accounts, you can’t tell.

Such simple points are exactly what they seem – dead simple.  And yet they are ignored by thousands of businesses each year where owners and managers believe that they KNOW how to make it work because, well, they just KNOW.   Hear a business owner saying, “How hard can it be?” and you are almost certainly looking at a company about to hit rocks.

Football clubs, it is easy to forget, are businesses.   And by and large they are businesses that are run appallingly badly.

Now it may be thought that life should be easier for football clubs since they have a loyal customer base of supporters, but sadly, at least for some clubs, this is not the case.

Look at the seemingly ceaseless anti-board rhetoric that pours forth from organisations like AST and the other Arsenal organisations and blogs that may on occasion sign their petitions.  Look at the empty seats for Europa League games this season.  Look at the “Wenger out” banners and chants and the anti-Emery rhetoric on the AST supporting blogs.  It was remorseless and we ended up ninth in the league when the shut down arrived, three points and three goals off a Europa League place, and eight points and eight goals of a “fourth is not a trophy” place.

The effect is that when small groups of fans turn on their team the newspapers and bloggers follow suit and the whole atmosphere becomes toxic.  Supporters who wish to give voice to their continuing support can feel harassed and pressured by the outpourings from such places as AFTV.

We don’t know what follows, because few clubs have ever had such an experience as Arsenal have with both the media and fans turning on the club at every opportunity.   Of course Arteta has bought himself some time with just one defeat in 13, but even with such a run it is noted sometimes that only three of the wins were by more than one goal, and really the defeat to Olympiakos was a severe disappointment.

But repairing the team in the way that some fans and many bloggers and journalists like to propound – by bringing in yet more players – is a high risk affair.  Because this takes us into the world of unrecoverable debt.

Buy a player for £70m, find he is no good, what you have on your hands is a player who is worth £30m.  Or in the current market probably £10m – but one still earning the salary as befits a £70m player.

Worse, agents, who more or less seem to run the transfer market these days, spend their lives telling their players that they can earn more with another move, so the players are endlessly pushed into refusing moves that might rebuild their careers simply because there is not another salary hike.

Take a look at the League One table and you will find there Coventry City – not the most famous name in football, but for many years a proud member of the top division.  Or Portsmouth, champions of the top division two seasons running, promoted to the top division as recently as 2003, FA Cup winners 2008.  And we haven’t even got to Sunderland, Blackburn and Bolton.

And let us consider Bolton, for a number of years under the awful Allardyce the club that could grind out draws with Wenger’s Arsenal, and even beat Arsenal on occasion.  Now bottom of the third tier, 21 points from safety.  At least there is some justice.

But do not think, as some occasionally say, that this is just an English thing, a reflection of the fact that we have so many teams in the leagues.

You might like to note Kaiserslautern, one of the great names of German football with a stadium that holds 50,000, and title winners just 22 years ago.  Now it is half way down the third division.

And the cause is simple: the club tried to buy its way back to the riches of the top league by spending more than it earned.

For that is always the issue.  Even when a club is raking in a huge profit.

Now I am not an expert on the finances of Liverpool so there may be situations that I don’t know about, but we all know that Liverpool got the record pre-tax profit for a club in 2017/18, and on the back of that announced another £60m redevelopment plan for their ground.

There is no denying those figures were a spectacular achievement, but if we look at it, they were built on reaching the Champions League final and selling Philippe Coutinho to Barcelona for £142m.

Yes of course businesses do this sometimes, they take out business loans.  I’ve done it myself for my companies (although obviously not on anything remotely like that scale).  But normally even the big boys in the Big League do it with a bit of careful testing.

My point is that Liverpool may well be starting a run equivalent to that of 1973 to 1990 during which they came first or second in the league every year but one.    Or maybe not.  If they do, all is grand, because they will attract more and more sponsors at higher and higher prices.  But if not…

And of course if we talk about the fall of Leeds United and Nottingham Forest, it is easy to say that those two were not as big and historic as Liverpool.   But Liverpool’s trophies in the last thirty years are the Champions League twice, the Europa League, the 1st division once, and three FA Cups.

It’s a big haul and not to be sneezed at, but that is across 30 years.  Arsenal’s record is four titles and five FA Cups.  Equally a fairly big haul.

The other issue we have now is that there are new kids on the block in terms of winning things, and no one quite knows where they are going to go and whether the courts will stop them.  One thinks of RB Leipzig, Manchester City, Paris St.-Germain and maybe in a few years Newcastle.  All clubs powered by ceaseless money and an utter need to win, to keep up the brand name.

Liverpool’s amazing run of winning the title 11 times in 18 season, and coming second in every season where they didn’t win except once, was unprecedented in England.  Four years after their last title they were eighth, not playing in Europe and out of the two domestic cups in rounds three and four.  It has taken them 30 years to get back to the top of the league.

But in trying to emulate their teams of the 1970s and 1980s they have engaged in 21st century spending.  And maybe they will make it work – in which case their owner, their board, and their players will be heroes, lauded by commentators wherever they go.  But it is not guaranteed, and the hole that could be left in the accounts will need an oil state in the middle east to fill it in.

And there’s just one other thing.  Imagine that the objections to Saudi Arabia buying Newcastle fall, so we then have two clubs with oil wealth beyond the dreams of even footballers.  And suppose maybe Mr Abramovich sells Chelsea to another middle east country… that will be three clubs that feel they have an absolute right to win the league and quite possibly not a very high regard for the rules of Uefa (in the same way that the people running Fifa don’t have much regard for the rules of… well,… Fifa).

Will there be yet another country to buy Liverpool?  For a country is what will be needed.  Your common or garden billionaires will no longer but wealthy enough.  At least not if they want to win the League.

In the future “internationals” will have a completely new meaning.


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