When spending a fortune in football can go seriously wrong

By Tony Attwood

Last season Barcelona became the biggest earning operation in football, up 22% on the previous year pulling in €840.8 million in that year.  Around 10% more than Real Madrid.  They had money everywhere.  What could possibly go wrong?

One could have asked a supporter of AC Milan, the third-wealthiest club in football 15 years ago, that same question.  Now they are not even in the top 20.

The problem is football contains something unique.  Something we might call “NOTUS”.  A belief that it won’t happen here.  A belief that our club has the money, and even if we bought a load of duds last time, next time we can buy the right players, not the dodgy ones we bought for too much money last time. After all the last manager was the dodo to end all dodos.  Next time…

Yet as Barcelona stand on the very edge of the cliff, with the ground collapsing under their feet, and Milan having already gone, we have to realise, really, no one is safe.  And yet the blind faith continues.

So could Arsenal go bust?  Yes, most certainly if we keep buying very expensive players and then not using them because we’ve changed managers.

Indeed the sort of financial expenditure that some are envisaging for Arsenal in terms of another round of record purchasing, could bring about the destruction of the club, as easily as it might bring about the return to winning trophies.

Let’s go back to Barcelona who have lost about €100 million following the arrival of Covid 19.  Had the League not been concluded and the TV firms had to be repaid, they most certainly would have been bankrupt and gone into administration.   But the museum (a “must visit” site in the city for tourists), is shut.  The megastores are shut.  The ground is shut, there are no tours, the tourists are gone.  The value of players is sinking fast.

By why is Barcelona particularly in difficulty?  The answer is that they have the highest wages bill in football.  69% of their income goes on salaries.  The lower that ratio the safer the club is.

In 2018/19 Everton had the highest (ie most dangerous) ratio in the PL at 85%, Leicester also looked dodgy (84%), as did Bournemouth (83%).

Of the big boys, Chelsea are at 64%, Manchester City and Arsenal 59%, Liverpool 58%, Manchester United 53%.  Tottenham are bottom (in this case best) with 38%.

So Barcelona are on dangerous ground with 69%, Everton and Leicester are basket cases with 85% and 84%.  But in the Championship it is even worse with half the clubs spending more on wages than they earn.  In 2017/18 Wolverhampton made a loss of over £57m.  Just before the pandemic hit they borrowed the equivalent to 50% of next season’s TV money in order to pay their bills.  Then the pandemic struck.   It is not that Wolverhampton don’t have a light at the end of the tunnel; for them there simply isn’t a light anywhere.

And thus we start to see the problem.  Even the big clubs are suffering now, and so clubs with very expensive players are trying to offload them.  But they don’t want to go and take a much lower salary, so we are starting to hear of deals in which a top player is sold to a new club, but the old club continues to pay half his salary!

Big clubs, like big ships, can take forever to turn around.  The top players don’t want to leave, and no one wants to buy them.   So the notion often expressed by fans over a top man who has lost his touch that “we ought to sell him” is often not as easy to realise as one might think.

But if corona virus causes a huge recession there will be problems both for the biggest clubs which need to have their incomes to pay their salaries, and for the smaller clubs which need money to pay the rent.  Just remember the Hicks-Gillett era at Liverpool where they loaded debt from their takeover onto the club – they nearly brought down their bank as well.

The point is, if one of the big six clubs does overreach itself in terms of transfers, it could go down.  And the ripples would go on and on and on.

The biggest problem for the clubs is always going to be the making of bad signings, and that is something any club can do.  Barcelona signed Philippe Coutinho from Liverpool for something between £106 million and £142 million.  And in the end they had to loan him out.  . Antoine Griezmann cost £105 million and scored three goals in 17 games.

And this is where we see the problem of the owners of countries buying clubs.   Neymar went to Paris Saint-Germain for €222m.  PSG then spent another €375 million on a raft of players.  This season another €273 million.  It keeps going because their owner wants it to keep going (as part of  2nd Arab cold war) and because Uefa are incompetent to stop it.

Arsenal are not Man City so we do need to be cautious.  Simply buying players is never a guarantee of success.  But it can be a guarantee of collapse.



One Reply to “When spending a fortune in football can go seriously wrong”

  1. I’ d be glad if we could keep our present crop of promising youth and the more experienced players , while at the same time off loading those who may not be in the managers future plans.

    Maybe some sales could finance new players that the manager may feel useful to add to our squad. With the pandemic still raging , a cautious long term approach must be enforced.

    It would be most beneficial if we keep our heads while others are losing theirs. There maybe fire sales elsewhere , and bargains to be had.

    Up the Gunners !

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