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The big football clubs have more money than they know what to do with

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November 24, 2016 23:19

Premier League football has never been richer than it is at present. In the 2013-14 season (the last for which there are complete numbers) it generated income of £3.26 billion, some 29 per cent up on the year before. And we know it is only going to get even more wealthy.

The 2016 Premier League TV rights deal, signed earlier this year, is worth an astonishing £5.136 billion, 71 per cent up on its predecessor. It is in effect a huge transfer of wealth from the subscription broadcasters Sky and BT (and their customers) to the big football clubs.

Ownership of football clubs used to be regarded as a ''trophy asset'' only available to the super-rich with money to burn. In the case of the Russian Jewish owner of Chelsea, Roman Abramovich, it has been a passport to political and economic safety in Britain. But more recently the clubs have started to normalise as commercial enterprises.

In spite of the vast inflows of cash and the opportunities to build enduring franchises and businesses the management, financial, legal and governance skills at the biggest clubs still looks to be in the dark ages. Among the biggest clubs, only Arsenal has consistently shown any degree of financial rectitude and success. In terms of trophies, except for the increasingly marginal FA Cup, it has little to show for its efforts. Manchester United may have been partly returned to the public markets by its main shareholders, America's Glazer family, but its ability to function as an efficient firm is in severe doubt.

If anyone thinks this is an exaggeration, it is worth reflecting on the opening weeks of the current season during which poor management skills look to have been the norm. Much of the angst surrounded the transfer deadline. In spite of being endowed with pots of money most of the big six Premier League clubs, with the possible exception of Gulf-owned Manchester City, failed miserably in their efforts to strengthen the business. If these had been regular FTSE-quoted companies the chairman and independent directors would have lost patience with the chief executives long ago. A failed transfer bid is the equivalent of poorly executed merger and the boss concerned would be out on their ear.

Instead of strengthening the hands of the big six - Arsenal, Chelsea, Liverpool, Manchester City, Manchester United and Tottenham Hotspur - the surging amounts of income has left them befuddled on and off the pitch. More scrupulously managed lesser clubs, such as Leicester, Swansea and Crystal Palace, are demonstrating that frugal, intelligent management works on and off the field of play.

The prize for managerial blundering must go to Manchester United's chief executive, Ed Woodward. Putting to one side whether or not the club could have done with an extra centre forward, as backup for England captain Wayne Rooney, the confusion surrounding the transfer of goalkeeper David de Gea affair was sheer farce.

It was myopic of Man U not to have agreed a sale price to Real Madrid until the very last transfer deadline day, when the bones of the deal were known weeks earlier. But the genuine disgrace was not to have the legal documents ready, signed and dispatched electronically before the deadline. Even the most laid-back country solicitor knows the importance of having all the documentation together for a house sale on the date set for completion.

At Chelsea, coach José Mourinho, often described by the football writers as a "managerial genius", has shown he has a grasp of human resources as shallow as Jeremy Corbyn's knowledge of the Middle East. His handling of Gibraltarian club doctor Eva Carneiro over her on-pitch ministrations has proved deeply disruptive. In any normal business this would have brought the wrath of the chairman, Bruce Buck, an accomplished lawyer, down upon him. The champions, who were in thirteenth place, after four games are demonstrating that playing havoc with people's careers does not enhance performance.

When money has been spent, ridiculous sums have been expended. Less well off (but often more successful) continental clubs must think all the Hanukahs have come at once when the Premier League comes knocking. Manchester United paid £36 million for a 19-year-old from Monaco Anthony Martial, who, so far as we know, is not the next Lionel Messi.

Meanwhile, Manchester City gifted German club Wolfsburg £54.5 million for Kevin de Bruyne, a player rejected by Chelsea just a year or so earlier. Someone, somewhere has their monitoring and scouting prowess all wrong. Claims that football is now a scientific affair - more Michael Lewis's Moneyball than instinct - are made to look ridiculous by such outcomes. Add to this Spurs' mishandling of the proposed Saido Berahino transfer from West Bromich Albion and Chelsea's unsuccessful pursuit of John Stones from Everton and there is a full house of incompetence to be examined.

The conclusion I draw from all of this is that the big Premier League clubs lack the depth of financial and human resources and executive skills to be allowed to handle billions of pounds of TV and other income. The governance structure at football clubs is not fit for purpose.

The quality of executives is poor and scrutiny by boards with an independent chairman, powerful non-executives and intrusive audit committees non-existent. Supporters will argue all that really matters is results. Maybe. But with one exception the big six have shown less reliability than clubs in the Maccabi Sunday leagues.

November 24, 2016 23:19

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