Leyton Orient have secured a 5th round replay against Arsenal. The cup run, including prize money, TV revenue and gate receipts will mean Russell Slade's team will be the only side in League One to make a profit. In a week when Plymouth Argyle are docked ten points for signalling intent to go into administration, how can we stop football going down the financial plug-hole?
Administration and debts are nothing new to the football league, and the latter plagues the Premier League. Everton revealed their net debts had increased £6.9million to £49million and they are a club that is hardly amongst the league's big buyers or payers. The Glazers continue to add debt to Manchester United even though they have increased commercial revenue. Liverpool still struggle even though they have new owners and far higher sponsorship deals. Martin O'Neill left Aston Villa as they attempted to balance the books, before giving up. Even though Sunderland received over £18million for Darren Bent they are still relying on the money of Ellis Short. If any club does make a profit it is usually small, and if it has been inflated by player sales then fans expect the money to be reinvested at the soonest possible opportunity.
The fact Leyton Orient have relied on a entertaining cup run (they were on the cusp of being knocked out by Droylsden in the second round) to turn a profit shows you the problems that are now endemic in the English game. How can clubs continue to trade when there is little to no chance of breaking even, never mind making money to invest in the future?
Uefa's Financial Fair Play may be on solution but the repercussions deserve their own discussion, and they will only effect the dozen teams that hope to qualify for Europe. Maybe the authorities hope the effects will trickle down the leagues but the case of Portsmouth going to the wall has not stopped spending or wages. Football refuses to learn the lessons of the past,
One answer consistently suggested is a wage cap. It works in Rugby League they say, although Wakefield Wildcats have shown it does not stop clubs going bankrupt. It works in Rugby Union they say, and while English clubs are on a firmer financial footing than their round ball playing cousins, the flow of talent to France with its laxer rules shows that a wage cap only in England will have a detrimental effect on the English game. With differing tax structures, image rights and legal issues it would be impossible to establish a Europe or Worldwide wage cap, and tying the cap as a percentage of a club's revenue will only help increase the gap between the big and the small.
Obviously, the expectation of a knight or Sheikh coming to the rescue is implausible, as Plymouth have found out with their useless owners. So we need a solution that not only helps the club, but the fans, the players, and HMRC.
More pressure has been applied by Her Majesty's Revenue and Customs since they were removed from the list of preferred creditors, in effect removing the guarantee that they would receive 100% of the money owed to them when a club went into liquidation. The 'Football Family', made up of players and clubs, does receive 100% of the money will charities, local businesses and the like are offered pitiful amounts, often 15-25% of what they are actually owed, and often a millionth of the amount owed to clubs and players. Could the removal of the Football Family's protection prove the holy grail?
The idea is thus: clubs no longer pay transfer fees in installments. You can still have payments after so many games, or if you win a trophy, but the primary sum is paid up in one big lump sum. This way clubs cannot spend money they do not have in the bank. If the authorities stop clubs taking out loans to fund payments, like Leeds United did, and banks stop clubs spending when they are using their overdraft, transfer fees will reduce for 90% of clubs, and if a Man City does come in for your player you have that money upfront, ready to do what you want.
The downside of this will be that selling clubs will find their assets (players) are worth less, but then this can be the case anyway and to constantly rely on making profits on players to break even each season is a poor business plan.
Secondly, players will not sign for clubs in poor financial situations. Why sign a £60k a week contract if in six months time they cant afford to pay you, and you only get 20% of that wage? Maybe the first thousand pound can be protected for youth staff and lower league players, but why should millionaires be guaranteed their money when a club goes under? Do this and supply goes down, suddenly players cannot name their price, they may have to pick a lower wage at a financially secure club. Wages go down, costs go down, clubs save money. And we get the added bonus that charities, cake shops, other local businesses and charities and the British taxpayer get more of their money back if a club does go bankrupt.
Another area to clear up would be payments to agents. I think clubs should be banned from paying agents fees on transfer deals. Either the player pays them, or the clubs pays them an annual sum for being a scout. If they only get you one deal then that's the clubs choice, if they get them 400 they still get paid the same. And of course a scout cant be employed by another club or by a player. There does become an issue with how agents work around Europe - they have different roles and function under different rules in different countries - but the Premier League is such a big player it could enforce its own legislation without too much damage to the quality of the product.
Point deduction is a harsh penalty in terms of the fans and players who are not involved in the financial running of the club but equally it is unfair to allow clubs to spend beyond their means, get ahead of others, with the only penalty being the banning of club directors from the sport. Given some of the stick directors and owners get they might be glad of the get out clause, and if the club has battled its way to the top, is allowed to remove the majority of its debt and start again while staying at the top, it is imply unfair on the rest who play by the rules (or at least make a better fist of playing by the rules).
Debt and administration has become the disease of English football, as hooliganism used to be in the 70s and 80s. Clubs cannot continue to overspend and expect TV revenues and transfer money to go up and up and up. At some point there will be an end to it, the money will no longer increase as much as they expect. Until clubs get a grip and a helping hand from the governing bodies there is a real danger they will die. The only winner will be the last team standing, and by then there will be nothing worth playing for.
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