Creative Commons photo: Katie Brady
Was I the only football fan to be bored by the John Terry affair? Or did anyone else find it all slightly tedious and difficult to get worked up about, especially when it came to whether he should remain as the England captain? Of course, you have to feel sorry for his wife, who has had to suffer the public indignation of being splattered across the tabloid – and most of the quality – press. I can’t say that I particularly like Terry and I’m certainly not a Chelsea fan, but the hysteria of the past few weeks seems to have let slip football’s real story.
The football scandal that should be splashed across every front page is about the financially parlous state of the national game and its appalling lack of regulation. On one day alone recently, three football clubs – Portsmouth, Cardiff City and Southend United – were in the High Court facing HM Revenue and Customs. Portsmouth was there owing £7.4 million in unpaid VAT and another £4.7 million in unpaid PAYE and National Insurance, plus it has substantial debts pressing elsewhere. The club has now gone into administration, has been docked nine points as a consequence, faces almost certain relegation and possibly worse to come.
Cardiff City faced an unpaid £2.7 million bill, having only just paid off a £15 million debt to its previous owner, while Southend’s debt to the Revenue was £200,000. Unsurprisingly, they all wanted our sympathy, pleading on behalf of their employees, fans, and local communities. Maybe they should have thought about all that before recklessly chucking their money around.
And let’s not forget whose money this is. It’s owed to the Treasury – that is, you and me. It’s money that should be going to finance our schools, hospitals, police and so forth.
All three clubs were given a stay of execution, although Portsmouth may well be history before too long.
If only these court hearings were an isolated tale of woe. Sadly, they are not. Virtually every club in the land is saddled with crippling debts, while there are other clubs, owned by offshore companies, dubious businessmen and some whose ownership remains a total mystery.
Take my own club, Liverpool, owned by two Americans, George Gillett and Tom Hicks. When they bought the club in 2007, the assumption was that they had dug deep into their Texan pockets. By chance, it was later discovered that they had actually purchased the club through a leveraged deal. In other words, they had borrowed money on the basis of the value of the club and its future profits. The result is that Liverpool is now in debt to the tune of £237 million and is paying out £40 million a year in interest payments. The Royal Bank of Scotland, the club’s biggest lender, has now told the owners that they have to find £100 million by July – otherwise they will not renegotiate their loan deal. Unfortunately, Liverpool was not their only sports franchise financed this way and, swamped by the international financial crisis, the two Americans are now all but broke. What happens next is anyone’s guess.
It’s much the same picture at Manchester United, where the Glazer family, also from the United States, set up a similar deal that has saddled the club with debts of around
£716 million. Just how long that situation is sustainable is again uncertain. The total debts of Manchester United and Liverpool alone exceed those of Germany’s entire Bundesliga.
All this started with Roman Abramovich and his billions. Before Abramovich, the situation was just about manageable. However, once the Russian oligarch started throwing his roubles at Chelsea, others felt it necessary to follow suit if they wanted to keep up any kind of footballing challenge. And now we have Manchester City, with another sugar daddy prepared to throw money at a venture that can never make money.
Football is not an investment. It’s an unregulated jungle, rivalled only by the banks and financial institutions for its carefree, boom-or-bust attitude. This is cloud cuckoo land capitalism at its worst. Even the Americans regulate their sport with wage caps and a draft transfer policy. Some of this could not work in football, but it can’t be beyond the intelligence of someone to come up with solutions. Unfortunately, it seems to be beyond the intelligence of those in football who anyhow do their damndest to avoid any semblance of regulation and transparency.
And what about the fans in all this, who pay out hundreds of pounds every season to follow their favourites through ticket prices or television subscriptions? Shouldn’t they have a say in the way their clubs are run?
The solution to this unfettered market is not simple. Wage caps and maximum transfer fees would have to be implemented in a business notorious for its under-the-table payments, offshore bank accounts and general lack of transparency. And it would need to be implemented globally. Sentiment has to stop. Club chairmen need to start acting responsibly and stop handing out blank cheques. Who knows – one day the TV money might stop as well.
The economy may have gone pear-shaped, but football carries on as if nothing has happened, stacking up debts, paying out even higher transfer fees and more lucrative salaries. Someone, somewhere needs to take action and, if the footballing authorities won’t, then perhaps politicians should take a lead. How about a manifesto commitment to sort out football’s lunacy?
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