The success of Manchester City last season led to inevitable accusations that they had bought the title thanks to cash from their new owner. City, however, are only one of many clubs in the Premiership that have relied on a rich injection of cash from a wealthy benefactor to fund a spending spree that has led to sporting success. Is such a business model inevitable? Is it advisable? Is it desirable? And is it even sustainable?
Risky business and costly players
All the statistical know-how and technical wizardry of investment analysts such as SunGard APT (http://www.sungard.com/apt
) could help you to conclude that buying a football club is a risky business. You can read up on calculating risk for investments with this additional information
Firoz Kassam, former owner of Oxford United, famously commented that ‘if anybody wants to go into football thinking it's a business then that is a big mistake, and I would say don't do it. Football is a hobby; it's not about making money.’
Recent figures show even Premier League clubs still failing to show significant profits, despite record attendances and ever-increasing broadcasting rights. In lower leagues the situation is worse, with clubs often spending at least a third more than they are actually earning.
The main spend, it will come as no surprise, is on ever escalating player’s wages and transfer fees of astronomical proportions.
Kassam outspokenly labelled as madness the situation where a player in the second or third division can command a salary that would have big city bankers looking askance at their latest pay check.
The latest analysis reveals that players’ wages alone account for about 80% of top clubs' turnover, and can be over 100% of turnover for smaller clubs. To put this in perspective, any business operating outside of football would be considered to be in trouble if its wage bill rose to over 65% of its turnover.
The ascendancy of clubs like Manchester United, and more recently Chelsea and Manchester City, has proved beyond doubt that a club that benefits from a wealthy benefactor can win titles. But at what cost?
United finds itself straddled with debt and other clubs must literally pay the price for the inflationary effect on wages that a sudden injection of cash has. UK football’s increasing reliance on what amounts to a rich fan’s charity rather than any sustainable business acumen has seen more than 40 insolvencies from clubs in lower leagues since 1992. What can be done?
Various rescue plans and new business models have been proposed for football. The following address the wage situation without confronting ownership. A wage cap on players would free up much-needed investment in other areas from ailing clubs.
Having larger teams invest in academies hosted at lower league clubs would provide a pool of players for the Premier League and new players for lower leagues.
There is a model that has already been proved to encourage financial stability and massive investment in grassroots football. The German Bundesliga's 50+1 model addresses ownership by ensuring that majority shareholders in football clubs are its supporters.
Since its introduction in Germany average attendances are up to 42,000 (20% higher than in the UK), ticket prices are 50% cheaper, clubs are ran profitably and there is always a good variety that win the major trophies.
It seems that in business models for football, as with technical know-how for cars, the Germans might be saying ‘vorsprung durch technik.’
The best thing about the European Championships is the fact you can swap teams and country whenever you like. Let’s just say England is kicked out straight away and you want to adopt another country such as Spain or Italy, you can. The great thing about living in London is that you can easily adopt a new country and hang out with the locals to support their team in an international pub. So just in case you’re already thinking about switching teams: here are best 5 international pubs in London to watch the European Cup.
The Bavarian Beerhouse
The Bavarian Beerhouse is a great venue at any rate. The pub is tucked away in a cosy cellar underneath the busy London streets. Booking a table is essential, especially if you want to see the matches of the German team. There is an entry fee of ten pounds that reserves you a seat at a table and a ticket for one of the after parties.
Country: The Netherlands
A bustling pub situated in the heart of Soho in central London. It is a small pub, which serves Dutch bar snacks and beer with a large head. Make sure to venture out early because the enormous amount of Dutch people living in London will be watching the match from this pub. Enjoy the atmosphere and the electric spirit of the country that dresses up in the colour orange. Down to earth as the Dutch usually are, they go all out during events likes the European football championships. Google and purchase some quirky orange merchandise. The Dutch are infamous for their outrageous orange outfits and outrageous accessories.
Le Bouchon Bordelais
Le Bouchon Bordelais is an authentic French café that serves fine food and great wine. Support the French team whilst you enjoy a scrumptious meal in the front garden. Inside you will find a cinema room in which every UEFA Cup games will be screened. Revel in the classic atmosphere of this traditional café and enjoy the footie like the French.
Can you remember the 2006 championships when Italy won? Every city in world belonged to the Italians for the night. You couldn’t look left or right without walking in to a cheerful group of Italian football supporters dressed in blue. Bar Italia organised an amazing street party with live music as the Italian team took the golden trophy home. This year might be their year again. In any case, if you like to enjoy homemade Italian food and a strong espresso whilst watching the footie, bar Italia is your destination for UEFA 2012.
Bradley’s Spanish Bar
Dress up in red and cheer on the world champions that will be fighting extra hard to gain the European title as well. Bradley’s Spanish Bar is a hidden pub in the centre of London. It is famed for its vinyl jukebox, friendly staff and lively atmosphere. The Spanish football matches are shown live in the basement of the pub. Expect a cheerful crowd, fresh beer and a lot of music and dancing at the end of the night.