The Modern game needs to look at Rome and Arsene to secure it's long term future

There’s a famous expression that Rome wasn’t built in a day. Rewind back nearly three decades to 1984 and Apple under Steve Jobs launch the first Apple Macintosh. In 1985 Apple released Jobs from his position and by 1997 the company was looking at the real possibility of going bankrupt. Fast forward back to the present day and Apple are now valued at more than 600 billion dollars a staggering turn around in fortunes masterminded largely off the back of the vision of one man. The rise in fortunes isn’t alone to the technology industry either. Back in 1984 kicking a ball around a field for 90 minutes didn’t bring the players the same riches that we see today. Before the formation and the days when the top league was known as Division One, the average wage of a top flight footballer was just £480. Wayne Rooney’s current contract at Manchester United see’s him collect an annual salary of £8 million a figure just shy of £154,000 a week. Whilst today’s players aren’t all earning multimillions per year in the top flight, the average wage in the Premiership by the 2009-10 season has risen to £22,353 per week, close to nearly 47 times the amount players were earning 25 years previously. Looking at this on an annual basis this means the average annual salary will be £1,162,356 per season, not bad work if you’re fortunate enough to get it.

Football like the world of technology has changed beyond belief over the past three decades with the money inside the top flight of the English game beyond the wildest dreams of the Chairman of any owner back in 1984 could have ever imagined. Manchester City, today crowned Premier League Champions for the first time today have since 2008 spent a total of £930.4 million. Of that total just £365.3 million of that money came from revenues generated by the club with the rest coming from the pockets of billionaire Sheikh Mansour to the tune of £565.1 million. Whilst figures like these might not be a problem to a billionaire benefactor like Mansour, other clubs are now finding that chasing the dreams and living beyond their means can only last for so long before the bubble bursts and the problems begin to mount. Portsmouth found themselves the first club to have ever gone into administration in the English Premier League. A successive round of financial problems has been well documented to be joined by the names of Glasgow Ranger north of the border fighting for their very survival. With so much money flooding into the game it’s hard to believe that any top flight club could manage to get themselves into a financial mess but it’s a sad reality of the changing face of English football.

Whilst the blue half of Manchester will be celebrating their first title win since 1968 today, just over ten miles down the road at neighbours Bolton Wanderers fans will be commiserating after their relegation to the Championship with debts estimated to be in the region of £100 million and no rich billionaire benefactor to bail them out. Owen Coyle’s Wanderer’s will see a total of 14 players either out of contract in the summer of loan players returning to their parent club. Captain Kevin Davis, influential playmaker and winger Martin Petrov and top goal scorer Ivan Klasnic are just three names who will be out of contract in the summer. Whilst West Ham and Blackpool are both in with a chance of regaining their place in next season’s Premier League, Birmingham City have failed to go up at the first time of asking of the three teams that were last relegated and ultimately only one of those three will find themselves back in the top flight after the end of this season. Bolton will be looking very closely at Birmingham City’s plight and the challenge ahead as they try to balance their books, consolidate their debts and attempt to jump back into the top flight of football at the first time of asking.

The cost to Birmingham City of failing to be promoted will most likely be administration. Birmingham will have all but run out of money by June. The club’s owner Carson Yeung is absent facing fraud charges in Hong Kong relating to £59.7 million is a case of alleged money laundering. The banks have withdrawn a £7 million overdraft facility and the club cannot raise much needed revenue by remortgaging St Andrew’s as HSBC hold the deeds to the ground as security on an outstanding loan. The club are subject to a transfer embargo imposed by the football league, manager Chris Hughton is largely believed to be heading out of the door to join neighbours West Bromwich Albion after Roy Hogson’s departure to take over the reins at England and the clubs wages to income ratio remains hovering very close to the 100% mark. The parachute payments received by the midlands club are nowhere near large enough to offset the huge wages of star players retained on the clubs books like striker Nikola Zigic earns a reported £2.5 million a year alone. Birmingham City in the next month are set to follow in the footsteps of Portsmouth and fall victims for chasing the dream with too much vigour and financial recklessness.

Failure to publish their accounts on time for the second season running means the level of debt Birmingham City is actually carrying isn’t being reported. Contrast that to fellow relegated side Blackpool and we see a totally different picture. Despite only staying up for one season, they sit one game away from a personal first time return against Sam Allardyce’s West Ham United, another club carrying significant levels of debt from their time in the EPL. Blackpool’s promotion saw their income levels rise by a staggering 450% to £51.7 million. During their season in the EPL their net cost on transfers was £3.5 million but that brought in ten players, losing only two in comparison. The wage bill only rose by less than £600,000 or roughly 4.5% year on year. Majority shareholder Owen Oyston paid off all the clubs external debt as cash balances at the bank rose from £2.8 million to £8.1 million.  Blackpool’s finances for the following Championship season will make very interesting reading indeed having seen stars like Charlie Adams depart in the summer to Liverpool, the inclusion of wage reductions for players and staff following relegation and the addition of parachute payments being received. I’m sure if Blackpool were to win promotion via the play offs again, Blackpool would start the season fully believing they would potentially be able to stay up this time around as all three of last season’s promoted clubs have managed to do this time around. Whilst QPR only managed to survive on the last day of the season, in comparison Norwich City and Swansea City have been able to breathe easy and stop watching over their shoulders for some time and finish the season in 11^th and 12th places respectively both finishing on 47 points, 11 ahead of newly relegated Bolton Wanderers. They both managed to do so on reality meagre budgets in comparison and all three sides will be hoping to consolidate and build on this season when the season restarts in earnest this coming August.

The gulf in football from the EPL to League Two is vast and we see the average League Two player earns £747 per week, some £21,606 behind their top league counterparts. The significance of winning promotion to the EPL or remaining in the league has never been higher with so many clubs carrying such high levels of debt without the backing of billionaire owners at their disposal. Whilst this true of many clubs, Wolverhampton Wanderers have continued to buck this trend and despite being the first club to be relegated this season, remain debt free. Their main struggle this summer will be trying to keep hold of their main players rather than a worry about balancing the books.

The annual PKF survey published in regards to the state of English and Scottish football brought about some interesting revelations into the views on football finance in the game and the way clubs are structuring and using finance on offer to them or will potentially be doing within their business models in the forthcoming season. In 2011 10% of English Championship clubs increased their banking facilities a figure very similar to the previous season though most banks remain reluctant lenders to the sector and are unlikely to commit further facilities. 40% of Championship clubs envisage having to use 90% of more of the total banking facilities presently made available to them during the coming season a sign that borrowing will remain a significant part of trying to gain promotion or avoiding relegation will be done raising levels of debt within the national game. Whilst 50% of clubs said they didn’t envisage using the facilities the other 10% stated they were unsure whether they would have to take advantage of the facilities or not. A further 30% of clubs admitted that they were having problems sourcing finance for the season a figure of nearly 1 in 3, a worrying sign and trend for the forthcoming months and years in football indeed.

10% of clubs admitted to being late with payments due to the HMRC and a further 10% wouldn’t commit to admitting whether or not they had made late payments. Of that 10% not one club had done so with the agreement of the HMRC itself. Another worrying statistic is 20% of Championship clubs have admitted they are worried that a sizable challenge by the HMRC on the use of image rights in player’s contracts would likely to cause them an issue. We’ve seen the issue north of the border with Glasgow Rangers and it would be hugely naïve to believe the potential problem doesn’t exist in the EPL.

44% of EPL clubs have player’s contracts in place whereby player’s wages will decrease if they are relegated from the top flight. Impressively that figure increases to 90% of Championship clubs who it seems are way ahead of their EPL counterparts in now beginning to see the financial impact potential relegation can bring.

Whilst looking at the clubs who’ve recently been relegated or promoted, it would be hard to forget the last of this season’s EPL clubs to have been relegated who haven’t already been mentioned so far, so step forward Blackburn Rovers. Until today Rovers were one of only four clubs to have lifted the EPL championship alongside Arsenal, Chelsea and Manchester United. This season has been a turbulent one on and off the pitch for the Lancashire club which has seen the fury of fans vented at the owners the Venkys and manager Steve Kean with calls for both to go. Fans have begun to boycott home games, the club shop and fail to renew season tickets in a bid to bolster the chances of removing Kean and ultimately the Venky’s themselves. When the Venkys took over at Blackburn Rovers they promised the fans they would deliver European football within five years and the signing of Ronaldinho. What they actually delivered was Championship football and David Goodwillie who last month narrowly avoided a prison sentence after being guilty of his second assault within a year. Perhaps someone should take the Venkys aside and remind them that despite the money of the EPL, it’s the fans who remain at the heart of any club and not the finance. Whilst the owners deny any attempts to sell the club it wouldn’t come as any surprise after the mistakes they’ve made during their tenure see’s Kean removed from his job or the Venky’s try and sell on the club. The next twelve months promises to be an even more turbulent time for Rovers if not.

I’ll end this the same way that I started it. I mentioned how Rome Wasn’t built in a day. It’s best to remember the cornerstones of Roman civilisation stood for hundreds of years and to this day we still have Rome although in a different form to its earliest times obviously. The way the English Premier League is currently operating, unless serious changes are made at the bass roots of the industry the debts carried in the game are going to be a burden that some clubs will no longer be able to potentially trade. Birmingham City are likely to go into administration next month, Portsmouth and Glasgow Rangers both remain in administration already as do Port Vale. If Bolton Wanderers fail to bounce back in their first season of asking will they be left facing administration? With debts of £100 million relegation will pose very serious questions of the Wanderers board and how levels of debt were allowed to build up to such levels in the first place, questions the game should have been asking itself a long time ago now.

I will leave you with my favourite bit of research from this entire piece which surrounds Mr Arsenal aka Arsene Wenger, the man who revolutionised the Premier League more than any other manager in my opinion. Since Arsene Wenger arrived at Arsenal the top sides in the country have continued to spend lavish sums on players backed largely be either billionaire owners in the cases of Manchester City and Chelsea or be leveraging large amounts of debt in the case of Manchester United. The following shows the overall spend on player purchases since Arsene Wenger’s arrival in the English game of some of the clubs around them in the same time and more interestingly after transfer monies received what their net spend was.

Manchester United:

Overall Spend: £534.05m
Overall Received: £283.975m
Net Spend: £250.075m

Manchester City:

Overall Spend: £628.1m
Overall Received: £155.543m
Net Spend: £472.557m

Chelsea:

Overall Spend: £720.83m
Overall Received: £216.185m
Net Spend: £504.645m

Liverpool:

Overall Spend: £523.33m
Overall Received: £318.87m
Net Spend: £204.46m

Tottenham:

Overall Spend: £392.55m
Overall Received: £217.93m
Net Spend: £174.62m

Now compare this to Arsene Wenger’s record at Arsenal where their overall spend is less than all other five clubs, the transfer income was only bettered by one club in the shape of Liverpool and the last figure in comparison is astonishing and none of the other biggest clubs in the country even come close. Read it and marvel at it folks.

Arsenal:

Overall Spend: £314.75m
Overall Received: £310.514m
Net Spend: £4.236m

Remember under Arsene Wenger Arsenal have never failed to qualify for a Champions League slot. If there’s a starting point for other teams to base themselves upon then all roads lead to Arsenal.