February 2012 and not for the first time Portsmouth FC find themselves in administration and not for the first time in their well documented recent troubled past. The only difference this time is they are joined by some more illustrious counterparts north of the border in the shape of Glasgow giants Rangers. I’ve been saying it for some time now that the football bubble is going to burst, that the current levels of spending cannot be maintained. The worrying sign is that no one really seems to be heeding the warning signs and clubs are like the blind following the blind with only a few showing any signs of financial negligence if any at all. At a time where income into the English Premier League is at an all time high, how is it that only Wolverhampton Wanderers and Arsenal have anything coming close to a business model that seems sustainable over the long term?
An equally worrying sign is that despite being in poor financial health, some clubs genuinely don’t see it as a problem. Take for example Aston Villa who today posted annual losses of £53.9 million. Their bosses insist they are satisfied with the club’s financial position. Whilst that figure doesn’t include the money raised from the sales of Ashley Young and Stewart Downing it does come at a time where Villa’s income had actually increased by 1.3% to a record £92 million. So not taking into account the sums received for the two players, the operating costs for the financial year would stand at £145.9 million. No offence to the staff and followers of Aston Villa, but you would from a neutral point of view state the opinion that this is a club looking to secure mid table security at best, certainly aiming to avoid a relegation dog fight and certainly not a side that look capable of kicking on and securing a European birth anytime soon under the new stewardship of Alex McLeish. Remember Martin O’Neill walked away from the manager’s job over the issue of finance and if huge strides are not made soon to curb their spending then that figure of debt will be maintained and surely cannot be sustained when income levels are at a record high already.
What makes interesting reading are the comments of Chief financial officer Robin Russell who was quoted as saying; "Given the challenging economic environment we're pleased with positive trends in our financial performance."
“The board of Aston Villa are confident that the actions taken since the end of the 2010-11 financial year have galvanised the long-term sustainability of the club.”
Reading that from a neutral’s perspective reminds me of the comments made by the ex-CEO at Portsmouth Peter Storrie who was stunned when the contracts he had drawn up for the players signed during his tenure had resulted in the club having to pay out millions in bonuses when they won the FA Cup. He seemed genuinely bemused that a squad of highly paid internationals was capable of bringing silver wear to the club. I mean what were the chances of that? Sadly it seems there wasn’t the slightest glimmer or an inclining that this could possible happen. Some of the contracts contain such wonderful creative pieces of writing that even JK Rowling is jealous and even now the impact of such contracts is felt when you realise that despite having the smallest playing squad in the league they have one of the largest wage bills in the Championship. I’d be genuinely surprised if at least a few players didn’t receive huge bonuses for winning the Asia Cup but then again nothing would surprise me anymore after Peter Storrie received win bonuses alongside the players. I do however wonder if he’s got any goals in him because let’s face it we need someone to get on the score sheet with Kitson again firing blanks; perhaps it stems from the fact his hair if the colour akin to a jaffa?
Villa’s overall loss of £53.9 million for the year up to the 31st of May 2011 represents a 46.87% increase from £37.6 million, a rise of £16.3 million. Whilst Villa’s commercial income had increased by 15.9% year on year, the club had been impacted heavily by the change in management which cost the club £12 million and the record purchase of striker Darren Bent. No one remind the Villa fans how long he will be out injured for after being stretchered off over the weekend.
So in two years the club has managed to post a total loss of £90.6 million. Whilst I’m sure there will be no marquee signings during the summer for Aston Villa, the club really will have its work cut out as it attempts to start to begin to get its finances under control and work towards a brighter financial footing whatever the Chief Financial Officer has to say on the matter.
However it’s not all doom and gloom in the Premier League when Arsenal reported a rise in profits to £49.5 million yesterday following on from Sunday’s on the pitch 5-2 demolition of North London rivals Tottenham. The profit for the six months to the end of November, compares with a loss during the same period in 2010 of £6.1 million.
Player trading, including the sales of Samir Nasri and Cesc Fabregas had helped bring in some £41.6 million and the figures saw Arsenal’s cash reserves rise to £115.2 million up from £110.4 million. Turnover from football also rose to £113.5 million from £97.6 million. Whilst supporters call for investment after a period of seven success seasons without winning a trophy in any major competition, unlike some Premier League rivals, the club is keen to point out that despite a healthy balance sheet, that not all the money is available for spending on new players; a prudent and strong financial decision even if it doesn’t help appease some of the fans in my opinion.
During the week I was posed the question by ex-Pompey player and manager turned BBC pundit Steve Claridge whether I would swap Porstmouth’s FA Cup win for financial security? My answer in a heartbeat was yes. I’m sure the large percentage of diehard fans would probably agree with me on the matter as well. So whilst I’m sure it’s hard as an Arsenal fan to want to see common sense prevailing when you’ve gone so long without winning a trophy, from our fans point of view we would largely swap in an instant to now be watching a talented young side playing attractive football with a strong financial position behind us then we would at being able to look back at one trophy win that was the pinnacle of what in reality has lead to an absolute disaster and warzone landing on our front door step for the footballing world to shake it’s head in disgust at, not just once but twice.
As a footballing fan the noises coming from inside Arsenal are refreshing and positive and other clubs should start to take note of what is being said. "It's important to understand that not all that money's available to invest in transfers," Chief Executive Ivan Gazidis was quoted as saying before adding; "We have running costs of the club, player salaries and so on, so that amount goes down during the year. We also have to keep something in reserve in case things don't go our way."
"We are proud of Arsenal's record and consistency over many seasons and have the foundations in place, at every level of the club, to ensure we remain a force in the seasons ahead," said chairman Peter Hill-Wood.
I’m sorry Mr Russell at Aston Villa, if I was a fan or either yourselves or Arsenal I know whose trust I would rather be putting my faith in over the past two days when it comes to talking about being happy with financial positions having announced two very differing sets of results. As a Pompey fan all I can do at my own club, like every other one of our great fans fan is to sit and hope and pray that we manage to survive until the end of the season at the very least and avoid relegation. Attempting to sustain Premiership costs on Championship income is one thing, trying to do the same if relegated doesn’t bare thinking about.