Saturday 24th April. Kingston upon hull. Witness the growing fear amongst, football fans, chairman, managers and maybe even players in the English Premiership. With Portsmouth already in administration, and therefore relegated for chasing the dream of FA Cup glory and premiership respectability, another of Englandâ€â„¢s top-tier survivor wannabeâ€â„¢s, Hull City all but confirmed their relegation with a defeat against Sunderland at the KC stadium. Nothing out of the ordinary there you may think, afterall teams get relegated from leagues all over the world every season. Sadly though Hullâ€â„¢s Chairman Adam Pearson confirmed at the final whistle that the club owed Ã,£35 million to various creditors and had taken cash in advance for the last few seasons. Chasing the dream could, like Portsmouth before them, push them over the edge.
The question is, how in the supposed richest league in the world does a team get into debt and how does that debt get out of hand? In Portsmouthâ€â„¢s case it seems clear-cut. Too many owners of dubious quality and finances in a short period of time, too many hidden deals, too much cash upfront and too much spent in players wages. But Hull is a different proposition. They were rescued in the lowest tier of the football league on the brink of going out of business by Paul Duffen and Russell Bartlett in 2001. On the face of it Hull had a huge and successful run, gaining promotion after promotion and building a new, state of the art stadium. Theyâ€â„¢d never played at the highest level in England and for a city the size of Hull that was criminal. Itâ€â„¢s a strong region for Rugby league and this is probably where their history had been diluted. But nothing in England is stronger than the Premier league and the fan base, which was always there, grew â€Å“Success has a thousand brothersâ€Â¦ failure sadly has none.â€Â One fan noted on the eve of their premiership debut two seasons ago.
Duffen resigned in October and was replaced by Pearson. Almost as soon as he arrived he blamed the last chairman for financial failures, and their manager Phil Brown seemed doomed. He was, lasting only until March. Iain Dowie took over, but sadly didnâ€â„¢t change the results. Hull are now all but mathematically doomed and rather ironically mathematics have all but doomed them.
They now face League one, with a lot of average players. The good ones if there are any, apart from Bullard will be off for little or no money. The only advantage is the shrinking of the wage bill. Itâ€â„¢s a sad predicament for such an ambitious team. But sadly it was always going to end this way.
Chasing the dream of premiership establishment is a costly business. Newcastle United were promoted in 1993 and almost instantly they changed their recent history to one of a â€Ëœbig succesfulâ€â„¢ club. They developed their ground to a 56,000 all seater stadium. They managed to secure a top three finish before the big four had even been thought of. They had very succesful runs in Europe and the league and even bought world record Ã,£15million players. They were riding a crest of a very succesful wave of football optimism in England but they never won anything. There was of course ups and downs, but a couple of mid-table finishes and a few bad management appointments were as bad as it got. Sadly for the Geordie supporters they were bought by a paper billionaire who has a history of supporting another club and were quickly relegated by at best, some naive decisions by the new owners.
fast forward a year and Newcastle have again been promoted and look like a good Championship team. This time though there is no open top bus to celebrate, or massive stadium development and there will definitely not be any world record-breaking signings. Times have certainly changed. Survival is on the lips of every Newcastle united fan, not europe.
The recession is not the only thing to blame, but it certainly is a big factor. England has been hit particularly hard but then again so has Spain, but Madrid and Barcelona can still spend big. In 1993 millionaires used to buy clubs not billionaires. Jack walker for example didnâ€â„¢t have anywhere near a billion when he bought Blackburn. This is the problem, there isnâ€â„¢t a lot of billionaires willing to live in Britain when they can have the weather, lifestyle and tax-free money of places like Monaco. Players wages have reached such a height that you need to have a bank account of billions just to mount an attack on the top of the league. The ones that donâ€â„¢t have that luxury are left to buy or pick up free players who on the whole can be very average for huge wages and are for the most part have little or no love of a club or the area.
We here at SoccerCasuals.co.uk have seen this pattern before in business. Itâ€â„¢s very similar to the huge bank debt crisis of last year. The first reaction of many was to question the governments. Why hadnâ€â„¢t they regulated them better? Why wasnâ€â„¢t there more transparency in how they operated? Well the truth of the matter was the American government were mostly to blame and the rest just followed. But details emerged of how much tax was paid by these big finance companies in the Square Mile. Money is the root of all evil as the saying goes and where thereâ€â„¢s tax, thereâ€â„¢s profit. Basically the banks were allowed to carry on and regulate themselves because they were very, very profitable for the government.
Now look a year or so later and turn your attention to the Premier league and the FA. Theyâ€â„¢ve never been so big, so rich. They have the most profitable league in the world, TV rights are constantly sold at higher prices year on year. This money is then filtered through to the clubs who are free to use it as they wish. Thereâ€â„¢s no real regulation of finance. This means that players are free to earn whatever they want. Afterall if wages were capped it would be illegal by European law, but also the star names wouldnâ€â„¢t venture to exotic locations such as Hull, or Portsmouth and that wouldnâ€â„¢t be good for TV rights deals.
You may think that your Sky tv subscription is the biggest money spinner for the FA but if you look closer youâ€â„¢ll see foreign tv rights in places like China and the Middle East are massive earners. So of course the more highly paid superstar players in the league the more money for the clubs and not least the FA.
As Hull and Portsmouth have recently found out, this money for a hired gun scenario is not sustainable and if the only way you can compete is if your club finds a billionaire with no love or link to your club then youâ€â„¢ll always lose in the end. What will happen to Manchester City and Chelsea when their billionaires leave? Itâ€â„¢ll happen sooner or later and so will the free expendable cash.
Football in england is not cheap, as Liverpoolâ€â„¢s and Newcastleâ€â„¢s owners can testify, but in Liverpoolâ€â„¢s case it may just be profitable when you sell. If thatâ€â„¢s the only way you can muster a profit then the FA premiership is going to struggle. and itâ€â„¢ll be criminal if the powers that be donâ€â„¢t step in and introduce a system that allows the smaller less fashionable clubs to stay afloat and maybe even turn a decent profit.
But will that be as entertaining? Only time will tell.
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