How Literal Will The Premier League’s Survival Sunday Be?

By on May 20, 2011 in English League Football, Latest | 4 comments

In an August 2009 Radio 5 Live programme on the Premier League’s financial troubles, Supporters Direct Chief Executive Dave Boyle addressed the issue of the “chasm” between Premier League and Football League finances. “Once upon a time,” he said to a gathering of football people including the then-Birmingham chairman David Gold, who wasn’t ‘sitting comfortably’, “relegation meant you’d not had a good season. Now it seems to be this existential ‘it’s the end of the club, it’s the end of the world as we know it.’”

Boyle’s theory was tested to an extent by that season’s relegation of Hull City and Portsmouth. But it was difficult to gauge how much of Hull’s traumas were down to the gap between the leagues, or the gap between owner Russell Bartlett’s financial strategies and sanity. And Portsmouth, of course, was a test of a different set of theories entirely, largely connected with the wisdom of allowing convicted Russian/Israeli gun-runners to try out a Premier League club’s bank account for size. Allegedly.

Some of this season’s bottom six might put Boyle’s theory to a more pertinent test. The bottom six has mostly been the three ‘Bs’ – Birmingham City, Blackburn Rovers and Blackpool – nestling uncomfortably on top of the three ‘Ws’ – West Ham United, Wigan Athletic and Wolverhampton Wanderers (the five ‘Ws’, if you have a certain view of the Hammers’ current co-owners). And all six clubs will have their various business models and financial strategies challenged by the drop in income which still accompanies relegation, despite recently-increased parachute payments which are themselves an admission that the financial gap between the leagues is too wide. The “£90m game” is no longer just the Championship promotion play-off final.

It is difficult to gauge how relegation will affect West Ham United’s future, as they’ve had a different debt level for each day of the week since the soft-pornographer David Sullivan and sex shop ‘entrepreneur’ David Gold became co-owners. The one thing going for the Hammers is the two Davids’ vast experience of losing relegation battles, which has made them equally adept at winning promotion battles the following season. But since the last time West Ham themselves hit English football’s second-tier, times have changed drastically.

In a rare genuine ‘exclusive by Harry Harris’ in the Express newspaper in December 2006, he revealed that relegation that season for the Hammers would “spell doom” under the terms of the takeover by Icelandic businessman Bjorgolfur Gudmundsson. West Ham were “effectively paying for their own takeover” through a series of loan repayments which simply could not be met by Championship finances. Little wonder, then, that the club were so desperate to avoid relegation that they risked reputation and credibility to shoehorn Carlos Tevez into their side for the crucial closing games. They (in)famously escaped the drop with three late, Tevez-inspired wins. These included a last-day victory at Old Trafford after Manchester United had received the Premiership trophy, Blackpool fans may be encouraged to recall. It simply hadn’t been that urgent back in 2003, when 42 points hadn’t been enough to save the East Enders, Blackpool fans may be encouraged to forget. But only Sullivan and Gold’s classily-earned millions will ensure relegation won’t be that urgent this time; which, of course, is just as well.

Relegation for Birmingham and Blackburn will test the long-term determination of their respective foreign owners, who clearly failed to factor in the possibility when they took over with grand plans to corner their respective domestic markets. There clearly wasn’t a chapter on “the drop” in the brochure. Birmingham City have been labelled this season’s example of a club making a late run for the relegation zone. But in reality, that was Sunderland, who halted their slide just in time with wins in the Greater Manchester area, otherwise the ‘benefactor model’ of club ownership, as practised by Irish-American businessman Ellis Short, might have had some unwelcome pressure.

Birmingham were in and around the drop zone before and since their Carling Cup triumph over Arsenal at Wembley in February made it Uefa’s business to see the Blues stay as much out of the red as possible.Those finances, as detailed in the accounts of their Hong Kong stock exchange-listed parent company, Birmingham International Holdings, were enough of a worry for auditors to express the all-too-familiar concerns about the ability to remain a going concern. But they weren’t enough of a worry for ‘relegation’ to be among the potential future scenarios outlined in the 2009/2010 accounts. These showed that “funding of around £7.5m” was needed in the short-term for the club to “operate within its agreed banking facilities”, in the event of Blues reaching their “expected placing in the Premier League.”

The accounts also included a “sensitised” forecast, which showed an extra £3m would be needed if “the football club does not achieve the forecast position but does retain its Premier League status.” But that’s it on the sensitised forecast front because “the directors are confident that the football club will retain its Premier League status.” Blues’ turnover more than doubled on promotion to the Premier League in 2009, with 75% of that down to broadcast revenues. So they’ll need extra “extra funding” in the event of the drop. A recent share placing, designed to deal with future shortfalls, fell way short itself. And victory over Spurs in North London this Sunday could prove infinitely more vital than their victory over Arsenal in North London on the last Sunday in February.

The world domination plans of Blackburn Rovers’ owners, Venky’s, were largely based on becoming India’s “Premier League representatives,” which rather depended on actually being IN the Premier League. And even if they do survive, these plans are threatened by Queen’s Park Rangers’ promotion as Football League Champions under the 20% ownership of Indian billionaire Lakshmi Mittal, with Mittal’s Indian son-in-law Amit Bhatia and his Indian mate Ishan Saksena both high-profile directors. When Venky’s chief Anuradha Desai said last October that “we will be happy to be in the top 10 or 12” in the Premier League, she was accused of spouting ill-informed rubbish. Now it seems like wild ambition.

She did talk ill-informed rubbish for much of Venky’s early months in charge, of course. And Venky’s insistence that manager Steve Kean make the time-consuming trip to India this week of all weeks is the latest sign of Venky’s ill-advised, self-importance. Maybe relegation will provide the education and humility they need to become successful owners. In the meantime, is that Sam Allardyce I can hear laughing?

Wigan Athletic owner Dave Whelan doesn’t do humility – hence the “DW Stadium.” He has long positioned himself as a football financial guru, which suggests that a wages-to-turnover ratio of 90% should be in vogue rather than an example of football’s financial lunacy. And this from one of football’s most vociferous salary cap advocates. But relegation may scupper Whelan’s plans, as told to the execrable Alan Sugar on telly last week, to handover the club “in the next three or four years” to another kindly benefactor.

Wolverhampton Wanderers’ curmudgeonly little Englander Sir Jack Hayward pulled off that trick when he passed the club to current owner Steve Morgan in 2007. In the media run-up to this weekend, Morgan is being positioned by others as a football financial guru after Wolves made a, gulp, profit last season while ensuring Premier League survival in their first season. “I do shake my head sometimes,” Morgan said, creating disturbing images of Black Sabbath on his MP3 player. “I hear what certain chairmen and directors say should happen in football with salary control and look at what they do? The opposite.” If Whelan’s ears were burning, it wasn’t because of anything on HIS MP3 player.

So the neutrals’ vote for survival should surely go to Molineux. Yet it almost exclusively appears to be with ‘little’ Blackpool, despite the best efforts this week of manager Ian Holloway’s repulsive alter ego ‘Olly’ to suggest the Premier League felt otherwise, in yet another tedious “these people running the game” rant. Blackpool bet the proverbial ranch on getting promotion last season, with an arithmetic-bending as well as mind-bending ONE… HUNDRED… AND… FORTY-FOUR… per cent of turnover going on salaries. But their comparative wage restraint this season,which makes Holloway’s achievements so laudable, looks likely to leave them with financial back-up even if they are catapulted back to Burnley and co.

Burnley, of course, followed the same path to the Premier League – betting the ranch was their chairman Barry Kilby’s phrase. And time, and next season’s accounts, will tell whether the Clarets were the right financial lead for Blackpool to follow. No doubt some will seize on Blackburn’s or Birmingham’s relegation as a failure of foreign ownership. But that wouldn’t be the case any more than Wolves’ demotion would be down to the failings of Scouse ownership and the management of the large Barnsley Irish community. And what would these people make of a demoted Dave Whelan? Or the Oystons by the seaside?

But there is plenty of scope for relegation from this year’s Premier League to provide the “one or two disasters” that the execrable Sugar claimed football fans “need to see”; and to test whether relegation really is more than Dave Boyle’s “not had a good season.” In an ideal world, those disasters will be avoided. But relegation may be a wake-up call; if not for fans, as the execrable Sugar suggests, at least for the clubs themselves. And anything contributing to less insane management of English football’s finances has to be a good thing, even if some fans of some clubs will be thinking anything but, come Sunday evening.

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    4 Comments

  1. Is it especially relevant to this article that West Ham’s co-chairmen are, respectively, a soft-pornographer and sex shop ‘entrepreneur’? How ‘classily’ did the other owners you mention gain their fortunes, or is this just Daily Express-style sniffiness?

    Is this about finances or morality? Is there some relationship between Dave Whelan’s humility (or perceived lack-of) and his club paying a wages-to-turnover ratio of 90%? If so, it’s worth drawing out, but otherwise petty snipes like this distract from the strong central message of the item and should be left to the tabloids.

    George

    May 20, 2011

  2. Sullivan and Gold make great play of how they are local boys made good, so I don’t think it’s a big deal to detail exactly how they made good. And it’s not sniffy at all to have a low view of the soft-porn and sex shop industries.
    I Whelan’s attitude directly links to his benefaction at Wigan. But yes, I could have drawn it out.
    I don’t think he’s a hypocrite or a reckless businessman. But he is a vociferous critic of EPL over-spenders, of which he is a prime example. I think that’s down to his view of Wigan as a vanity project.
    That’s not all bad by any means. But “there’ll be another benefactor along in a minute” is a risky business strategy.
    In general, while emphasising that I wrote my article first, David Conn has addressed the issues in it rather better than I in today’s Guardian.

    Mark Murphy

    May 21, 2011

  3. I knew that Wolves were the only profitable club in the relegation battle – although I had not realised just how ridiculously Blackpool had spent last season, because I was focused on their comparative restraint this. (Let’s not forget their shirt sponsors this season were quasi-loan sharks, either.)

    Whelan – hypocritical? Maybe.

    I can’t decide which two teams I most want to see relegated – Blackburn probably my favourite to show up Venky’s, but I’d be plenty happy enough with Birmingham going down (and ecstatic if it means they’re thrown out of Europe). As long as Wolves stay up, I’ll be content.

    It terrifies me to think that one of the relegated clubs might need to go to the wall to even begin to fix football’s finances. It terrifies me even more to think what it would take for that to happen, seeing as there is still a Portsmouth Football Club – and I don’t say that angrily with ties to the city of Southampton, because that club should have folded first anyway. In a world where football clubs were wound up like any other company, the South Hampshire derby would be Eastleigh v Havant, simple as that…

    David Howell

    May 21, 2011

  4. The relationship between finances and morality is surely a key issue in football?

    This is a sport and a family social event and whilst Gold and Sullivan do not push their other products at matches the source of their money and their business ethics are reflected in the way they run the club I think.

    The question is, I suppose, where do we draw the line? Other football clubs have owners with far more questionable sources of funding of course…

    SJ Maskell

    May 21, 2011

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