It Really Isn’t What Football Fans Want to Hear?

By on Jul 19, 2012 in Finance, Latest | 2 comments

Greg Clarke is a defender of your football club. No really. Stop snorting with derision in Pompey, Plymouth, Leeds, Wrexham, Coventry (supporters of other clubs are also available in snort-mode) … He says so himself. So it must be true.

In a telling exchange with MP Damien Collins at the DCMS enquiry (from 12.00 on) he explains how he tries to step in before clubs are liquidated.

‘My job,’ he says with some force  ‘is to swallow my moral scruples about the Football Creditors’ rule and keep football alive in those communities.’

Collins points out that liquidation ‘might be the end of that club as a business, its not the end of football in that town – clubs can come back from financial ruin.’

Clarke’s response gets to the heart of issues illustrated by reaction to the problems of both Rangers and Portsmouth in recent months. With heavy emphasis, throwing his hands up, Clarke declares, ‘I agree with you … but I have to face these clubs, and their fans and the local press … I can’t say don’t worry guys, in ten to twenty years you’ll be back … that isn’t really what they wanna hear.’

Collins, with a certain imperturbability, responds, ‘It may not be what they want to hear, but maybe its what they need to hear.’

It is a position that I have come to agree with very strongly over the last three years. Every club should come with a health warning akin to that carried by mortgage companies: Your club is at risk if it does not keep up with the payments on any loans secured upon it, its business and its ground by any person or persons, known or unknown, that the Football League deems fit and proper. Fans need to hear this message with regular frequency.

Clarke says to the committee that football is a ‘fiendishly risky & volatile business’, and causes general laughter at another point by saying, ‘Don’t confuse Football League clubs with viable economic entities.’ If this is the case, as is obvious to anyone with an abacus, then why are Football clubs trying to run under the laws of normal businesses? Because, as Clarke told the committee, there are not enough owners and we need to bring more capital into the game. And this is the crux of the matter. The game is run on this fundamental belief, that for a club to be successful it has to spend a lot of money that it doesn’t have, which is all right while a benefactor loads on debt that stores trouble for the future but not from the point when that future arrives. Clarke made this his argument against fans owning and running clubs because they ‘eventually run out of money, they don’t have access to money to compete. Where do they get the money to run the club?’ He asks in genuine bemusement. Sustainable business models seem to be outside his comprehension. Has he not noticed that a wide range of private owners are facing the same dilemma?

This fundamental belief permeates the fan base. It works against Supporters’ Trusts who have to argue an economic case of some sophistication to justify the break even model. The excitement at Reading and Forest currently with the promise of rich owners ‘in it for the long-haul’ illustrates this. At Pompey such belief was used as an exquisite Public Relations tool by Peter Storrie to crowbar his favoured ‘Ali Al Faraj’ consortium into control at Fratton. In promising ‘a level you wouldn’t quite believe’ and dropping hints of the new owner ‘going all the way up in Saudi’, he had fans on a guessing game as to which Sheikh this could possibly be before Ali turned out to be the reincarnation of the invisible man. I believe Leeds fans are in a similar situation currently, in that they are awaiting the outcome of a protracted and elusive takeover bid from a somewhat publicity shy Bahrainian.

Each time a new take-over raises its head fans are led to hope that this time the glory will come to their club. They want to give owners a chance on the back of that hope. At Pompey some fans passionately argued that Balram Chainrai was our saviour. Not once, not twice, but three times was it their hope that his involvement in the club would not only be its salvation but also its return to greater things. Similarly, despite the information in the public domain regarding Pompey’s last owners and their shaky financial foundations, fans were still wanting to give CSI the same chance. Some still retain a vague hope of an innocent Vladimir Antonov returning to revive the club. It is wrong to call such fans naive when the Football Authorities pass such people as fit and proper to own their clubs. Clubs that Clarke himself calls a ‘force for good’ in their communities’ describing their owners as ‘custodians’ in his talk with the DCMS committee. I don’t believe many owners see their tenure in quite the same way. Not if the number of administrations and punishments meted out to clubs are anything to go by. As Collins said to Clarke, ‘It’s too easy for clubs to rack up debts, go into administration, walk away from them and carry on playing and there’s not really a downside to this.’ How that makes them ‘a force for good’ in their communities is difficult to fathom.

The League’s reactive treatment of clubs that go into administration leaves fans feeling victimised by points deductions. Rival fans cheerfully point out it is deserved punishment for ‘cheating’ whilst happily ignoring the potential in their own clubs for similar events to occur. They point out that fans ‘should have seen it coming’, that ‘fraud was being committed before their eyes’ without acknowledging that as it stands, fans can do very little about an owner once the club is purchased.

As Mark Murphy says of the Rangers case the ‘crimes’ other fans like to accuse ‘insolvent’ clubs of committing are not unique, but are ‘cultural and systematic of Football’. Interestingly Rangers have revived from liquidation more quickly than Pompey have from their troubles aided by the lack of a football creditors’ rule in Scotland. In Pompey’s case the Football Creditors’ Rule could drive the club into liquidation and is, in-part, to blame for its second administration in two years due to the legacy issues of players on unsustainable salaries still having to be paid. Bids tabled for the club so far are conditional on the administrator losing these salaries from the payroll. If these players stick out for their money the club will die. So much for Clarke’s claim to the DCMS that the FC rule props up the finances of football clubs. But it was the belief ingrained in the system, that capital is needed to run a successful team, that allowed CSI to add £10.5m to Pompey’s CVA debt in order to run the club, money which was used on player costs.

Yet Pompey’s ‘punishment’, at which many fans feel aggrieved, is very much aimed at ‘rescuing’ the club from the cycle of loaded debt that it is caught up in. The ten point penalty makes it difficult for anyone to think that the team will easily bounce back into the Championship, giving pause to any owner with thoughts of a quick turnaround. The restrictions on carrying forward secured debt from before administration and on loans and wages for five years hence force a financial parsimony that will, if properly enforced, restrain any future loans from draining the club’s resources. The insistence on the payment of Football Creditors ensures the destination of any parachute payments owing. Along with the Salary Cost Management Protocol this seems to evidence what Clarke declared he was trying to do in stopping clubs wasting money. However, it is not surprising that many fans do not see the value in rescuing the club in such circumstances. There are a significant number in Pompey who would be quite happy to hear the news that Clarke thinks they don’t want in order to be able to start their club again, in their name, from scratch without any legacy of the last four years.

Should fans ‘know better’? It is difficult to see how they can, given the lack of transparency in football governance and the weakness of the will of authorities in turning away doubtful potential owners, due to their feeling that the game still needs to attract capital despite the billion pound TV deals that are done. Clarke argues that it is clubs’ owners’ right to keep their financial matters private. He proves this to the point that he says that, as with Leeds last year, the League knows who the ultimate beneficial owners of Coventry City are but doesn’t fell that anyone else needs to know. Without fans having the right to involvement in governance they cannot have access to the knowledge they need to keep vigilance on their individual club’s affairs. I was clear throughout the DCMS meetings that those involved in running the game did not see fan involvement in governance as necessary or even desirable.

Consequently, if fans want such a say, if they feel strongly about the survival of their clubs, then the responsibility devolves upon them  to make it clear to the authorities that, far from being unwilling to hear the message that their club is operating in a suicidal way, they are willing to play a role in governance. To do that they need to arm themselves with the knowledge that allows them to argue against the prevailing culture of ‘spend, spend, spend.’ They need to present a more united front in arguing their case, for this is not an issue that can be tackled on a club by club basis as comments on the recent Rangers and Portsmouth articles show – that way lies division. If, once that knowledge is widely available, fans want to go for ‘glory or bust’ and are happy to see financial doping achieving this for their club then they must accept the fall if and when it comes. Claiming victim status in those circumstances is not an option.

The challenge for supporters groups, including Supporters’ Trusts, Supporters Direct and the Football Supporters Federation, is how such knowledge can be made available.

The Pompey Trust is still seeking pledges from Pompey fans to back their bid. Information can be found here

You can follow SJ Maskell on Twitter by clicking here.

You can follow Twohundredpercent on Twitter by clicking here.

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    2 Comments

  1. Clarke has no idea. A fool at best.

    jertzee

    July 19, 2012

  2. Not one of your best, SJ

    Dinksy

    July 20, 2012

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