Saturday essay As recession looms, what is the future for the Premier League clubs?
Crunch time for football
So 2008, a tumultuous year for English football, is thundering to a close, leaving behind so much incident it is tricky to identify the most crucial. With the Premier League gripped by a new championship race which has carried unforeseen horrors for Arsenal and Hull City's happy arrival; the economic downturn has begun to focus minds on how the game will be affected, constant speculation that more clubs will be taken over, you can risk forgetting 2008's most significant event.
It came in May, in Moscow. Sixteen years after the Premier League was formed, English clubs finally conquered Europe again. For more than a decade, the Premier League has been the world's richest: TV companies paying multi-millions to broadcast the matches around the world, great grounds full of fans paying expensive ticket prices, merchandising and commercialism feared by the other European powers.
But until this year, the Premier League could boast of only two ultimate European victories on the pitch: Manchester United's Champions League trophy in 1999 and Liverpool's in 2005. It felt like a genuine historical shift, not just a remarkably good year, that three of the semi-finalists, Manchester United, Chelsea and Liverpool, were English clubs, the fourth was Barcelona. The first final between two English clubs, in which United beat Chelsea, was a staking of sporting supremacy, but it also laid the turf for a public battle over the year's other great theme: money, and English football's obsessive relationship with it. Richard Scudamore, the Premier League's chief executive, claimed Chelsea and United's presence in the final was proof of a "virtuous circle" - riches and investment leading to playing success - while the Uefa president, Michel Platini, fired scorn at what he called the "ultra-liberale" (free market) English approach to football.
Platini, who has criticised club takeovers from overseas and the dominance of non-British players in the Premier League, chose to focus on debts. He congratulated the clubs on reaching the final and acknowledged English football's traditions, the passion of the supporters, the atmosphere at the stadiums. Yet he argued of the English clubs' dominance: "This success is often built on an unsustainable level of debt, which is distorting the level playing field in Europe."
Platini warmed to this theme again in the summer, saying that clubs which achieved success through borrowings they could not repay were "cheating," and he set up a Uefa task force to examine the issue. Global headlines were generated in October by Lord Triesman, the chairman of the Football Association, the English game's governing body, who warned that English clubs were £3billion (Dh16.3bn) in debt, cautioning that this debt was "at high risk levels" and carried "tangible dangers" at just the wrong time economically.
"The debt mountains are owned, and therefore the clubs are owned, by either financial institutions, some of which are in terrible health, or very rich owners who are not bound to stay, or not very rich owners who are also not bound to stay," was Triesman's assessment of English football's health. He argued the game was reaching a tipping point where it was not competitive enough - an observation directed at the same clubs that compete for the Premier League every season, and stocked the Champions League semis as well.
A similarly uneasy prognosis followed from the Government's Minister for Culture, Media and Sport, Andy Burnham. An Everton supporter since childhood, he believes football clubs should be owned by their fans, rather than be commercial companies to be bought and sold by investors. He called for football to "completely reassess its relationship with money," otherwise it risked, he said, "losing further touch with its traditional supporter base."
English clubs were traditionally owned by local businessmen, out of public duty and for the personal prestige which went with a seat in the directors' dining room. They were not permitted, by FA rules, to make money out of a club, and generally they did not look to sell their shares on at much of a profit either. Football and those old chairmen's running of it was far from perfect, but the clubs, squashed among the city streets, allowed cheap entry to young and working class fans who clasped "the people's game" with a heartfelt sense of belonging.
The clubs were built on a system of sharing money. The Football League, since it was first established in 1888, operated on the principle that big city clubs should not dominate simply because they would make more money from their larger crowds. Then, after television companies began to pay for the rights to broadcast matches, that money was shared, too. The BBC paid just £5,000 in 1965 for the first series of the highlights programme Match of the Day - quaint compared to the Premier League's current £900m per season - and the money was shared equally between the 92 clubs in all four divisions of the Football League.
Even as late as 1988, the TV money, much greater by then, was shared: 50 per cent was kept by the First Division - including Manchester United, Arsenal, Liverpool and the other big clubs the TV companies wanted to show; 25 per cent went to the Second Division, 25 per cent to the Third and Fourth. That system ensured a rough equality; the big clubs did have a financial advantage which they translated into signing the best players, but there was room for smaller, well-managed clubs to challenge. Brian Clough did it most famously, winning the league with Derby County in 1972 and Nottingham Forest in 1978, taking Forest to two European Cup victories, in 1979 and 1980. Wimbledon muscled from semi-professional status to the top division and an 1988 FA Cup victory over Liverpool, before falling into financial collapse in the Premier League era.
Burnham, like Triesman, called for measures to promote "competitive balance", and when these men speak of it, they are appealing for that tradition not to be lost, for just about everybody to be able to afford access to a game and that money does not rule the sport. These emotions run deep in the affinities of English fans, so for all the glittering success of the Premier League and the crowds it has attracted, it has been a target of criticism from the beginning.
Its very formation was a cause of strife, a deliberate break with that century-old principle of sharing. The television deal was due for renewal in 1992, and the big clubs, led then by Manchester United, Arsenal, Liverpool, Everton and Tottenham, decided they were no longer going to share the money with the clubs in lower divisions. They were allowed to break away by an FA led then by men without Triesman's principles, did the first landmark deal, huge because of the emergence of satellite TV, and for the first time, did not have to share it with the smaller clubs.
English football was on the up at the time. England's performance in the 1990 World Cup had reminded a national audience of football's dramatic wonders, and the Premier League promoted this positive vision of the game. Fans flocked back, and so the money grew. The clubs' wealth paid for the world's stars to come to England whereas once Italy and Spain had cornered them all. The excitement and skill in the Premier League attracted fans in even greater numbers and made the English game hugely popular on televisions worldwide.
This is Scudamore's "virtuous circle", although it took until this year to refine the playing style to one which would conquer Europe on the field as well as financially. It is, you could argue, a contradiction that a period of such wealth and success should have brought with it instability, grave warnings about debt, and clubs up for sale. The central reason is that the clubs are financially so unequal.
The big city clubs do now dominate, their success generates more money which consolidates their positions, and they can pay the high wages for top players. The other clubs are paddling furiously, straining to pay enough to attract players who can at least compete, so many of those clubs borrowed money or looked for buyers, whom they believed could finance the cost of Premier League pay packets. In Spain, Barcelona and Real Madrid are truly owned by their members, the fans; in Germany, Bundesliga clubs have to be 51 per cent owned by a supporters' association. In England, popular feeling chimes with Burnham, that clubs are badges of identity and "belong" to fans, but their status as true clubs did not last long beyond the game turning professional back in the 1880s - the clubs became limited companies and since then have been owned by shareholders.
Manchester United had no debt and its directors never wanted the club to be taken over, but in 2005 the Florida-based Glazer family battled the board to buy United for £790m. The Glazers borrowed £525m and now, with interest and charges, United have debts of £667m. Chelsea was a club over-stretching to compete, the former owner Ken Bates had borrowed copiously to keep up, and Roman Abramovich, the Russian oil oligarch, bought the club in 2003 for just £17m. Since then Abramovich has put the money in, a mammoth £578m, as an interest-free loan.
So Platini's warning about debt rang true given the huge liabilities of the Champions League finalists, although the two clubs' situations are opposites. United's high-interest borrowings were to pay for the owners buying the club, Chelsea's are owed to an owner who gave it all for the club to spend. Arsenal have debt, but that is different too: their £260m debt was taken on to build their new 60,000 seat Emirates Stadium - to enable them to earn more money from fans to compete with Chelsea and United. Liverpool have a £350m finance facility with Royal Bank of Scotland and Wachovia, £185m of which was the cost of being taken over by the American owners Tom Hicks and George Gillett. Now the economic downturn has hit, and Triesman warned that the clubs may be too over-borrowed to cope.
Despite a year thick with speculation about the sales of Premier League clubs - Newcastle, Everton, Portsmouth and Blackburn all publicly for sale and persistent rumours about several others - December arrived with just one club having actually been taken over: Manchester City, by Abu Dhabi's Sheikh Mansour bin Zayed. He reassured fans that he would seek to understand and respect the club's heritage and "significant role in the community going back years."
That, in the current climate, has been the most convincing vote of confidence around. email@example.com