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Is Football Feeling The Pinch?

Robert Elstone, 9th October 2008 - 12:50

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Robert Elstone

Robert Elstone

Posts: 38

Robert is Everton's Chief Executive.

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If I may, I’d like to move off the Everton agenda slightly and give my views on the pages and pages of discussion on the impact of the ‘credit crunch’ on the business of football.

Football’s never been short of people telling it how to run itself and it’s been fascinating, over the past few days to hear the debate on governance, regulation, debts and the future of the game.  Politicians, administrators and so-called industry-experts are quick to highlight ‘problems’ and are never short of opinion on how to fix them.  And the groundswell of that opinion seems to be the Premier League is about to implode.

I don’t doubt the scale of the economic problems facing all walks of life, all over the world; equally, I’m certain football isn’t immune from these difficulties – it would be both naïve and blasé to assume a fan’s football spend is ‘bullet-proof’, so I can only assume these commentators are genuinely responding to real issues.  However, if their intentions are honourable, and non-political, I believe their solutions are flawed.

Before getting into these solutions, and having suggested that the current debate is in response to real economic challenges, I can’t help but feel that what we have is the classic ‘tall poppy’ syndrome – when something gets too big and too good, we delight in knocking it down.  In a previous job, we were called on a regular basis by overseas leagues asking to ‘make us like the Premier League’. It is league envied across the world and that envy is fuelling the power struggle  - the traditional ‘owners’ of the game – the governing bodies vs. the new leagues and the big clubs. On that particular point - who owns what in the football pyramid? All I know is that here in Liverpool, it is Everton that develops young players from the age of 4 or 5, it is Everton that invests well over £1m per year in community projects, it is Everton that invests in the best playing talent we can afford and it is Everton that has developed and operates a stadium capable of housing 40,000 per week. In my view, football on Merseyside is owned by the Clubs – for better or for worse.

Consider some of the proposals; Platini wants to ban debt, Blatter wants to ban foreign-ownership, Triesman suggests a look at a salary cap, various politicians propose fan-ownership. 

Over the past few months, debt has become the ‘root of all evil’ and the cause of the ‘meltdown’ and whilst it is indisputable that across the globe debt levels are too high and too much debt is unsecured, managed debt is a critical component in almost all business models.  Football is no different and I would suggest debt has been part of the way in which football has financed itself since the day it went professional.  Of course, Platini’s headline is crazy and if he really means ‘no debt’, then that’s a worry.  The immediate impact would be no English representation in UEFA competitions, which come to think of it; might suit some of the newly promoted clubs who, according to yesterday’s Telegraph are debt free….Uefa’s new version of the Fair Play league? If Platini means ‘sensible debt’ then we need to define ‘sensible’.  I suggest Chelsea’s debts are sensible in the context of their owner's wealth.  I would also suggest that there’s no one better placed to make that call on ‘sensible’ than the borrower and the lender. He should also be aware that I suspect all clubs, as we do, manage cash flow and debt diligently, and on a day-to-day basis. Premier League club’s are very well aware of debt issues.

Equally misguided and unenforceable is a ban of foreign ownership.  Again, as the suggestion is so unworkable, I cannot believe this quote has not been taken out of context.  At Manchester United, the pre-Glazer furore was vocal and often venomous.  Post-Glazer, has there been loss of identity? values? heritage and tradition? Clearly there’s been no let-up in success. There are good owners and there are bad ones.  Good ones understand what makes a club tick; good ones appreciate heritage and tradition; good ones have the vision to make progress. Nationality is not the issue.

Player wages have been near the top of the media agenda for almost two decades and whilst it is vital that clubs manage and control wages within affordable parameters, it is indisputable that the players create the value in our sport.  Broadcasters and 40,000 Evertonians pay hard earned cash to watch Mikel Arteta and mllions of kids want to be Mikel Arteta.  Supply and demand are powerful forces.  Putting aside the legal enforceability of salary controls, it’s well-discussed that football is the only truly international sport and any salary cap has to embrace an entire sport - it does in the US and it does in Rugby League.  A Premier League-only cap will almost certainly drive players abroad which in turn will turn our ‘business circle’ in the other direction – reducing the attractiveness of the league, its ability to develop and recruit the best players and, ultimately perhaps, its financial well-being.  My over-riding comment on salary caps relates to personal experience.  Again in a previous job, I worked on two leagues in southern Europe – both had asked ‘to be like the Premier League’. Let me tell you, I would not like to be the person policing that cap – turning over accounts and telling club presidents what to do. I value my well-being too much.

Finally, the fan-ownership model has been put forward on many occasions as the mechanism to ‘give back the Club to the fans’.  Besides the small matter of raising funds, and, as we know hundreds of millions of ‘funds’, whether we like it or not, fan or customer ownership, as far as the UK goes, is an alien business model.  And perhaps that’s at the heart of it? Again like it or not, football is a business, commanding huge revenues, employing household names and embracing significant economic and social responsibilities. 

In my view, we (fans) cannot accept the cash to build stadia and invest in players and then turn around and dictate how the business is run. We cannot have our cake and eat it. The best way to run such businesses –football businesses, is the same way it is done in any other business – the long-established and rigorously tested corporate model - regulated properly with effective checks and balances – the banking sector perhaps excepted! 

I’d add two key things in conclusion, firstly, any business, any football club that does not listen to its customers or fans and does not respond to their needs and demands will fail. In that sense, in my opinion, there’s inherent and genuine fan ownership in every successful football club.  Secondly, the Premier League is where it is today – the most lucrative and coveted league in the world, largely as a result of its integrity and its transparency …it is well regulated and to date, it has never allowed complacency to threaten its future.

Latest Blogs by Robert Elstone

Steve McClellandGood article. Interesting remarks about fans input, the majority of us voted to move to Kirkby (if possible), while a small group are attempting to derail it at every chance. I sincerely hope the club listens to us, the silent majority, when considering our future.

Saturday 11th October 02:58 Report Comment
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