Wednesday, 15 August 2012

Everything that's wrong with football...

Short-termism at it's very worst.  Prepared to risk a clubs long term security for fleeting success.  Colossal remuneration for a player that isn't even proven to provide success.  

I can see why Big Sam wanted Andy Carroll, he does fit his style, as does Matt Jarvis, the two together should be an effective partnership.  But £17million and £100k a week for someone who's only scored 38 goals in 133 club games seems excessive for a big club with good finances, let alone one that's only been promoted this season and was struggling financially.  "The Manager really wanted him" should never be an excuse, they are the people with the financial experience, I'm sure the Manager would love Lionel Messi in his side, but their job is to tell him that they can't afford to bring him in.

David Beckham comes with his very
own logo.
I'm not one of these people who claim that all footballers are overpaid.  If you look at their Marginal Revenue Product (MRP) some are actually underpaid for the value that they bring to their clubs... however lots are overpaid as a result of this.  They see stars who bring in lots of money for their getting paid large salaries so they expect to receive them too.  (Think about it would you be happy if your colleagues at work were getting paid multiple times that you were?)  Back in 2003 David Beckham signed for Real Madrid for a cool £24.5 million.  A year later he had already accounted for over 1million shirt sales, in fact around 50% of shirts sold in that period by Real Madrid had "Beckham" and the number "23" on their back.  This is in addition to his contribution on the field as well as other merchandising and the additional attendance from having stars like him in their side, all of this meant he had a higher MRP than almost anyone in world football so deserved his high salary.  The difference here is Real Madrid could afford to pay this because of the income they were able to generate and he had more than that value to the club.  I doubt Andy Carroll could create an additional £100k a week for West Ham as well as repay the large transfer fee.  

Living beyond their means has already hurt so many clubs, Portsmouth for example, are currently having to field basically a youth team after years of chasing glory left them in liquidation and they had to release all of their senior players.  It's not just confined to England, up in Scotland one of the biggest clubs, Rangers, are currently starting life in the bottom tier of their professional football leagues after they were demoted following liquidation. 

If a team can win a competition and then play in Europe the
next season, getting a huge increase in revenue as a result and
still go bust, something is wrong with the system!
For some reason many football clubs think racking up debts that they will never be able to afford to pay is a viable way to run a business, it isn't.  This spending is not sustainable - creditors like HMRC shouldn't allow any delay in their payments.  I find it remarkable that they let some of these clubs build up such high debts in the first place, paying tax and national insurance should never be optional.  Nor should smaller local suppliers have to suffer because clubs owe such vast amounts to each other and their stars whom apparently get priority.  

I think UEFA's fair financial regulations are a reasonable start, but I worry they don't really have any bite.  I would like it if the Premier League or FA also introduced something to ensure that clubs couldn't live beyond their means as to my mind, looking at plenty of club accounts I wonder how they can seriously be treated as going concerns.  I don't think the English leagues have been strict enough with those clubs that have gotten into difficulty, perhaps Scotland got it about right with Rangers, but maybe they should have had to start from scratch?


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