Date: 29th May 2010 at 9:27am
Written by:

Dave_S139 on the money lending culture that football finds itself trapped in. Something that has seen us suffer seriously as a result.

A less than prudent attitude to spending has resulted in a shift of emphasis as far as club ownership is concerned. Long gone are the days when local businessmen could organise themselves and run their club. Enormous operating costs now prohibit anybody outside of billionaire status from buying and running a top club. And even in the lower reaches of the professional game you need to be more than just a millionaire.

Because of this monetary upswing, agents have emerged, seizing an opportunity to help less than savvy clients maximise income and at the same time take a generous share for themselves. And player’s incomes have now been talked up to levels that many regard as obscene and a major part of the game’s problems. Shrewd local businessmen feeling the wind of change have given way to more and more overseas owners and football has lost a breed of owner who had a genuine feeling for their area and the people which their club represents. Today’s owner, whilst mega rich on paper, can only relate to the P&L Account.

Attendance at games can be occasional and communication with what should be their most valuable asset, the fans, is made through a third party. So what is their motivation? If they have little interest in football and no loyalty to the club then how do they gain added value from getting involved in the first place? With little true investment taking place money must be made either in an underhand way or through lending activities, taking a return by way of an interest rate. We know that the latter was true at Portsmouth (where 15% has been mentioned) and I suspect that there are many similar scenarios operating throughout our game as we speak.

And therein lies part of the long-term problem. Most clubs can no longer sustain their own existence. Fans have become less important with TV deals being the prime source of income but even this revenue is insufficient to meet the financial demands placed on clubs by a combination of players, agents and, ridiculously, the owners themselves. The assets, including players, become mortgaged as security on the loans provided by the owners and, when the novelty wear’s off or a more lucrative use of cash is found, the club is expendable and the loans are recovered by asset stripping. This is a where Pompey find themselves but somebody had to be first into the spotlight.

Football in general is suffering and the game in this country needs regulation that requires genuine investment to be firmly on an owner’s agenda before they take control. Yes, that may put people off and everybody may have to lower their expectations but player’s will no doubt still be well paid compared to the average man in the street and in particular those that for years until now paid the player’s wages – the fans.

The Premier and Football Leagues need to know an owner’s intentions. How much money?, What is the source?, How do you plan to spend it?, What is the business plan? Football Clubs should be like any other business but they are different. They offer a ready made opportunity to grow a business quickly as they are already high profile and have a loyal customer base who are unlikely to shift to another brand even if temporarily they have been discouraged from parting with their cash in the short-term. They can be tempted back but the cost of attending games has risen and the fans are simply lining the pockets of those that are killing the sport.

Football should welcome anybody that wants to come into the game after seeing a development opportunity, invest and develop all or a part of it and then if they decide to cash in and sell up, making a return on what they have spent, then fine.

Pompey are primed for such a person. Invest in the Stadium or the new training facility or both, increase the value of the business and then sell for more than it cost to buy. It’s a pity but that almost seems too much to ask until football somehow escapes from the money lending culture that it has become trapped in.

Written by Dave_S139.

The views within this article are the views of the individual who wrote and submitted this piece, sometimes solely theirs. They are not necessarily shared by the Vital Pompey Site Journalists.

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8 Replies to “Football trapped in a culture of money lending”

  • I know I have gobbed off on this before, but football is run by agents and players, all the time players can earn a years salary in a week and an agent gets a 250k fee for negotiating deals, football will stay broken, Pompey are the epitome of football as a whole, the Premiership is like Disney’s castle cuilt on a thin layer of ice, sooner or later something will give

  • I have never understood how a lad from a working class home destined to become a plumber or a postman, needs to be offered such vast sums of money to do what he would do for nothing. In my “football world” a player would earn around 3k a week. For every week that he works for me, I would put another 3k into a trust fund for him, so that by the time he retires (say age 32), he has a very nice pension/trust fund and a lump sum to spend how he likes. (Win bonuses would also be reflected in how much was put away for him, thus giving him the incentive to move his backside EVERY week). I wouldn’t have turned that down when I was 18, would you?

  • Well written good article this, my only point is I can confirm in my business ( very large Commercial, Property and sports Developments) anything between 13% to 17% sometimes even 19% is the currently standard commercial loan rate offer: therefore your suggested 15% is bang in the middle and hardly exhorbitant. Rug and I were discussing if a trust ownership is realistic these days and to me your article demonstrates it probaly isn’t.

  • Well put, Dave, but such benefactors are few and far between nowadays. Gandor, I agree totally with that (I’ve always argued similarly in respect of film stars, pop stars etc.) But success is always the driving force behind the obscene wages. Look at what H&W pay their players in spite of their lowly existence.

  • russellm; yeah, point taken about the interest rate. 15% had seen a lot to me but obviously it isn’t. I would definitely prefer that an owner came into a club to earn their money in a way that is beneficial to both parties and certainly the money lending route hasn’t done Pompey or Hull or Palace (and others) and favours. Idealistic I know but I do think the PL need to take more responsibility if they want the power that they seem to desire within the game.

  • yep, a very well written article dave, thanks for sharing it. i, like paul have ranted about similar thoughts in the past – football needs a club to ‘go wrong’, altho i do not think the things that have gone wrong with us will make much difference in the grand scale of things and football will continue to eat itself alive until the arse DOES – and it will, eventually – fall through…

  • Excellent article, which highlights how what happened at Pompey is part of an overall malaise and a culture that is threatening to push football clubs into oblivion. And its horrifying when its your club that is threatening to be the first to go. It all went horribly wrong when the businessmen decided that football was something they wanted to own and took it away from the ordinary people who’s game it always was and always will be. Its not just a business, and if the ordinary people stayed away, there would be nothing. Pompey are by no means unusual in what’s happened and perhaps one benefit of going down will mean we’ll not be in the same spotlight anymore as we recover. Football needs to sort it’s act out and fast, and yet despite whats happening at PFC, I don’t see it happening.

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