PART 3: NOT BUSINESSES AT ALL
When business people look at soccer, they are often astonished at how business-like the clubs are. Every now and then one of them takes over a club and promises to run it “like a business.”
Alan Sugar, who had made his money in computers, became chairman of Tottenham
Hotspur in 1991. His brilliant idea was to make Spurs live within its means. Never would he fork out 50 billion lire for a Vieri. After Newcastle bought Alan Shearer for $23 million in 1996, Sugar remarked,“I’ve slapped myself around the face a couple of times, but I still can’t believe it.”
He more or less kept his word. In the ten years that he ran Spurs, the team lived within its means. But most of the fans hated it. The only thing Spurs won in that decade was a solitary League Cup. It spent most of its time midtable of the Premier League, falling far behind Arsenal.
Nor did it even make much money: about $3 million a year in profits in Sugar’s first six years, which was much less than Arsenal and not very good for a company its size. Sugar’s Spurs disappointed both on and off the field, and it also illustrated a paradox: when business people try to run a soccer club as a business, then not only does the soccer suffer, but so does the business.
It is in fact almost impossible to run a soccer club like a profitmaking business. This is because there will always be rival owners like Roman Abramovich or the Sheik Mansour who don’t care about profits and will spend whatever it takes in the hope of winning prizes. All other club owners are
forced to keep up with them. If one owner won’t pay large transfer fees and salaries, somebody else will, and that somebody else will get the best players and win prizes.
The Fall of Arsenal can also be attributed to the club adopting a business mentality.
Making profits deprives a club of money that it could spend on the team. One reason Bundesliga clubs rarely do well in the Champions League anymore is precisely that they make profits
The business of soccer is soccer. Almost all soccer clubs that are not Manchester United should ditch the fantasy of making profits. But that doesn’t mean that they should continue to be badly run. The weight of money that now washes through soccer demands a more business-like approach to managing cash. We shall see if Financial fair play will change this.
Soccer clubs need to know what they are. They shouldn’t kid themselves that they are S&P 500 companies. Rather, they are like museums: public-spirited organizations that aim to serve the community while remaining reasonably solvent. It sounds like a modest goal, but few of them achieve even that.
Check the following links on Deloitte’s ranking of Football clubs finances and a few links on financial fair play.
Deloitte football money league:https://www2.deloitte.com/uk/en/pages/sports-business-group/articles/deloitte-football-money-league.html
Uefa financial fair play:http://www.uefa.com/community/news/newsid=2064391.html
Highest earning football clubs:http://www.businessinsider.com/the-20-richest-football-clubs-in-the-world-2018-1?IR=T
Premier league financial fair play:https://www.premierleague.com/news/102374
Manchester United and Real Madrid have the most finances in the world check their financial results below
Manchester United Financial Results:http://ir.manutd.com/financial-information/annual-reports/2017.aspx
Real Madrid Financial Results:https://www.realmadrid.com/en/members/member-card/annual-reports
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The information was adapted from soccernomics