Latest Items

SAINTS POST BIG LOSS – 2/12/08

Southampton have announced a loss of £4.9m in the last financial year even after making £12.7m through player sales. Saints PLC chairman Rupert Lowe revealed that at one stage the player and coach wage bill was a huge 81 per cent of the club's turnover. Also in the Southampton Leisure Holdings plc figures for the year ending 30 June 2008 was the revelation that the Championship club's overdraft peaked at £6.3m during the summer. In a statement released to the Stock Exchange, Lowe, who along with football board chairman Michael Wilde didn't return to the club until May, laid the blame for the figures at the door of the previous board. He commented, 'Since returning in May, the current Board has worked tirelessly to bring our costs more into line with our dwindling revenues. We have done this throughout the Company where possible, but the nature of player contracts means that the process cannot be completed instantly. This work will continue, in discussion with both our loan note holder and Barclays Bank, on whose support we remain reliant.

Southampton is a classic example of what happens to a relegated Premiership club when the parachute payments run out, compunded by the need to service a long-term debt on the new St.Mary's Stadium. The club is reliant largely on young players, many produced through its Academy. Although recent results have been encouraging, relegation still remains a possibility. Not all fans welcomed the return of Rupert Lowe to the club and he noted, 'We are not currently strong enough to indulge the small, but vocal, negative elements of our support base and need everybody to pull together which we recover our financial strength. This is not a good time to be exposed to too much debt, particularly if revenues are likely to be adversely affected by an economic downturn.'

LEEDS TURN THEIR FINANCES AROUND – 30/11/08

They may have been knocked out of the FA Cup by non-league Histon, but the financial position at Leeds United is looking a whole lot brighter. In May 2007 the club owned £35m to a variety of creditors, entered administration and were awarded a ten-point penalty that effectively relegated them to League One. Owner Ken Bates then persuaded the administrators to sell the club to a new company owned by Ken Bates. Eventually Leeds had to accept a 15 point penalty in League 1, although as a Football League spokesman commented at the time, 'People don't get their debts paid and that's not good.' Last week Leeds announced that they have made a substantial £4m profit in the 14 months to 30 June. This is certainly a considerable recovery, although the club enjoys a large support base reflecting the size of the city and its successful days in the top flight.

WEST HAM TRY TO REDUCE BILL – 30/11/08

Some time ago we forecast on this page that West Ham would have to pay compensation to Sheffield United over the Carlos Tevez affair, but the Blades would not get as much as they hoped. That is the way it looks like turning out. The Court of Arbitration for Sport in Lausanne is not going to look at the issue, so it will have to be resolved in the UK, but probably through an out-of-court settlement. West Ham has had access to United's books, allowing them to work out the real cost of relegation. It would appear that the Blades suffered a drop of about £8m in income from their football activity after being relegated from the Premiership two seasons ago. Overall income fell by £12m and ticket sales by about £1.5m, but then costs, particularly wage costs, are lower outside the Premiership. Sheffield United claim that the fact that a £2.7m profit turned into a £3.5m loss following relegation can be attributed to the breach of Premiership rules by West Ham in their signing of Tevez which helped to keep them in the top flight.

West Ham have made it clear that they will use every legal avenue to contest the ruling, delaying making payments. This is a perfectly legitimate tactic and an understandable one given the financial problems they may face after the effective collapse of the Icelandic economy. West Ham have engaged Paul Chaisty, QC and Wilson Horne, a barrister, both from Kings Chamber in Manchester, who are scrutinising every element of Sheffield United's income and expenditure to estimate the cost of relegation. Should the Hammers find grounds for driving down Sheffield United's claim of £60m (which takes account of the effects of a second year of relegation) it is possible that the Blades might be willing to settle out of court. As we originally suggested, compensation of around £10m could be closer to the mark. This would give the Blades a substantial sum which could boost their promotion hopes, but would not drive West Ham into administration and even threaten the existence. After all, the fans of West Ham were not to blame for the mistakes made by their board. Rivalry between clubs is one thing, but threatening another club's existence is another. One may question the whole way in which no points deduction was originally awarded, which would have surely been the most appropriate penalty and has led to the present difficulties. This matter needs to be resolved sooner rather than later for the good of football.

CREDIT CRUNCH STARTS TO HIT MATCHDAY REVENUES – 23/11/08

The standard assumption in the sports economics literature is that demand for tickets at top flight clubs in any sport is relatively inelastic, i.e., relatively unaffected by changes in (real) prices. That may apply in normal economic conditions, but we are now in what is probably the worst economic downturn since the 1930s and football cannot escape unscathed - although that does not mean that the most doom-laden predictions will be fulfilled. Some of the effects have been masked by the fact that season tickets were bought last summer before the economic crisis hit home. Attendance figures include season ticket holders whether they turn up or not. 'Walk up' matchday sales were once not available at top clubs, but Liverpool now regularly put seats on general sale, while Aston Villa - despite their current success - cannot get gates up to last year's average of 40,000. The prawn sandwich brigade is being hit hard as well. Catering revenue at the Emirates is well below expectations. American company Delaware North paid £15m up front for a 20-year contract only to find that many executive box holders who pay £100,000 a year for the privilege are not willing to shell out another £100 for a pre-match meal. For the first time, the Gunners have put Champions League seats on general sale this season.

Deflation is forecast, but for now many goods and services are still increasing in price. The Virgin Money Football Fans' Inflation Index showed a 21 per cent rise in match day costs since last season with an estimated outlay of £106.21 per fan each match day, the first time the figure has gone about £100. Train fares have increased above the rate of inflation and are due to go up again in January. The Football Supporters' Federation reckons that fans are cutting down on their stadium spending with more taking their own food and flasks (never a bad idea at many grounds given the quality of the food and drink on offer). Bolton Wanderers have made a free beer offer to early arrivals at the Reebok, are providing free travel to away grounds and have slashed the price of junior season tickets. Efforts like this can help, but more depends on the general state of the economy. For example, falling mortgage interest rates would help, although so far the cuts in base rate have not helped many house buyers. Probably not much of the fiscal stimulus package will help football.

GAP BETWEEN CHAMPIONSHIP AND LOWER LEAGUES TO WIDEN – 23/11/08

The Championship will get a big boost next season from a new television contract, but the gap between it and the lower divisions of the Football League will widen. This may revive talk of a two division Premiership with no or limited promotion to the lower leagues. A new contract will increase the broadcasting income of the Football League from £32m a year at present to £88m. Under a long-established formula, Championship clubs will receive 80 per cent of the extra money from BSkyB and the BBC, but League One and Two will receive only 12 per cent and 8 per cent respectively. At present Championship clubs receive £1m each in television income a season, League One teams £375,000 and League Two sides £250,000. The figures for next season have not been finalised but the breakdown is expected to be around £2m for the Championship, just over half a million for League One and about £400,000 for League Two. The Football League's answer to critics is that the disparity is 'nowhere near the gap between the Championship and the Premier League, and yet you see a club like Hull reaching the Premier League and doing well.'

Small clubs argue that the task of reaching and remaining in the Championship will now become more difficult, and the game's hierachies even more fixed. There is certainly evidence to support such a trend, although other factors apart from television income are at work. Some ten years ago smaller clubs such as Crewe Alexandra, Gillingham, Grimsby Town, Rotherham United, Stockport County and Tranmere Rovers could not only reach the second flight, but were able to stay there for at least a few seasons. In the last two seasons, clubs of a similar size are doing much worse. Southend were relegated after only one season in 2006-7, while Scunthorpe and Colchester United came down last May after one and two seasons respectively. Doncaster Rovers are struggling this season (although Nottingham Forest, a much bigger club, are not doing much better). Mark Maguire, managing director of Stockport County, says an immediate effect of the TV deal is to make League One clubs 'desperate' for promotion this season in order to gain the extra money immediately and not be left behind.

John Bowler, the chairman of Crewe Alexandria, thinks that the increasing number of foreign owners makes getting rid of promotion and relegation more likely because such owners have 'less affinity with our national game' and less regard for the role smaller clubs play. However, scrapping promotion and relegation would provoke a major fans' revolt as it is out of line with British sporting tradition. Reverting to the traditional model of two up and two down is more likely. Indeed, when there was a third division north and south, only one team from each league could escape each season which did not make for a very interesting competition and led some clubs to stagnate. However, one has to remember that there are some major challenges that many of these small clubs face. Crewe and Stockport have to compete with the two Manchester clubs; Gillingham and Southend with the nearer London clubs (especially Charlton and West Ham respectively); Rotherham now play in Sheffield and have to compete for fans with the Blades and the Owls. Only Grimsby are really a 'stand alone' club (and they actually play in Cleethorpes). Not everyone can be a big club and not everyone wants to be.

POMPEY'S NEW STADIUM IN DOUBT – 21/11/08

Portsmouth's ambition to move to a spectacular new waterside stadium could hit the rocks because of the club's need to include shops in the development. Bankers interested in financing the £100m scheme have told the club that there must be a significant retail element along the 36,000-seater ground and housing, or the necessary cash will not be available. With the credit crunch biting the club have changed their plans to include shops, a hotel and supermarket. But the city council thinks such major changes would almost certainly spark a full-blown public inquiry and fears a new shopping development could drain the life from the city centre. The council fears shops at the development could threaten Gunwharf Quays and the proposed Northern Quarter city centre development. However, the club's executive chairman, Peter Storrie, insisted that there would not be direct competition as 'It's other types of retail that will just make it profitable for us'. The leader of the City Council, Gerald Vernon-Jackson, responded, 'From nobody else would we look at an out-of-town shopping centre, but because it's the football club we will work with them on it.' However, he didn't offer too much hope: 'Ministers will be unhappy about out of town shopping because of the effect on city centres. It will be a public inquiry and ministers will make the decision.'

A resolution to the takeover bid for the club is forecast within 10-14 days. Admittedly, this forecast comes from Mike Makaah of Prosports International, a South African sports management company which is one of the intermediaries fronting the bid. He argued that the revised plans for the new stadium made the club a better prospect: 'The commercial element is a serious point of interest in the deal.' Makaab refused to name any of those making the offer, although he ruled out Johann Rupert, one of South Africa's richest men (linked with a possible buyout of Newcastle earlier in the year). Makaab continued. 'None of them are football me at all - and none of them are involved in gold mining. What interests them about Portsmouth as opposed to any other British club is that it is the only Premier League club in that part of the world.' That honour once belonged to Southampton, who built a new stadium on the back on it and are now burdened with debt and may join Leeds and Leicester in League 1 (assuming those last two clubs don't get promoted which they may do). What the buyers are possibly overlooking is that Portsmouth is probably the poorest and most socially deprived city in southern England, despite recent efforts at regeneration and the success of the University.

MORE UNCERTAINTIES AT NEWCASTLE – 17/11/08

Long suffering Newcastle United fans face further uncertainties about the future of the club. Two American companies are said to be in the market to buy Newcastle. The usual broker in such deals, Keith Harris of Seymour Pierce, has described the potential purchasers as 'wealthy investment funds' and the 'people behind them [are] first-rate', but nothing is guaranteed. There have been suggestions that Ashley may be prepared to stay at the club, working in tandem with local businessmen. That possibility will upset many fans, with the newly formed Newcastle United Supporters club threatening to step up their boycott of official club merchandising at Ashley's leadership. Ashley bought the club for around £140m and spent another £100m reducing debts. He is alleged to be seeking a price of around £280m which would give him a good profit on the deal. Whether he can secure such a sum remains to be seen. Newcastle fans would like the whole matter sorted in time for Christmas.

FIERY AGM AT NORWICH – 16/11/08

Nearly 440 fans attended the annual general meeting of Norwich City and remarks made by Delia Smith attracted a subsequent clarification from would-be investor Peter Cullum. It emerged there was no money available for new transfers and Peter Cullum's potential takeover deal was dead in the water. The club has appointed Keith Harris of Seymour Pierce, the 'Mr Big' of football takeover deals, to try and find new investment. But this will not be an easy task, illustrating the dilemmas that clubs of the size of Norwich face despite their solid fan base and historical track record. As Delia commented in reply to a question, 'What has changed is the state of football. It has sold itself to money and anyone outside the Premiership is going to struggle without billionaires and millionaires.'

Delia Smith once again told supporters that she and her husband Michael Wynn Jones would 'be very happy to stand aside' as majority shareholders if someone came along with an offer to buy them out. Delia also stated that she was never made an offer for her majority shareholding by Peter Cullum. An emotional Delia spoke of her 12 years at Carrow Road and said: 'The lowest point to date was last summer when we were not allowed to speak to our supporters with regards [to] the media circus week after week. It was an extremely difficult time and the thing which hurt the most was not being able to speak. The reason we could not speak was we did not want to compromise an offer which might come along.' She added, 'Michael and I have spent a lot of time, hours and hours, we have had conference calls, we have had meetings. We have tried everything we can. I, at the age of 67, am standing up to do a great deal of work this year I hadn't planned to do because we have to find £3m this season and go out to earn it.'

Supporter Rob Emery told the meeting, 'I should be reassured by the fact you are trying, but my concern is I can hear nothing new. The issue I have is that in the 12-year tenure of this board you have managed to attract £2m in investment which would have been £4m if the Turners had stayed. That cannot give confidence you are going to find millionaires and billionaires to invest. The thought that a team which can only reach 16th or 18th on an £8m wage bill having a £5m wage bill is a little bit frightening.' Delia replied, 'The truth is that it is not just £2m. That is new investment, but we have invested quite a lot of money.' Another supporter said that the hope of major investment had raised the hopes of fans and said the atmosphere in the stands had changed because of the raised expectations.'

Peter Cullum subsequently confirmed that he did not offer to buy the shares of the majority shareholders. He explained the £20m he offered would have been in return for new shares and that money would have been used to buy players, but he had never offered to buy out the majority shareholders. He added, 'From my perspective, discussions have been terminated and I shall watch anxiously, as a lifelong supporter, at the disappointing results on the pitch.' One view would be that a gift horse has been looked in the mouth, but there is no definitive view on why the negotiations, brokered by club sponsors Aviva, broke down. As things stand, the AGM heard that the club's 'dire' situation financially meant that the transfer chest is empty and manager Glenn Roeder will have to rely on selling players and donations from supporters to boost the playing squad in January.

Tim East, a supporter and county councillor said, 'I think the appointment of Keith Harris to examine the possibility of future investment is a deliberate diversionary tactic to deflect criticism from the board. If he can't find a buyer for Newcastle [which in fact he probably will], how is he going to find a potential investor for little old Norwich City, especially in this current economic climate? I think the board needs to go cap in hand back to Peter Cullum, admit they made a mistake and say we need you back on board.' In fact, not everyone is interested in buying a club as big as Newcastle. With its large catchment area without any league level competition, Norwich would be quite an attractive prospect to an investor seeking development potential. Meanwhile, one group of fans has launched an online petition, saying they would be prepared to pay more for their tickets in return for better performances on the pitch. That is certainly a novel approach. The more general point is that Norwich's problems are not that unusual.

FIRE SALE AT 'POOL? – 12/11/08

Keith Harris, the chairman of investment bank Seymour Pierce, and a key intermediary in football takeovers, believes that the American owners of Liverpool could be forced to sell leading players if they are unable to pay off the club's £350m debt. Although George Gillett Jr and Tom Hicks have an option to extend the 25 January deadline for repaying the loan by six months, it is far from certain that an extension will be granted. Their main lenders, Royal Bank of Scotland (RBS) and Wachovia are two of the banks worst hit by the global economic crisis. With the Government holding a 60 per cent stake in RBS, MPs have piled in and lobbied Gordon Brown to prevent the bank from giving the Americans extra time to repay the loan. It does not seem that the Americans can fund the much needed new stadium. The best way forward might to be take the £500m offer to buy the club from Sheikh Mohammed, the ruler of Dubai.

Harris also said that he was struggling to find a credible buyer for Everton in the face of the economic downturn. He commented, 'The demographics of Liverpool as an area are not hugely compelling. It is not a very wealthy city and Everton share the city with another club which has been in the vanguard for the last decade. They both have a stadium to build, so the economics need a lot of looking at, whereas Newcastle is a one-club city with a fabulous stadium.' Harris implied that the two Merseyside clubs should share a new stadium, but this continental model does not find favour with English fans, especially those in Liverpool. The identity of clubs is closely bound up with their stadium. Many have moved into new ones, but it has not always brought footballing success, as the examples of Leicester and Southampton testify.

PROMOTED TEAMS NEED CAREFUL BUSINESS STRATEGIES – 11/11/08

Getting promoted to the Premiership can seem like a bonanza, but getting relegated can bring a cold dose of reality. Once the parachute payments run out, life becomes very difficult, as clubs like Leicester and Southampton have found. Recently we reported in depth on the prudent strategy being followed by Hull City. But what of the other two newly promoted teams? For Stoke City it's a long awaited return to the top flight, but West Bromwich Albion have the reputation of being a yo-yo team. Therefore it's not surprising to find their finance director Mark Jenkins telling FC Business, 'We never look at a one-year budget. We operate on a three-tear plan, it's the only way to work so that the decisions we make today, we know what the effect will be in three years' time. West Brom also make a point of investing in their academy and their scouting system. Jenkins commented, 'If you don't have the huge resources of the teams in the top half, you must make the money you do have go as far as you can.'

The trade magazine for the football industry also voted Stoke City which, after a 23-year absence, is back in the top flight as a debt free club. There is a marked contrast between the very traditional Victoria Ground and the Britannia Stadium. Chairman Peter Coates has been able to finance the club thanks to his business, Bet365. Based in Stoke-on-Trent, the business is only six years old but is already one of the biggest online betting and gaming operations in the world. He has recently acquired a training ground for the club and is seeking to make it a first class facility. A planning application has been submitted to build a permanent structure and once completed it will become the club's new headquarters. Club director Phil Rawlins has recently purchased the franchise to an American soccer team, the Austin Aztex. Based in the Texas state capital, the team will act as a feeder club for Potters and will also be used to try and build up a global fan base for Stoke with pre-season tours in the States already planned.

SPRINGBOKS IN FOR PORTSMOUTH – 10/11/08

A South African consortium in the gold mining business is believed to have approached Portsmouth with a view to buying out owner Alexandre Gaydamak. At one time the asking price was £60m, but the financial crisis and the club's debts and large wage bill have made a sale more urgent. It is believed that wages represent more than 90 per cent of turnover. Attempts by Keith Harris, chairman of Seynour Pierce, to find a buyer have been unsuccessful, even at a knockdown price of £18m. The loans taken out by the club to fund player purchases have been a major obstacle. If the South African consortium is successful, they will represent the first owners from a so-called 'emerging' country in the Premiership.

NORTHWICH GROUND IS SAFE – 10/11/08

When Northwich Victoria played at the Drill Field it was the oldest continuously used football ground in the world. Now they play at the Marston Arena and they will not be forced out of their new home because of the collapse of the company that owns it. Beaconet Ltd., owned by former chairman Mike Connett, went into receivership at the end of October. Its assets will be sold to pay off creditors. Under nornal circumstances, the stadium would be sold to the highest bidder, leaving the club homeless unless it could find enough money to buy it. But because of a lease signed by the club Vics are protected for the next 25 years. Northwich are named as 'successor tenants', meaning that anyone who buys the ground is obliged to let them remain. Rumours of a merger with neighbours Witton Albion have been dismissed. A groundshare has been mooted, but Witton own their own ground and would not want to leave.

FACEBOOK BID TO RESCUE CLUB – 10/11/08

An attempt is being made to rescue ailing Leigh Genesis by using social networking site Facebook. Supporters are preparing a bid for the stricken Unibond Premier side through the internet social networking site after club backer Dominic Speakman pulled out. Fans are being asked to share the team's running costs. A Facebook group called 'If Enough People Join We Can Buy a Football Club' has already attracted 800 members in just six days. The last straw for Speakman came when Wigan council reportedly told the Genesis owner it would cost £3,000 a month to steward games in their much-delayed new stadium.

SETANTA SEEKS NEW SUPREMO AS TV RIGHTS BATTLE LOOMS – 9/11/08

Setanta Sports is searching for a new chief executive of its British operations after the broadcaster fell foul of football fans for failing to sell highlights of England's win over Croatia to ITV. The broadcaster is also preparing to line up more cash from its shareholders, which include Goldman Sachs, to help to finance a bid to renew its Premiership television rights in the spring. Mark O'Meara, who was the chief operating officer running the British operation, has returned to his native Ireland where he will have a consultancy role. However, a Setanta spokesman emphasised that this was not because of the highlights row but to enable him to spend more time with his young family. Mark Mohan, commercial director, has also returned to Ireland in a non-executive role, but no information was made available about his family situation.

Setanta started life as a Dublin-based broadcaster of sports aimed at the large expatriate Irish community, but has expanded rapidly in the UK (initially from Scotland) and now derives most of its revenue from this side of the Irish Sea. At present the broadcaster has the rights to show 46 games a season, in a three-year deal worth £392m that expires in 2010. However, the next rights auction is due to begin in January, and the broadcaster is not yet profitable. Setanta Sports needs 1.7 million direct subscribers to make money, but has only about 1.4 million. It also generates revenue by allowing its sports channels to be included in Virgin Media's largest television package. That takes its subscriber total above 3 million, but it derives less revenue from the Virgin Media customers. Setanta has emphasised that it is not looking for an external stake, repudiating rumours that Disney's ESPN, BT or Virgin Media might take a stake.

INTERMEDIARY SAYS THERE WILL BE MORE GULF DEALS – 9/11/08

Amanda Staveley has emerged as a key figure in major deals with Britain and the Gulf States, recently facilitating the purchase of a 16 per cent stake in Barclays Bank for Abu Dhabi's Sheikh Mansour Bin Zayed Al Nahyan. That deal follows the sheikh's £210m purchase in September of Manchester City by means of Abu Dhabi United Group. Dubai's ruler, Sheikh Mohammed bin Rashid al-Maktoum, still harbours hopes she can purchase Liverpool for him. Ms Staveley is convinced that there will be more Middle East-funded deals for leading clubs: 'It is a business that can only be served by extraordinarily wealthy people. Football is strategically important to the Gulf. A lot of people watch football and the interest in football in the Gulf states is immeasurable.'

The 35-year old financier, who is about to gain residency status in Dubai, cuts a glamorous figure. She is the daughter of a Yorkshire landowner and an Olympic showjumper, and after dropping out of Cambridge, she borrowed money to open a restaurant in Bottisham, a village in between Newmarket and Cambridge. It brought her into contact with the Godolphin stables belonging to Dubai's ruling Maktoum family. Always immacutely dressed, at one time she dated Prince Andrew. She never takes a holiday and is more interested in closing deals than making money. We can expect more in football.

TERRAS TO SELL STADIUM – 9/11/08

Weymouth Football Club have announced plans to enter into a deal that could see the club move into a new stadium. The Blue Square Premier outfit will ask shareholders to approve a deal with Wessex Delivery Partnership. Under the terms of the deal, the club will continue to play their games at the Wessex Stadium until the new venue is built to Football League standards. The Wessex Delivery Partnership will only be able to call on the option to build on the site when they have consent on a new stadium for the club. Chairman Malcolm Curtis will continue to fund the club for the time being, but has made no secret of his desire to sell. The deal should ease the problems of the cash strapped club for the time being. Curtis himself owns the land around the stadium, having sold it to his own holding company for £500,000. It is believed that a price for the stadium has been agreed at £100,000, making the whole site worth £600,000. When Asda wanted to build on the site three years ago, the price quoted was £11.5m, but it will now be used for housing development. Curtis is a director of Synergy Housing Group, one of the largest social housing groups in Wessex.

TWO US INVESTORS IN FOR MAGPIES – 5/11/08

Two US-based investors are left in the race to buy Newcastle United off Mike Ashley. Both of them are believed to already be involved in the management of sports franchises. Seymour Pierce who are acting as advisers on the sale of the club have confirmed that the original field of seven potential bidders has been whittled down to two. It is believed that Mike Ashley has scaled down his expectations of what he can get from the sale following recent financial turmoil. Having invested £250m in the club, including paying off its debts, he now accepts that at best he could make only a small profit from the sale. It is understood that he would not necessarily take the highest offer available, but agree a sale to an investor with the better financial credentials. It is thought that any sale is likely to go through before the January transfer window in which any new owner would like to be involved.

The fact that the two main bidders are American is a development that has a significance beyond Newcastle United. I had thought that recent financial developments made it likely that we would see fewer American investors, also bearing in mind the difficulties have occurred in raising funds for stadium development at Liverpool. What I had perhaps underestimated was that the fall of the pound against dollar would make investment in sterling assets better value for those holding dollars. The one concern I have about American owners is that sport in the United States is organised on a rather different basis. 'Franchises' can be moved across the country and promotion and relegation does not form part of major American sporting competitions including soccer's MSL. However, although Liverpool offers an unhappy example of American ownership, and Manchester United a contested one, a Villa fan told me recently how pleased he was with Randy Lerner's stewardship at Villa. In his view, the combination of Lerner as owner and O'Neill as manager was a match made in heaven. Let's hope that passionate Geordie fans can get a similar result.

MEDIA HYPE SCARED OFF GULF INVESTORS – 4/11/08

Zabeel Investments ended their proposed acquisition of Charlton Athletic because the media hype it attracted threatened their preferred low profile. The timing of the global financial crisis was also a factor. The executive chairman of Zabeel, Mohammed Ali Ali-Hashimi, told wire services, 'All of a sudden it opened up a Pandora's box. People were talking about foreign ownership ... every other day we spent time denying this club and that club and it became out of control. We are used to doing things relatively under the radar and our focus became having to keep an eye on what was being written in the media.' Ali-Hashimi said that they have looked to buy Championship side Charlton because Premiership clubs were overvalued. He added that Zabeel would look at lower-profile opportunities without specifying if it would look at buying clubs in the future.

POMPEY LOOK FOR BUYERS – 3/11/08

Europe's richest man, Rinat Akhmetov, has turned down an opportunity to buy Portsmouth. An intermediary acting for the club is believed to have approached representatives of System Capital Management, the holding company that controls Akhmetov's other businesses, with a prospectus, but was shown the door. Akhmetov, who made his fortune in mining and metallurgical businesses, has been the president of Ukraine's Shakhtar Donetsk since 1996. Portsmouth last received £5m in compensation from Spurs for manager Harry Redknapp, who confirmed that the club's finances were 'a little bit tight.' However, executive chairman Peter Storrie has repeatedly dismissed reports of a financial crisis. 'We've said all we're going to say about finances,' he said last week. 'It's getting boring now. It's a boring, boring subject. The club is fine, move on. The owner continues to put money into the club.'

Last month Richard Caborn, the former sports minister, called on the Barclays Premier League to 'rigorously examine' any new allegations about the finances of owner Alexandre Gaydamak. Gaydamak is worth £100m according to the Sunday Times rich list. His father attracted some controversy after he moved from France to Israel after magistrates in Paris issued a warrant for his arrest over an arms deal. Gaydamak is believed to want around £40m for the club should he sell. However, debts believed to total around £50m have put off many buyers. There have been recent talks with a South African consortium which may be the same one that expressed interest in Newcastle. However, they have also been looking at Fulham and Charlton as better value buys.

ABRAMOVICH REALLY IS A CHELSEA FAN – 2/11/08

Roman Abramovich really is a Chelsea fan - and we have a 134-page ruling from Mr Justice Christopher Clarke to prove it. The ruling, dealing with a Siberian oil dispute, reveals a great deal of information about Abramovich's lifestyle. It emerged that as much as 92 per cent of the time he spent in England in any given year was specifically connected with Chelsea matches, rather than any personal or professional ties. Mr Justice Clarke rules that the club, on which he has lavished around £500m, was a 'hobby and a leisure interest'. 'It is not a business investment,' the judge determined. 'The sums that Mr Abramovich has given to the club far exceed any return that could possibly be expected.' The credit crunch has hit home at Stamford Bridge with manger Luis Felipe Sclorai being told that he will have to sell before he buys in the January transfer window. This may not be much of a problem for Chelsea, given the way they are playing, but it may tend to bring down transfer prices.

SPURS GO FOR NEW STADIUM – 31/10/08

Tottenham Hotspur have confirmed their intention to build a new 60,000-capacity stadium near their current White Hart Lane ground. The Northumberland Development Project will be a large-scale development including leisure facilities, public space and housing as well as the new stadium. The scheme includes the current site and adjoining land with the stadium largely sited to the north of the existing one. The Tottenham board have been looking at a range of alternative sites for some time, given a season ticket waiting list of around 22,000, but were conscious of the importance of remaining in the Haringey area. The number of alternative sites was quite limited and redeveloping the existing site was identified as the most viable way forward. The club has spent five years buying and taking options over property around the current stadium to permit a local development or gain the critical mass to achieve a substantial site sale as a contribution to relocation. So far this has involved 60 separate transactions including potentially 160 commercial properties at a commitment of £44m. The planning process is likely to begin next year, but the local council is supportive.

RECESSION HITS NON-LEAGUE CLUBS – 27/10/08

Non-league clubs are taking a big hit as the economy slips into recession. Conference outfit Grays Athletic have cut their players' wages by a 50 per cent payment deferral to avoid going into administration which is technically a breach of contract and allows players to leave. Workington managed to negotiate a voluntary 10 per cent cut. Despite riding high in the Ryman South, Folkestone Invicta are on the verge of financial meltdown. They have reported a downturn in matchday revenue and appealed for fresh sponsors to keep the club afloat. Blue Square South Eastleigh have had to deal with a £100,000 sponorship shortfall and have forced every member of staff to take a wage cut. Salisbury City fans raised more than £45,000 in a fortnight, but the club still faces a huge hole in its budget. They failed to replace the financial backing of former director Peter Yeldon who left at the end of last season. Their situation has not been helped by gates falling by more than 300.

Winchester City, who won the FA Vase in 2004, but have been propping up the Southern League, exemplify the problems that can arise. The club is facing the biggest crisis in its history as it approaches its 125th anniversary. It overspent its budget by tens of thousands of pounds last year. The cash crisis was caused by bigger bills including gas, electricity and water charges. None of the players are paid a salary and just claim petrol expenses, but the club still costs £80,000 a year to run. The challenges are very different from those in the Premiership. Acting chairman John Moody commented, 'Footballs are £40 each and we need a lot of those in a year. Kits are £500 a go. We used to darn socks in the older days but can't any more as nylon socks ladder.' It is hoped that a consortium of six business people will step in to save the club.

THE HULL PHENOMENON – 26/10/08

Hull City were tipped for an instant return to the Championship at the beginning of the season, but their victory against West Brom on Saturday made them joint first at the top of the Premiership before today's matches. So how does one explain the Hull phenomenon? I'm not talking about what has happened on the pitch. When I saw Hull in the Championship last season I did not think they were anything special, but clearly manager Phil Brown has weaved some magic. But what interests me here is the city of Kingston upon Hull and its economic geography. I recently visited it for the first time in many years for a conference held at The Deep aquarium. The nearby Marina was full of boats and there was some very attractive new housing along the waterfront. Driving through the city itself, however, it was clear that there was some problematic social housing whilst even the private housing stock was not all of the highest quality. Many of the more prosperous people connected with the city clearly live in nearby Beverley. The city is still recovering from some terrible floods. This was for many years the home of gloomy if penetrating poet Philip Larkin who had a love-hate relationship with Hull, as he did with most things in life, including his many girlfriends.

On the way into Hull you pass the club's sparkling new stadium. There is no doubt that the city council's decision to build this was pivotal. As befits such a relatively isolated city, Hull was the only place in Britain to have its own municipal telephone service - it still has distinctive white telephone boxes. When the telecommunications company was sold for £130m in 1999, the then council leader decided that £40m would be spent on building a new stadium. It would be offered, rent-free, to the city's football and two rugby league clubs. Hence, the club was not faced with the need to service debt on stadium loans that has brought Southampton to the brink of collapse. Adam Pearson, a former director at Leeds United, bought the club in 2001 and over the following six years, the team was improved and the club put on a sound financial footing. Having seen how debt crippled and then brought Leeds United to its knees, Pearson was determined that things would be different at Hull.

After just avoiding relegation in 2006-7, it became known that Pearson was ready to sell. Surrey-based entrepreneur Paul Duffen was looking for a football club to run. With his partner Russell Bartlett, Duffen explored the possibility of buying West Ham or Cardiff City. Then he travelled to Humberside to meet Pearson. He explained, 'There was a buzz about the place. The attraction of Hull was the potential. It was clear that this club could get much bigger. The city and surrounding area had a big population, the stadium is magnificent and it wsa a very well-run football club. We needed to buy the club and then have £5m or £6m; that figure would allow us to walk into the casino and play for the prize of a Premier League place.' Although the Championship is a very competitive league and has been the graveyard of many ambitions, the gamble has paid off. It is believed that Duffen and Bartlett paid £12m for the club and then invested another £6m in the team.

Success on the pitch can change a community's image of itself for the better. Hull as a city was known most for its failings, although that image was somewhat unfair: it is, for example, the headquarters of one of Britain's most successful specialist food processing companies, Cranswick. Nevertheless, the fact that Hull was the largest city in England never to have had a top flight club contributed to a negative image. With its cluster of museums which attract more visitors than those at York, Hull is developing a tourist trade which will be boosted by the profile that the success of Hull City provides. It allows the city council to spread a positive message about what Hull can offer investors. Philip Larkin's reflection, 'Deprivation is to me what daffodils were to Wordsworth' may become outdated. [The writer holds a substantial shareholding in Cranswick plc and is also a shareholder in Kingston Communications plc].

FIGURES DON'T ADD UP AT 'POOL – 26/10/08

Liverpool fans will be celebrating today's victory at Chelsea. The club has had its best start to its Premiership campaign for many years. The red half of Merseyside can realistically talk about securing the Premiership title. Off the pitch, things are less rosy. Of course, what with a holding company in Delaware (the state with a reputation for business friendly rules) and a Cayman Islands tax haven link, the corporate arrangements of the current owners would not win a prize for transparency. It would appear that Gillett and Hicks funded their initial purchase of the 'franchise' with a £298m loan from the Royal Bank of Scotland and American bank Wachovia. £174m of that money was used to buy the club from existing shareholders, a deal that brought David Moores, last of the family line to run the club, a cool £90m.

The initial loan was replaced in January by a £350.5m facility with the same banks. The plan was to load the whole debt on the football club, but chief executive Rick Parry and Moores (now honorary life president) invoked a 'whitewash clause' that required all board members to agree on debt deals. The compromise that was agreed was to let the football club have £105m, much of which has been used to buy players. The remaining £245m then sat with the Delaware holding company, Kop Football. The rates on these loans are about nine per cent a year so they will cost the club £25m a year. This is broadly equivalent to the revenue raised by last season's run to the Champions League semi-final. European performance generally represents the difference between breaking and even and making a profit at the club.

Supporters are concerned that the requirement to service debt will inhibit transfer spending, and could eventually prove impossible to sustain from current revenue. Share Liverpool, the supporters group with aspirations to buy the club on behalf of the fans, have used well regarded financial modelling software to forecast the club's financial performance. They predict annual losses of between £30m and £70m over the next five years as player costs increase. One note of caution is that the credit crunch could actually lead to a reduction in transfer fees and wages as clubs are less active in the market (see Chelsea story below). Share Liverpool argue that, on their figures, the club do not have a large enough stadium or commercial income to support their player and debt costs. Hicks and Gillett dispute these projections, which do seem a bit like worst case scenarios, and point to recent commercial deals with Paddy Power and Thomas Cook worth £10m as evidence that they are enhancing the club's commercial appeal.

Ultimately Liverpool's ability to compete on the highest level depends on moving to a new stadium, a project that poses the most serious questions about the stewardship of the current owners. They insist that their plans for a 75,000-seat stadium are on hold only until the worst of the banking crisis is over - although a global recession may make lenders unwilling to fund this type of project. What is not clear is where the £300m - £400m for the Stanley Park stadium is coming from. They already face the challenge of refinancing their loans next July, and it is difficult to see how they will be able to secure the debt against the club without providing fresh capital. Until they do, critics will argue that they are caught in a Catch-22 of their own design. Without a new stadium and the revenue streams it will bring, they cannot clear their acquisition debt, but may be unable to build one because of an inability to raise fresh finance.

So what will happen? In more difficult financial times, the idea of a shared stadium with Everton - which many figures in public life in the north-west favour - is bound to be revived, but it would raise a storm of protest from fans of both clubs. It may well be that Dubai Investment Corporation will yet buy the club once the financial position in the Gulf state is clearer. At the moment, there is some concern about a level of debt which is said to be near that of national GDP, as well as the slowing down of the property boom. However, it is believed that the acquisition of Charlton was stopped by the head of the royal family because he feared that its effective ownership by his son (albeit operating through someone else) would raise 'conflict of interest' issues which would threaten the purchase of the greater prize of Liverpool. I am far from sure that the conflict of interest rule would have stood up to a well funded court challenge, but in the present climate of questioning foreign ownership, that is publicity Dubai's rulers could do without. They care about their reputation which is one consideration that should endear them to 'Pool fans. Certainly, I would have been delighted to see them own Charlton.

CHELSEA AIM TO REDUCE RELIANCE ON BENEFACTOR – 26/10/08

Chelsea chief executive believes that the club will be less dependent on Roman Abramovich next year. The plan is to gradually let go of the lifeline provided by their Russian owner, although how these good intentions work out remains to be seen. However, no money will be made available in the January transfer window for big new signings unless there is a real emergency on the pitch. Plans to move away from the cramped ground at Stamford Bridge have also been put on hold, even though a larger stadium would generate more gate money on the Old Trafford model. Chelsea believe that they are on target to make a profit in two to three years time and that within a year they will be self-financing. These announcements have been greeted with a measure of scepticism among football analysts, given that Abramovich has pumped more than £550m of his personal fortune into the club in the form of interest-free loans.

Admittedly, the fashionable West London club does have a plausible strategic plan. The long term target is to turn Chelsea into a global brand like Manchester United where Kenyon was once chief executive. Within the last five years Chelsea has emerged as one of Europe's leading clubs, exemplified by their appearance in last year's Champions League final. This has led to increased ticket and television income, although the former is constrained by the size of the ground. The next set of accounts for the 2007-8 season are likely to show Chelsea smashing the £200m barrier. With the emergence of Manchester City as (potentially) the world's richest club, Chelsea no longer have that monkey on their banks. However, today's home defeat by Liverpool showed that the best laid and supported plans can go wrong on the pitch. It is so long since Chelsea lost at home that it is believed that the King's Road was plagued by dragons and the last dinosaurs were living in a swamp near Putney.

TWO TIER PREMIERSHIP IDEA REVIVED – 25/10/08

The idea of a two tier Premiership has been revived by Bolton chairman Phil Gartside. He proposes two divisions of 18 teams each, but controversially no promotion or relegation from the Football League, an arrangement that is usual in American sporting competitions. He argues that smaller leagues would solve the problem of the winter break and the England team. Given Bolton's situation, his views may not be entirely disinterested. However, he points out, 'It would even everything out and make it more competitive on that basis.' In the context of current criticism of the Premiership, it is a response that might appeal to the competiton's leadership. However, to make it acceptable there would have to be some promotion and relegation from the lower level to prevent the creation of a self-perpetuating elite (although some would say we have that already). However, it could be one or two clubs rather than three as at present.

CHARLTON DECISION A STRAW IN THE WIND – 23/10/08

The decision by Dubai's Zabeel Investments to pull out of their proposed takeover of Charlton has a wider significance than the future of the south-east London club. Zabeel made it clear that, contrary to press reports, they were not pursuing an interest in Everton or any other clubs. They put their decision not to invest in Charlton down to the worsening economic climate in the UK and the current debate about foreign ownership of clubs. This suggests that Andy Burnham's speech may have had an effect in the sense that prospective foreign investors may feel that there is no longer a political dividend from any investment and less prestige than there was, indeed possibly some reputational damage. There has also been some analysis this week that suggests that the Dubai economy has been more affected by the world economic downturn than was first thought, particularly in terms of the ratio of debt to GDP. This suggests that sovereign wealth fund countries may no longer be in the market for clubs and that the likes of Newcastle may find it difficult to get a buyer at an acceptable price.

THE MOST COSTLY BENCH WARMERS – 22/10/08

The Premiership's most costly bench-warmers have been revealed in a new list published by football website IMScouting.com. Heading the league is West Ham's injury-prone Kieron Dyer, who having played no more than two Premiership games since August 2007 has cost the Hammers an estimated £1.1m per game. He is closely followed by Manchester United's Gary Neville, who is only now returning to long-term action following a succession of long-term injuries. Since the start of last season, Neville has played just four Premiership matches, putting his estimated cost per game at £840,000. Manchester City fans won't be surprised to see the unfortunate Valeri Bojinov as their club's most costly non-performer. Since signing for the Eastlands club in the summer of 2006, Bojinov has played a mere four games due to injury, putting his cost to City at an estimated £480,000 per game. Other high profile names on the list including Tottenham's perenially-crocked Ledley King, costing an estimated £285,000 per game since last August. Louis Saha has cost Everton an estimated £87,000 per game while Dwight Yorke has been worth an estimated £58,000 a game since joining Sunderland. Football database site IMScouting.com created the list by calculating the ratio of estimated salary against Premiership games played amongst players at each top flight club since August 2007.

PREMIERSHIP FACES POLITICAL CHALLENGE – 19/10/08

The Premiership faces perhaps its biggest ever political challenge from what is in effect a combined front of the new culture secretary, Andy Burnham and FA chairman Lord Triesman. Everton supporter Burnham has been tipped as a possible future Labour leader and responding to the concerns expressed by some football fans should do him no political harm. Both Burnham and Triesman feel empowered by the political climate that favours greater regulation following what some commentators have trumpeted as the end of the Anglo-American model of free market capitalism, although they should perhaps avoid being as hasty as those who earlier proclaimed the end of ideology. Burnham insists that the government did not want to interfere in the running of the game and that it was for football authorities to decide how to address the issues. However, they have effectively been issued with a three month ultimatum by the culture secretary. The Labour Government has generally enjoyed excellent relationships with the Premiership and will ultimately feel constrained about destroying something that is important to the profit line of News International. However, that does not mean that there may not be some modifications to the model as the result of the discussions that will now take place.

Addressing the annual conference of Supporters' Direct, the body he once chaired, Mr Burnhaim laid out seven areas of concern, including transparency of club finances and debt, insolvency risks, the league's 'fit and proper person' rule for owners and the number of foreign players. 'Despite the levels of money in the game, football must be a sporting competition run like a business and not vice versa,' he said. He demanded a response from football's three English governing bodies - the Premier League, the Football Association and the Football League - in the new year. Though aimed across football's hierarchy, the thrust of his attack was clearly directed at the Premiership. His personal conviction is that the new wave of overseas owners and heavily-leveraged takeovers threaten to destroy the link between some clubs and their communities. He argued, 'The game is becoming increasingly polarised. The top clubs who build on global success are in danger of becoming detached from their communities.'

For many big clubs, of course, that detachment has already occurred. The caricature of the Manchester United supporter living in Guildford is a familiar one and there are certainly plenty of United supporters in Surrey who do not originate from Manchester. Arsenal supporters go to the Emirates from all over southern England and well beyond. It is very easily to slip into a nostalgic haze about fans walking to their local ground wearing rosettes and sipping steaming cups of Bovril at half time. There have always been some clubs that have been dominant. A student I am currently supervising for a dissertation on the political economy of football did not realise that Arsenal was a rich club in the inter-war period (hence the 'marble halls' of Highbury) or that a club like Charlton had a number of foreign players after the Second World War (from South Africa).

Nevertheless, the imbalances have become greater than in the past, particularly in terms of the 'top four' in the Premiership, although the Champions League is part of the story there. The 'fit and proper persons' test has been apparently insufficiently stringent in design and application. There are also ways that one could tweak the Premiership model to improve competitive balance, although none of them would be straightforward, given that the existing leading clubs are unlikely to support anything that undermines their success and profitability. Even so, the Premiership is facing a pressure to 'do something' and when that call comes from the media and politicians, it generally has regulatory consequences. Nevertheless, the Premiership could offer some concessions without undermining its basic model which really rests on a lucrative TV deal.

BT'S VISION – 19/10/08

BT shares have not been doing too well lately, not just because of the general state of the market, but because of concerns about topping up BT's pension fund. The former utility, still the leading fixed-line phone company in the UK, is looking for ways to boost its slowing revenue growth. This explains the importance of its face off with BSkyB over access to the satellite TV operator's premium content. Broadband has been BT's main domestic motor over the past five years, but the market is maturing. About 60 per cent of homes now have broadband. BT Retail is seeking to increase its revenue by selling services based around the broadband connection, and BT Vision is perhaps the best example of this strategy. However, BT Vision has just 282,000 customers compared with 9m at BSkyB whose appeal is rooted in its live football. Even the head of BT's retail division admits he is a customer of BSkyB because he is a fervent Liverpool supporter. BT Vision offers some Liverpool matches through a deal with Irish broadcaster Setanta, but BSkyB owns the live rights to more games, including all the clashes between the big four.

BT admit that it will be 'challenging' if not impossible to hit its target of having 2-3m BT vision customers by 2011 by organic growth alone. The company believes it would be easier to reach the target if BT Vision can offer its customers the live football available on BSkyB's channels, which should be possible under Ofcom's proposed wholesale access regime. An alternative strategy for BT is to bid against Sky for the TV rights to live football at the auction due in 2009. A BT bid for the rights is a possible option, although it would probably be done in conjunction with Setanta.

CONFLICTS OF INTEREST? – 19/10/08

Press reports over the weekend have suggested that Dubai based Zabeel Investments have lost interest in unglamorous south-east London Charlton Athletic, available at a knockdown price, and switched their attention to Everton. One possibility that does not seem to have been considered is that, given that this is the era of the soveriegn wealth fund, Dubai-based interests might buy both a Merseyside club and Charlton. Dubai Investment Corporation have been circling Liverpool for some time, but they might consider Everton a better value buy and more readily available. Zabeel is not the same company, although there are apparently family relationships within the extensive Dubai royal family. Would such a dual ownership fall foul of 'conflict of interest' rules? It will be recalled that in the 1980s controversial tycoon Robert Maxwell rescued Derby, prompting the chant 'He's fat, he's round, he's never at the ground', while also being involved with Oxford and negotiating to buy two others (Spurs and Watford). I haven't taken the option of 'ringing a friend' (a sports lawyer) but my view would be that provided the entities involved in ownership are legally distinct and have different people at their helm, a conflict of interest does not arise in terms of the rules. But these are sensitive times about big money in football and, if the deals do go ahead, it could all end up in court.

HAMMERS TAKE THEIR CASE TO COURT – 14/10/08

West Ham will step up their fight against paying Sheffield United compensation by lodging an appeal in the High Court this week. West Ham have also asked the Court of Arbitration for Sport to hear the dispute. The grounds on which West Ham can appeal to the High Court are actually quite limited. They have to show that the arbitration panel that decided in favour of the Blades' claim over the Tevez affair made an error of law or came to incorrect findings of facts. It is unlikely that an error of law occurred and what the 'facts' are in a matter like this is something the courts may wish to keep away from. As always with any legal case, quite a lot can depend on which judge hears the case. What the appeal does do is delay the arbitration panel deciding on the amount of compensation. Sheffield United have now upped their claim to £50m to take account of a second year outside the Premiership, but this overlooks the fact that they could have secured promotion by their own efforts on the pitch. A cynical interpretation would be that if they ask for £50m, they might end up with £25m.

At the Boleyn Ground, to give it its proper name, attempts to maintain an atmosphere of outward calm have not really succeded, suggesting a parallel with Anne Boleyn as she prepared for what became a delayed execution. With the Icelandic economy effectively bankrupt and the IMF in Reykjavik, a fire sale of national assets has been declared, although whether West Ham's debt of £40m is an asset is another matter. The club is believed to be up for sale, and someone planted a story in The Guardian today which suggested that Zabeel Investments were going to transfer their interest from Charlton to West Ham. This was promptly denied by the Dubai investors and it looks as if the deal for the Addicks might be completed by the weekend. West Ham is a sufficiently attractive prospect for someone to buy it particularly if the price is right.

WHAT RELEGATION FROM THE SPL MEANS – 13/10/08

The impact of relegation from the English Premiership is a familiar story, but what about the implications of being relegated from its Scottish counterpart? The absence from the fixture list of matches against the Old Firm can create a serious financial shortfall for relegated clubs. Relegation leads to an almost immediate loss of £1.5m. Relegated clubs are provided with a £250,000 parachute payment by the SPL during their first season in the First Division, followed by £125,000 the following year. Contrast this with the situation in the English league where there are parachute payments of £11m for two years. If a club goes up for just one year and is then relegated, the additional income can amount to over £50m. If the club does not splash the cash on new players, outgoings will increase by a relatively small amount. In the Scottish league's recent history, only Dunfermline (in 1999) have been capable of dropping down and coming straight back up. Paisley's St.Mirren took five years to get back after being relegated in 2001. This absence almost destroyed the club financially and led to the sale of the Love Street ground to Tesco for £15m. With this money the club was able to clear its £2m debt and finance a new 8,000-capacity stadium at Ferguslie Park which should be available in 2009-10.

The club that finishes last in the SPL will receive a maximum of £720,000. This prospect is causing alarm at bottom-of-the-table Aberdeen, although the bookies favour Hamilton Accies to go down. Average attendances at Pittodrie, a stone's throw from the North Sea, were 12,000 last season, but for the quartet of Old Firm matches they went up to 16,547. Last year's accounts showed a 11 per cent increase in turnover to £7.5m, a figure that is expected to nudge £8m when the latest accounts are published. The last operating profit was a modest £62,000, following on two years of substantial losses and the club remains heavily indebted. The Dons hope to build a new ground on a greenfield site adjacent to Loirston Loch or at the King's Links. Last year's estimates of Pittodrie's worth as development land have taken a big hit since the spring. But Aberdeen is a prosperous city and the club could clear its debts if a joint venture with the city council to build a new stadium acquired fresh momentum. Banks which are partially nationalised may find it hard to turn their back on popular football clubs with lots of supporters who are also voters.

WHEN CASH IS KING – 12/10/08

Net debt figures for football clubs don't really make a lot of sense. Take the four most indebted Premiership clubs on the basis of 2007 figures: Manchester United (£666m); Chelsea (£578m); Arsenal (£318.1m, 2008); Fulham (£181.7m). Two of these are 'benefactor' clubs. Now even Roman Abramovich is not immune to losses on the stock exchanges. But he can lose a lot of money and still be very rich. Chelsea are not immune to, for example, slowdowns in merchandise sales in the run up to Christmas. But they are not suddenly going to be impoverished. Arsenal have caught a bit of a cold with the way that their Highbury property development has been hit by the changing market, but they are not going to default on their payments. Manchester United is a more complex case, because of its quite complicated financing arrangements, while at Liverpool the American owners cannot deliver on their promises if they are unable to borrow money. However, even for a club as financially troubled as West Ham, there is a buyer waiting in the wings. However, it is the sovereign wealth funds or billionaires from India who now have the whip hand. If you have lots of money in gold and a basket of currencies, you can still buy a club, but it may not cost as much as it would have done a few months ago. One consequence is that Newcastle may be difficult to sell at a price which would recoup Mike Ashley's investment.

Richard Scudamore, the chief executive of the Premiership, is a man that many love to hate, although it could be argued that what he does is fight his corner which is what he is paid to do. But even he has been moderating his tone. He has had talks with government ministers. Admittedly, those talks are part of an ongoing dialogue, but they are taking place in a context where there is more emphasis on regulation. When Mohamed Bin Hammam, the president of the Asian Football Confederation, who had previously been opposed to the 39th game proposal indicated that he might have changed his mind, Scudamore's reaction was very cautious. He said that nothing might happen for a year and emphasised, 'I've gone on record as saying that the idea will not come back in exactly the same form as announced in February is wrong. We're not daft and we're not insensitive to the reactions of fans. We've never been confident that the 39th game will happen.' With the number of purchasers of clubs from the United Arab Emirates, with more probably yet to come, they will soon be in a position to stage their own local competition between clubs they own!

'MELTDOWN' AND FOOTBALL – 12/10/08

The International Monetary Fund (IMF) has talked this weekend of a 'meltdown' in the world's financial system which could lead to a further 20 per cent being wiped off stock exchange values. We don't claim to be economic forecasters on this page, but one of the difficulties with statements of this kind is the so-called 'Oedipus effect': making the prediction increases the chances of it occurring. Some of the commentary in recent days has come from people whose agenda is the failure of the Premiership. As we have emphasised before, we think that the real threat could come to lower or non-league clubs in the near future. Two examples: work on a new stadium for Northern League Penrith has been hit by the credit crunch. The National Bank of Australia has withdrawn backing for the purpose-built £80m development which would have included a superstore. Following Blue Square premier club Salisbury's appeal for donations (£40,000 against a target of £100,000 raised so far), Kidderminster has asked individuals to pay £50,000 for a place on the board. The chairman's building company has been hit by the slowdown and gates at the former Football League club are currently 1,000 below a 2,500 target.

What the Premiership model really rests on is the television money. For a club like Manchester United, gate money along with corporate boxes and merchandise is important and the latter two categories could be hit in a slowdown. But a club like Wigan can get along with relatively low gates (a lot of them youngsters), the television money and a benefactor. Of course, benefactors may be hit by a slowdown. There are a lot of factors to consider, and it's a fast-moving picture, but we will try to provide as much in depth analysis as we can. What we don't know - and nor does anyone else - is what the length and depth of the global economic slowdown will be.

DUBAI GROUP BID FOR CHARLTON – 10/10/08

On a day in which global markets have been in turmoil, unfashionable south-east London club Charlton Athletic have received a bid from a Dubai-based investment group headed by His Excellency Mohammed Ali Ali Hashimi. Apparently the group considered a number of football clubs but thought that Charlton offered the greatest potential. In a statement, the prospective new owner has praised the passion of the club's fans, its heritage and its commitment to the community. He also expressed his determination to get the club back to the Premiership. Due diligence has to be undertaken, but it is hoped that the sale could be completed within a few days. It has the full support of leading Addicks shareholder, Richard Murray. Normally reliable sources at the club indicated that among the factors that had attracted the new owners were: the development potential of the Thames gateway; the status of Greenwich as an Olympic borough; the club's community programme; and the fact that it has a reputation for good internal management and effective structures.

Zabeel has links with Dubai International Capital, the group that was interested in buying Liverpool. They received approaches from a number of clubs in England, elsewhere in Europe and in South America before settling on the Addicks. They had talks with Newcastle owner Mike Ashley, but thought that his asking price of £480m was too much. Portsmouth were available at a bargain price, but it was thought that the London club offered more potential. They are thought likely to pay somewhere in the region of £20m-£25m, giving them a relatively economical route into English football with reasonable prospects of a Premiership place. They do not intend to splash the cash, however, but to build up the club steadily in a similar way to the strategy being followed at Queen's Park Rangers.

UEFA THREAT TO DEBT RIDDEN CLUBS – 9/10/08

Uefa are threatening to ban debt ridden clubs from their competitions. This is a major threat to leading English clubs to whom Champions League football is a key slice of their income. Some might feel that the move is motivated by continental jealousy at the success of English clubs in the Champions League. Others might feel that Uefa are trying to tackle a genuine problem facing football. So what arguments have been put forward by David Taylor, former secretary of the Scottish Football Association, but now the second most powerful man in European football as general secretary of Uefa? His experience in Scotland has clearly had a big impact on Taylor. He referred specifically to the collapse of Gretna. He also recalled the controversial Italian lawyer Giovanni di Stefano who stepped down from the board of Dundee five years ago before the club went into administration with debts of more than £20m after initially parading himself as a saviour.

Entry to the Champions League and Uefa Cup is subject to licences issued by European football's governing body. Taylor says clubs must address debts or face 'the ultimate sanction'. He explained, 'There would be forms of communication, even warnings or reprimands, before one got to a situation of exclusion but it is absolutely possible.' If Uefa did exclude a club on these grounds, they might well find a law suit winging in their direction. However, Taylor believes that clubs with huge debts are putting their future in jeopardy and feels they have to bring their finances under control. 'There is concern about these numbers, particularly in an era of financial crisis,' Taylor said. 'Debt in itself is not necessarily a bad thing. Just because I have a mortgage doesn't mean I'm bankrupt. But the debt does have a requirement to be properly serviced. Clubs must work within all available means and they must not expose themselves to such an extent that the whole future of the club is jeopardised unless some white knight comes over the horizon with millions and millions of pounds.'

On one level that sounds sensible enough and Taylor did succeed in making his case in a more reasonable way than some of the other individuals who have jumped on the regulatory bandwagon. However, some of his remarks have a hint of 'four legs good, two legs bad'. He stated, 'There are a number of English clubs being touted to Russians, Americans and Nigerians. Which do you want to choose from the list?' A harsh critic might say that such a remark could be seen as a little xenophobic. Or to put it another way, the owner of Gretna was British. A British owner can be irresponsible and a foreign owner can be responsible. What is really needed is an effective 'fit and proper person' test which involves a more than superficial examination of a person's credentials. For example, one might scrutinise with some care individuals from countries with a known history of corruption or 'crony capitalism'.

TRIESMAN BLASTS FOOTBALL DEBT – 8/10/08

Lord Triesman, the chairman of the FA, and Richard Scudamore, the chairman of the Premiership, got in an argument yesterday about the effect of the credit crunch on football at the Football Leaders conference, ironically held at Stamford Bridge. What a lot of this is about is a power struggle between the FA and the Premiership over who has the biggest influence on the game. Triesman, who is a former trade union leader, used the opportunity posed by the credit crunch to try and land a few debating punches on the Premiership supremo, but Scudamore gave as good as he got. I was asked to go on television at noon and my basic message was: calm down. Your own club is not about to go under and, unfortunately, if anyone does, it won't be the big clubs, but smaller clubs who are more reliant on overdraft finance, short-term loans or other forms of finance that can be cut off and perhaps the finances of a UK businessman. The most indebted club in the country is Chelsea, but this is money 'owed' to their benefactor, Roman Abramovich. He isn't about to run out of money, nor is the Russian economy. Indeed, they have offered to bail out Iceland.

Triesman announced that City analysts had told him that football owed a collective £3 billion. Scudamore shrugged his shoulders and announced that there was nothing wrong with debt. 'Debt, to a degree, is healthy ... What is important is that the level of indebtedness has got to be in proportion to your income,' he said. Debt, he added, was on a 1:1 ratio with overall revenues in the game. Like Sepp Blatter, Triesman is unhappy about the influx of foreign money and players into the English game. He wants a new Sports Law to regulate who governs what in English football. This is not a disinterested call, as it would strengthen the position of the FA, an organisation which enjoys little confidence among fans. Of course, this is good time for calling for more regulation. But one needs to think whether it would really work, or whether it would be yet another case of government/governance failure.

BLATTER HITS OUT AT FOREIGN OWNERSHIP – 7/10/08

Fifa president Sepp Blatter has called for stricter rules on foreign ownership of clubs in the UK and elsewhere in Europe. On a visit to the European Parliament, the football supremo stated, 'Something has to be done about these billionaire owners. These days you can buy a club as easily as a football jersey. This is not just about England where the problem is acute. This will spread across Europe.' Blatter is, however, less clear about what the solution is to what he perceives as a problem. A country like Britain, which has always welcomed foreign investment, is not going to bar foreign ownership in one sector of the economy and it is not an area in which the EU is really competent to act. Blatter admitted that there was 'no single remedy', but he believed owners should have an association with the area before buying a club. Apparently, there is a Swiss law of this kind, but any such measure would be open to challenge in the British courts. What is most likely to dry up the flow of foreign investment is the credit crunch. But that is likely to have more of an effect on where the money comes from rather than the actual flow.

NO WORRIES AT WEST HAM AS ICELANDIC ECONOMY COLLAPSES – 7/10/08

Iceland could be the first country to go bankrupt since Newfoundland was absorbed by Canada after the Second World War. But at Icelandic-owned West Ham an air of benign calm reigned today, although below the surface there may be more turbulence. The Icelandic bank chaired by the club's billionaire owner was put into receivership by the Icelandic government. The family of Bjorogolfur Gudmundsson are reported to have owned over 40 per cent of Landsbanki, so their personal finances have taken a hit. Gudmundsson is Iceland's second-richest person, after his son Thor. Gudmundsson bought the East London club in November 2006 for £85m. He subsequently invested another £30.5m in December 2007 after buying a further 5 per cent stake. Gudmundsson was listed as one of the thousand richest men in the world in the 2007 Forbes Rich List. However, most of his money comes from outside Iceland. The sectors he is involved in include construction and shipping.

West Ham, already hit by the collapse of its shirt sponsor last month, said that the club was not for sale and that the owner remained 'as committed as ever' in spite of the financial services. A spokeswoman told wire services, 'All at the club remain focused on taking West Ham United forward and these developments have no implications and no impact for the club.' A senior board member is reported by BBC Sport to have said, 'One of Mr Gudmundsson's investments has gone bad, but he is still standing and has a lot of other investments.' Unconfirmed reports have suggested that Indian billionaire Anil Ambani was interested in buying the club and was told that it would be available for £150m.

To earlier articles > >