Dr. John Beech & Christian Muller of the DfL talk you through the issues. We've now seen well in excess of 50 insolvencies at football clubs since 1992 compared to no insolvencies in the Bundasliga during this period, leading to most expert commentators on football finance now agreeing that ‘light-touch' regulation is at an end. We heard from one of the most respected academics in his field, Dr John Beech of Coventry University, about what has failed and what he believes needs to change. and the DfL's Christian Muller on how they do it in Germany, For Christian Muller's presentation look on our main presentations section.

1. Supporters Direct 2010
Just how broken is (English)
football’s financial model?
Dr John Beech
Head of Sport & Tourism
Applied Research Centre for Sustainable Regeneration
Coventry University

2. The Myths
The underlying myth – the club
The myth of the benefactor
The myth of investment
The myth of the new stadium
What are the alternatives?
Christian Mueller of the Bundesliga
Some issues of implementing change

3. The Myth of the Club
A breach of the Trade Descriptions
Act?
‘an association of two or more
people united by a common
interest or goal’
‘an organisation run by and for its
members’
Went with professionalisation
Replaced by the limited company

4. ‘The Club’
Construct Company Crew

5. Crew
Trigger’s broom
Constantly changing
Transfer to opposing clubs
2010 Cup Final
Days of local identity long gone
Still our heroes or zeroes

6. Company
The owner(s)
The board of directors
The Chief Executive Officer
The business element
Finance and accounts
Making a profit
or at least not making a loss

7. (Social) Construct
The ‘till I die’ element
Tattoos
The heritage, culture, mentality
and mythology
The fans’ construct
It doesn’t physically exist
yet it’s the most permanent
dimension

8. Confusion
Need to keep the three elements
distinct when analysing
‘Save our Stanley’
actually meant ‘Save our Board of
Directors’
Exploitation of fans; ‘taxation
without representation’

9. Can these three
elements merge?
Do we want
them to?

10. How have they
become separated?
Is this irreversible?

11. The professionalised era
FANS LEAGUES OWNERS
CLUBS PLAYERS

12. The commercialised era
SPORTS BROADCASTERS INVESTORS
FANS LEAGUES OWNERS
AGENTS
SPONSORS CLUBS PLAYERS

13. The model depends on money in
from fans and, when necessary,
benefactors
To be ambitious requires serious
financial input from the
benefactor
The model is not sustainable if the
money just flows through the
club to players and agents,
unless the benefactor is infinitely
rich and does not lose interest

14. The Myth of the
Benefactor
Origins go back to
professionalisation
Usually either churches or
breweries
Very different, but share the
outcome of local commitment
From the 1980s local benefactors
largely replaced by external ones

15. 

16. Jerry Sherman
One of football's most unexpected
marriages will be consummated when
Newport County, the unfashionable and
down-at-heel third division club, is taken
over by Jerry Sherman, the handsome
American multi-millionaire. (The Times,
1 October 1986)
By February 1987, the club is facing a winding up
order over debts of £600,000.
Sherman goes, and so does the club
Sherman believed to be currently in prison in
Seattle for defrauding an ice hockey club

17. Spencer Trethewy
The 19 year-old property
developer who would save
Aldershot in 1990
Club was wound up
In 1994 Trethewy was imprisoned for
fraud
Now manager (owner?) of Chertsey
Town, using the name Spencer Day

18. Jack Hayward
Wolves were insolvent in
1982 and again in 1986
Hayward bought them in
1990 (then in Tier 3)
Quit in 2003, having lost £40m
(Club made the premier League in
2003, only to be demoted after one
season)

19. UEFA’s Financial Fair
Play protocol
will end this model
being possible,
even at Chelsea or
Manchester City

20. The Myth of Investment
Shares (equity) or loan?
Fans misinterpret loan as purchase of
shares
If it’s a loan, the benefactor may want
his money back if his circumstances
change. But will the club be in a
position to repay it?

21. Roman Abramovich
Bought Chelsea from Ken
Bates for £140m in 2003
Has achieved great success on
the pitch
Chelsea have been indebted to
him for £700m in interest-free loans
Wrote of £346m in debt for equity
swop (or did he?)

22. The Booths
Ken Booth had a genuine love for
Rotherham United and saved them in
the eighties.
In his eighties, he handed over to his
sons, who did not share his love.
He was owed £3m he had loaned, and
took the stadium in lieu.
The sons pushed the rent so high that
the club had to move out of Millmoor
and go into exile at the Don Valley
stadium in Sheffield

24. John Bachelor
John Batchelor arrived at York
City promising to:
• buy the club and the ground
• give the Supporters Trust 24%
of the shares
• have two supporters on the
board
Far from being an investor, he later
admitted that his policy was in fact
to asset strip

25. Other benefactors who
failed to invest enough
Michael Knighton – Carlisle United
Mark Guterman – Chester City
Mark Goldberg – Crystal Palace
Simon Jordan – Crystal Palace
Mike Connett – Northwich Victoria
Ali Al Faraj – Portsmouth
Sulaiman al Fahim - Portsmouth
Alex Hamilton - Wrexham

26. The Myth of the New Stadium
Fossetts
Folly Farm

28. Ron Martin @ Southend United
Now in League 2
Average gate 2009/10 – 10,329 (L1)
Capacity of Roots Hall: 12,306
Fossetts Farm planned since 1998
With a capacity of 22,000
114-bedroom hotel, conference facilities,
retail park
Roots Hall sold and leased back in 1998

29. Estimated cost now £80 million
Not a sod has been cut
Costs already of £1.2 million
Club described in court facing HMRC
winding-up petition as a ‘serial offender’
Last two times were for £0.6 million each
Club now seriously committed to
Sainsburys
Financial beneficiaries of Fossetts Farm?
The Martin family

30. Darlington
Arena

31. George Reynolds @ Darlington
Opened in 2003 with a capacity of 25,000.
Currently restricted to 10,000 on H&S
grounds
Record gate – 11,600 at first ever game
Average gate last season – 1,943
George was going to take Darlington to the PL,
but, before he made it, he was given a three
year sentence for tax evasion and declared
bankrupt
Darlington in Administration in 2003 and 2009

32. The ‘Cargo Cult’ Belief
‘Build a new stadium and it will fill up’
This will finance better players, and hence
lead to promotion, in some kind of
virtuous spiral
The evidence suggests otherwise
It tends to lead to unforeseen additional
construction costs, and unsustainable
maintenance costs
Can lead to Administration and thence loss
of ownership

33. Other clubs with ‘new stadium’ issues
Bristol City and Bristol Rovers
Coventry City
Grays Athletic
Hereford United
Kettering Town
Leigh Genesis
Nuneaton Borough
Plymouth Argyle
Worcester City
(and then there’s Liverpool and Everton!)

34. To be financially
healthy, a club would
• maintain a steady position to: centre of the
want appropriate for their
in the
table of a league which is
potential fan base, avoiding relegation, and to
some extent, promotion;
• avoid the longer-term uncertainty of
benefactor dependency;
• own its own stadium, one which has
appropriate facilities for matchday
hospitality and non-matchday activities
which generate revenue streams;

35. • develop a committed local fan base;
• develop a long term relationship with a sponsor
which is itself financially stable;
• have performance-related contracts with its
players;
• maintain a squad which reflected its current
league position in terms of performance and
wages;
• employ a manager who is successful on the pitch
and appreciative of financial constraints.

36. My verdict?
Broken!
Two options:
a) Fix it
b) Change to a model that
is better fit for purpose

37. The Alternatives
Supporters Trust ownership
Community Interest Companies
The North American model
The Spanish model
The Bundesliga model
Please welcome
Christian Mueller of the Bundesliga

39. Some change issues
Stadium ownership
Transition
Mature market with crass
inconsistencies
Enormous financial differences up
and down the pyramid
Resistance (club v. League?)
Scaling down wages
Broadcasting rights?

40. The End
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