As we begin to reflect on another season, on the individuals and moments that shaped it, on whether it could have been different, it’s only natural for the vast majority of fans to be eyeing improvement for their team. That, though, is not up to the fans. No matter how much you might feel that your manager is inept, your defence is leakier than Thames Water or your strike force is riddled with impotence, only the owners of the club can really facilitate change. Without action from them there can be no changing of the guard at any level and whilst some are progressive thinkers, willing to take the necessary steps to advance the club, others are not.
There have been some interesting revelations in recent weeks with regards to owners’ handling of their clubs. First was the letter from former Blackburn director Paul Hunt to the club’s owners, which showed a strikingly apathetic attitude from the Venky’s group. Second, was an article in The Telegraph that published the financial results for the 2010-11 season clubs (2011-12 results are not yet available). The finances of the clubs was not news in itself; however, in a league where so much hinders on so little, as a title won on goal difference indicates, there was more than one group of supporters who could feel aggrieved with the way their club is being run.
Could Wolves have spent a little more considering they have no debt and had more money to spend? Should Arsenal have used some of their not insignificant cash flow to bring in a better standard of players last summer? Had Abramovich not had such a jumpy trigger finger with managers over the last few years could Chelsea reasonably expect to be somewhere close to meeting Financial Fair Play rules? However, by far-and-away the most eye-catching reports were that of Manchester United.
Now, we all know the negative impact the Glazers have had upon their club, but two factors really stuck out for me. The first was that, were it nor for the debt imposed upon United by the Glazers, Alex Ferguson would be able to spend over £80m every summer without having to borrow a penny. Secondly, despite having paid around £500m (according to The Guardian) in interest, repayments and bank charges the overall debt has only been reduced by around £100m.
So far there has been a clear and coherent resistance from a section of United supporters ever since the takeover. However, the fans have often been placated by the fact that trophies have been won and money has been spent. Nonetheless, what United fans (and fans of any other clubs in similar situations) should be thinking is not ‘how well are we doing’ but ‘how well could we be doing were it not for our owners?’ Before the Glazers purchased Manchester United the club were debt free. Now they have one of the highest debt’s in the world; whether fans or pundits want to claim that the debt is ‘manageable’ is totally irrelevant as the Glazers have brought nothing but debt to the table. The Chief executive is the same, the manager is the same; the only things that have changed is that prices have risen and there is infinitely more money leaving the club every year.
This begs the question: should it be illegal to borrow against a club’s assets in order to finance purchasing it? What may come as a surprise it that, to a certain extent, it already is. So how then do groups like the Glazers manage to purchase clubs like they did with United? In the 1985 Companies Act it states in section 151 (or at least it did when the Glazers took control of United) that, on the whole, financial assistance by a company in the purchase of its own shares was prohibited. In other words: you could not borrow money, secured against the company you wanted to buy, in order to purchase that company.
There was however an exception to this rule. It was possible to purchase a company in this way if they went through the ‘whitewash procedure’. This meant that a director of the company (or club) could release a statement that the party who intended to purchase the company would not be borrowing more than it was possible for that company to pay back.
In itself this loop-hole is hardly a stringent enough check on powers who wish to laden football clubs with debt in order to purchase them. To make matters worse, in 2008 the law was changed again. In a statement by Slaughter & May in August 2008 it read
“The CA85 restrictions on financial assistance by private companies in relation to the acquisition of their own shares or shares in a private company parent are to be repealed with effect from 1 October 2008. The effect of the repeal is that compliance with the whitewash procedure will no longer be statutorily required in transactions involving financial assistance by private companies.”
This meant it was then even easier for clubs to be bought and given unreasonably high levels of debt by new owners. Moreover this change in the law came just after Tom Hicks and George Gillett had purchased Liverpool in a deal that was arguably even worse (proportionately) than that of the Glazers.
So now fans find themselves in a position where, despite it being frowned upon, there is nothing to stop investors with no emotional ties to our clubs turning up, buying the club and transferring all the risk and the debt on to the club itself. Without the whitewash procedure there isn’t even a pretence of accountability any longer.
Fan protests are all well and good, as are the positive intentions of collections of wealthy and powerful fans such as the Red Knights; however, ultimately the fans are completely powerless. The only protests that can be effective negatively affect the club as well as the owners and this is why the Premier League need to step in.
The 2011-2012 season has, more than ever before, shown the influence of powerful, foreign owners. Sheik Mansour finally has his Premier League title (for the cost of around £1b), United have wilted in the face of the rivals (arguably due to so much money being pumped out of their club), and Blackburn have been largely ignored by their owners as they have slowly regressed over the course of a season that has ended in relegation.
If the law itself cannot protect clubs from detrimental potential owners then one of the governing bodies of football needs to step in. Either the FA or the Premier League should be able to veto takeover deals in particular cases. Clearly football clubs will always have some level of debt and clearly you cannot prevent prospective buyers from borrowing money in order to finance takeovers. However how much money is borrowed and against whose assets it is borrowed is a matter that can be policed. For a clubs such as Manchester United to go from having zero doubt to over half a billion pounds in the space of a takeover is unacceptable. Manchester United fans can count themselves lucky that they support a club that can afford such debt, even if it doesn’t comfort them after conceding the title to their higher spending rivals.
Like I said earlier: this issue is nothing new yet it remains unresolved. The culture of short-termism has engulfed football in recent years and as much as the Premier League does not want to hinder foreign investment it should consider the very people that make football such a profitable business in the first place – the fans. In many cases fans are ultimately paying (in rising ticket and merchandise prices) for takeovers of their clubs, which put their clubs at risk. It is clear here that the fans are helpless, it’s also clear that it’s up to football’s governing bodies to sort this mess out. The Glazers’ ownership of Manchester United epitomises everything that is wrong with foreign investment in British clubs: they have brought nothing to the club, have transferred a huge debt on to the club, then increased the debt through their 2010 bond issue, raised ticket prices and inhibited spending, all whilst allowing vast swathes of resources to be shipped out of the club. If we as a sport are not careful about who we let in then there could be many more Glazers to come.
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