"You can have the top stars to bring the attention, you can have the best stadium, you can have the best facilities, you can have the most beautiful project in terms of marketing and all this kind of thing. But if you don't win... All the work these people are doing is forgotten." (Jose Mourinho)
Former England method...
Is anyone in the boardrooms of the UK’s Premier League clubs listening to Alistair “worst economy in 60 years” Darling, Chancellor of what used to be accurately called the Exchequer? Certainly petro-pockets and BRICky investor Abramovich seem to know something he does not. Choice UK assets exist for the taking!

And Until China start mass producing Robinho, Berbatov and Renaldo clones the public can probably look forward to more international excess liquidity being sucked up by footballer wages in the Premier League. Perhaps the sovereign wealth funds might get in on the action? Lehman Brothers vs Manchester City is not too hard a decision to make (come on Korea, it's not too late to pull that deal).

OK – the wage spiral will reduce football operating profits for the third year running. And, of course, last season only 8 teams were profitable at the operating profit level – down from 16 in the prior year.

...retired for the new Capello method
There is other context, too: broadcast revenues rose almost 50% last year to circa £740m. Transfer spending has gone mad as a result - £600m in summer 2007 and January 2008. Not a single club generated cash on its transfer activity in 2007/2008 and yesterday’s spending of over £66m on just two players probably keeps the trend on track.

But let’s not count the penalty before the kick. Remains to be seen how well the newly deployed cash returns in Darling’s World. Still, with shrinking margins, optimistic stadium book values, an operating philosophy in which the words ‘cost’ and ‘control’ never appear one after the other and seriously expensive ticket prices the omens look poor.

On the other hand, as a method of reducing a bank balance, buying a football club must be on the pleasure shortlist. And on the brink of a significant consumer slowdown some may end up thanking the Ref Upstairs for his small contribution to the Great Deleveraging.


Useful reading: Deloitte & Touche Annual Review of Football finance Highlights
Hat tip for the cartoons to: Explosive Bomb

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1 comments

  1. Charles Butler // 9/02/2008 06:58:00 PM

    The spec play, if there ever were. The money's not paid for what Robinho does, but for what he ought to be able to. The kid's gotta like the pay raise, but he sure wasn't banking on that destination when he started sulking.

    For romantics, the best team going is Villarreal. Home town of 30,000. Market of 200,000. Always close on the appreciation of small mercies. Or, does Spain win the European Cup replacing Senna, Capdevila and Cazorla with Guti, Salgado and Raul?

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