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Sustainability of league position in football
28 April 2015 21:34 Post ID: #275535
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My brain decided that I needed to write this and I decided I needed to share it. sorry it's so long and rambly...

Before I start this I think it’s important for me to say that football is a results based game and that as long as all the clubs in the league(s) have followed the rules I have no problem with any club being promoted or relegated. You are in a league because you have earned the right to be there; whatever people may think. So this is not intended to be about saying one club or another do, or do not, deserve to be participating in that league. This is about understanding whether a club can sustain the league position they are currently in.
As long as there’s been promotion and relegation between divisions there have been little clubs higher in the league and big clubs lower in the league than one might expect at first glance. With Bournemouth being the latest example of a club outperforming what one might expect at first glance.
What is the driver for this over/under performance?
Clubs get promoted when they have a better squad of players being managed by someone who can get the best out of the players. That doesn’t just happen to clubs, otherwise there would be a higher proportion of managers who had been in post for a year than the current 50ish%. I would contend that there is one major driver for clubs to be able to succeed in the long term and that would be money. I know it’s not an outstandingly original notion but it is more than just ‘money good’ or ‘lack of money bad’ when it comes to successful or unsuccessful football clubs. Where the money is coming from and how it is spent is much more important than any absolute value.
Looking at ways that clubs get make money there are essentially only a limited number of ways; these being the supporters, selling players, the owners, the bank, outside interests and TV rights.
The supporters can generally be considered a reliable source of income but if you upset them they will cause a significant drop in form and league position. When the owners of Blackburn Rovers upset the supporters the ongoing unrest caused a drop in form which led to the relegation from the Premier League which they haven’t fully recovered from three seasons later.
For clubs in the Premier League there is the misconception that the massive TV income is an advantage. When clubs are in the Premier League there is no advantage as every team gets similar income. The other big TV income can be from doing well in the Champions League but the ability to qualify for them season after season is difficult for teams not bankrolled by billionaires. Leeds United successfully reached the Semi-Final stage in 2001 but failure to repeat the feat led to a high profile slide down the leagues to League One. This can be a common problem for teams which are relegated from the Premier League who are not set up financially to deal with the massive drop in income. There is a reason that so few teams recently have bounced straight back to the Premier League with very few of them managing to breeze through the league.
There are other income streams from the TV including FA and League Cup runs but they cannot be guaranteed over a number of seasons and for Premier League clubs the money made is a fraction of the money made in the league.
When there is not enough money coming in clubs will tend to live on borrowed money and with a large percentage of lower league clubs making a loss year after year that gap has to be plugged from somewhere if you can’t squeeze any more out of the supporters. The first is by selling the clubs’ best players for, hopefully, more than was paid for them. There is nothing wrong with being a selling club per-se and clubs have managed to do it successfully for decades. There was a plethora of fantastic talent which went through Crewe Alexandra over the period when Dario Gradi was in charge. The problem with this strategy is that it requires a constant string of good, cheap players for the club to bring in, improve and sell on. There just aren’t enough of those kind of players about and in the long term it will destabilise the club as they can’t necessarily rely on the club keeping the core of the squad in place long enough to succeed.
If you’ve not prepared to sell your best players then the money has to come from debt. There are essentially two kinds of football club debts, to the bank and to the owner. As with any kind of business it is increasingly hard to borrow money from banks these days and they are not averse to pressuring you into choosing between the taxman and the bank. There are masses of clubs who have not paid the taxman to keep the rest of the lenders off their backs. Since the Taxman is no longer first on the list for the spoils of the sell-off of companies the taxman is much more liable to push clubs into administration early.
On the other hand, the owners of clubs are not averse to putting their hands into their pocket to keep their clubs alive. In fact, it’s been going on as long as there’s been football clubs. These days it takes a lot more money to be able to keep a professional football club afloat when it’s consistently losing money. Gone are the days when mere millionaires could buy a lower league club and spend a couple of million and get it promoted to the Premier League (if it was ever really true at all). These days it’s Billionaires who are the ones with pockets deep enough to manage that. When someone buys a club supporters need to ask themselves a couple of questions.
1 How much are they going to put into the club?
2 What price is it going to cost the supporters?
3 Are they building the club or just spending money?
The naïve owners are willing to put in a lot and take little out but there are relatively few of them around. The first thing a rich owner can do (if they’re rich enough) is to pay of ‘the debt’. This is a good thing for the short to medium term sustainability of a club as it means that money is not leaving the club on unnecessary debt payments. What the supporters want a rich owner to do is spend some their perceived wealth on new players which they may not be able to afford. The problem with the football ‘sugar daddy’ is they eventually they tend to stop spending but the club is still dependent on their money. This leaves them in a position no better off than they started and generally tends towards relegation. Wigan are a good, but not only, example of this; promoted on the back of money from a rich owner who either by choice or necessity stopped putting in the money and are now facing their second relegation in three years in the face. Remember the footballing adage ‘the only way to make millions in football is to start with billions’.
There was a time in the early part of the century where football was beginning to get its house in order with regards to overspending but then Roman Abramovic bought Chelsea and that went out the window. Roman Abramovic was the first of a string of rich foreign owners buying English clubs (at all levels). What he did was to spend fortunes on a squad good enough to win the league and after years of trying the Champions League. Those players are on high wages and the club has made big losses in most of the seasons that he has been the owner. That is sustainable while he is at the club but if he leaves they would have to find another billionaire to take his place. Chelsea are not a one off by any means Manchester City are in a similar position. An interesting example is the team down the road from Chelsea.
Queens Park Rangers are owned by the owner of an airline and he’s spent millions on the club (mainly on overrated, overpaid and over the hill players) over the period he’s been in charge of the club. With losses of over £65 Million pounds (yes that’s sixty-five million pounds) for the season ending 2013. This was in a season where their turnover was £61 Million (yes that is a loss of MORE than their income!). This was mainly because of a wage bill of £78m or 128% of turnover. There is still uncertainty about their 2014 finances and relegation could see them barred from entry to the Championship if they don’t pay a massive fine. Tony Fernandez (the owner) has already stated that he’s not putting in as much money as he has in the past. There may be trouble ahead…
While on the topic of spending money the wrong way clubs can be seduced into spending money on new stands or grounds thinking that they are guaranteed to sell all of the tickets. That is fine if you have the financial backing of a sugar daddy putting in the money or are a team like Arsenal who had a massive waiting list for season tickets at Highbury plus consistent Champions League qualification to pay for it. When it becomes a problem is when there isn’t the money to spend on the stadium and the millions required to continuously bolster the squad. I point to Wolverhampton Wanderers as a prime example of this. They spent millions on redeveloping their Molineux stadium but didn’t spend the money required on the squad and as a result were relegated twice in as many seasons. In this current season they are barely selling 75% of their ground and so are making nothing every game on the extra seats.
The flip side of the coin to the excesses of some teams is when the club chairman refuses to open the purse strings at all. In the short term it’s not necessarily a problem if there has been large spending sprees previously. In fact I’d say it’s necessary but if it continues over a long period of time then the locals can get restless, especially if the squad isn’t performing very well on the pitch.
There are cycles in football just as there are in other aspects of life. One of the cycle of the footballing world is that teams with money rise up the divisions in an unusually short period of time, struggle to maintain their position and then fall back to where they came from and sometimes even lower. There are a number of indicators of whether a team is ‘overstretching’ in their league position. The first is comparing the crowd size at the club to the average crowd size of the clubs that consistently stay up in the league they are in. Yes it is a crude measure but it generally works. Another crude measure for the sustainability of league position, which I’ll call position stretch, is looking at the average league position of the club over the longer term (somewhere between 25 to 40 years) and see if the club is more than a league above or below that position. Sooner or later there will be a return to the average. Especially if the ground size and the position stretch values are worrying.
That is not to say that clubs cannot maintain higher league positions. It can be done if the building process is slow and steady. Swansea were a team that could just about sustain third tier football who are currently sustaining premier league football (I think they need another five to ten years at that level to say they are consistently maintaining it though). Up until 1960 Norwich had only spent five seasons in the second tier from their inclusion of the league in the 1920-21 season. The next time they sank to that level was in the 2009-10 season. Between those two spells in the third tier they spent 21 seasons in the top tier.
That brings me to what started this rant, AFC Bournemouth and their imminent promotion to the Premier League. They are a team that has spent a grand total of five seasons in the second tier in the time as a league club and they have an average attendance of 10265 this season. They financially have a big backer who is reportedly spending lots of money on players (fees and wages). I wish them well for the new season but predict that they will be back in league one within a decade unless the owner spends vast sums over a long period.
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23 May 2015 22:20 Post ID: #277123 - in reply to #275535
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A well considered and logical piece Phil.

I just hope it is not wholly true. It would condemn the clubs that try to punch above their weight to long term mediocrity. Clearly, the route to success without massive wealth lies in the ability to replace talented players, who move on to the lure of promised largess, with other as yet unrecognised potential.

That Swansea seems to have found a successful formula gives the likes of NC heart that they too can aspire to succeed near the top.

It is well known that money talks but I just cannot accept that the likes of MC and QPR should be able to cynically sustain success just because they threw money at it.
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