houseboy wrote: ↑Mon Mar 18, 2024 9:41 pm
Just out of interest when did football become a ‘business’? I’m not sure I can pinpoint the time it ceased to be a sport and turned into business. I assume the metamorphosis started when the PL was formed (remember the original daft idea of having a closed shop with members dependant on ground size and support?). But the lines seem blurred somewhat. Somewhere along the road we have taken a terrible wrong turn. It’s accepted the way it is now because many fans don’t know any difference, they are too young to remember football as a sport and just think of it as a sort of game thing involving lots of money and billionaires running around on a patch of grass chasing a ball. It’s a shame really because I remember when football was a sport and people didn’t look at new signings as re-saleable assets. People didn’t boast about how much their club had spent in the then non-existent transfer window and players couldn’t hold their club to ransom because they could ‘go on a free in twelve months’.
It’s all really very strange how football became the odd thing that it has become. Can anyone explain in plain English how football turned into the avaricious monster it has become? Billionaire owners? Foreign ‘investment’? Sky TV? All of the above? I’m kinda sad because I really love football but I’m not sure I love or even like what it has turned into.
I wrote this over a year ago as part of a larger article for The London Clarets - it covers most of the transformation of Football stopping becoming a sport and more a business
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'Not for Profit’
You may recall that our club, originally formed in 1882, became a limited company, Burnley
Football and Athletic Club Limited, on September 29 1897; all contemporary clubs did the same
thing. In truth, there was a growing need for them to become more formalised business entities:
investments in grounds (as we used to call them) and other infrastructure increased the associated
liabilities, meaning it became essential for them to do so. This is the point in time when football
indisputably became an industry rather than just a sporting pastime.
Such change brought with it a distinct set of concerns for the Football Association. In its view,
football clubs operating as businesses opened up opportunity for manipulation, exploitation and
profiteering by ruthless and/or unscrupulous owners. Those concerns, which also extended to the
game’s competitions, would become entrenched in the mindsets and actions of those who
governed football for years to come. Just think back to the words of Football League founder
William McGregor in 1909, that I have previously quoted: “Beware of the clever, sharp men who
are creeping into the game.”
Seeking to ensure that that the game as a whole, rather than a few individuals, would benefit from
this increased commercialisation, the FA carefully developed a distinctly strategic response. 1892
saw the introduction of the first part of what would become Rule 34; it limited the maximum value
of dividends that could be distributed to shareholders to 5% of the value of the shares. Additional
elements introduced throughout that decade proved robust enough against the perceived threat
for the next 80+ years, ensuring that:
• No director would be entitled to receive any remuneration in respect of their office as director;
• No owner could wind up a club and profit from selling the ground – any proceeds from such a
sale had to be donated to charity or another such institution.
The FA’s intent was to defend the idea that Football Clubs were sports clubs first and foremost.
Directors were custodians of their clubs, and their duty was to run a club for its and football’s
sake, not be in it to make money. For the most part they succeeded. While there was never a
golden age of selfless club owners, the system of clubs as not for profit companies prevented the
excessive exploitation of fans, encouraging loyalty and regular attendance, which in turn
facilitated the sport’s exceptional growth and the uniquely enduring relationship between
communities, fans and clubs.
Negligence
By the late 1970s, a changing attitude in the boardrooms of the biggest clubs was becoming clearly
evident. First, the ‘gate share’ was abolished in the Football League, then the equal share of TV
monies across the 92 was ended; each subsequent TV cycle saw distributions increasingly favour
the top flight. In a move that the FA vaguely attributed to a desire for ‘better, more professional
management’ of clubs, Rule 34 was amended in 1981, raising the dividend threshold to 15% of
share value and permitting directors to be paid providing they worked full-time at their club.
The FA effectively abandoned the spirit of Rule 34 in 1983 in an act that can only be described as
negligence. Irving Scholar wrote to the FA asking permission to float Tottenham Hotspur on the
stock market, his plan being to place the club under the control of a Holding Company and float
that, not the club itself. The FA, lacking both the foresight and conviction of their Victorian
forebears, did not even bother to respond to the request, leaving Scholar to proceed unchecked. A
number of clubs followed the Spurs example over the next two decades, though only Manchester
United really prospered under this model. The Edwards family, ending a custodian dynasty,
eventually made £93m from their shareholding (bought for £840k) while the club paid well over
twice the amount in dividends (£61.7m) than it raised for investment in itself (£23.3m).
Quietly admitting that as the rules ‘were not working’ there was no point in having them on the
books, the FA simply dropped all but the section on profiting from the future sale of the assets of
any wound-up club. This remnant of the rule remains, although it has not been enough to stop
some from profiting from the sale of grounds, perhaps most famously by then Brighton owners Bill
Archer and Greg Stanley with the Goldstone Ground. In a tale, whose debt-fuelled beginnings have
been regularly repeated down the years, the ground was ‘sold’ to the owners in lieu of debts, but
was then swiftly sold onwards to developers for vast profit.
At the FA, the systemic negligence continued, some would say it has never stopped. Failing to act
on the findings of the Hillsborough Inquiry, the Football Task Force and other proceedings while
also being complicit in the formation of the Premier League, has led to a situation where now few
believe they are fit to govern the modern game. So, it is of little surprise that the government
looks likely to appoint an Independent Regulator of Football with powers over financial, club
ownership and club governance regulation.
Consequences
The game has been transformed into one of ‘haves’ and ‘have nots’, its authorities effectively
absent from influence and control during football’s second commercial revolution that has
brought about astronomical increases in revenues for the few and catastrophic cost increases for
everyone else. The unique loyalty of the fan customer is exploited by excessive pricing and the
burden of broadcasters changing match days and times at short notice and seemingly at whim.
At the highest levels, local owners are the anomaly; billionaires, private equity, investment groups
and nation state sovereign funds have taken over. Lower down, we have a never-ending tale of
clubs in financial woe and the ludicrous situation where it is the norm for clubs to pay more in
wages than they earn in revenues. Some clubs have effectively been taken from the communities
they serve, made subject to varying degrees of maladministration, debt-loading and generally
inept management, leaving the fans to pick up the bill, which they always do – and for no stake in
the club. Successive attempts by the authorities to regain control have been weak, ill-conceived
and mis-targeted.
Hardly a professional club exists now without being owned by a Holding Company, though not
always for negative reasons – ours was created to facilitate the return of Turf Moor and
Gawthorpe to the club. No modern takeover seems to exist without this structural vehicle being
put into place, the flexibility it offers to owners, good and bad, is just too appealing.