Friday 23 May 2014

Investment needed to avoid relegation

The annual review by The Guardian of Championship finances makes sobering reading with accumulated debt now £1 billion. The point is made that owners now have to invest to avoid relegation: Finances

Financial fair play rules start to operate this summer and Charlton hope that these will level the playing field in the Championship. However, a legal challenge is likely if QPR fail to win the play off final and face a big fine.

Given that they are way outside the permissible losses, they almost certainly will be fined if they are not promoted. However, they and other clubs have already fired off a warning letter from a solicitor to the Football League. The compatibility of the rules with EU competition law is open to question, according to sports lawyers.

4 comments:

Kentish Man said...

The problem is of course the inflated wage bills which simply cannot remain at current levels. A simple cap - wages limited to no more than 80% of income - is surely not beyond the wit of the people who run the game.
If RD derserves our support it is because he at least appears to recognize the economic realities of the beautiful game.

Anonymous said...

Football is a false economy. Usual business principles over outgoings do not always apply. If a rich benefactor wants to offer wages that comprise over 100% of revenue, then whose right is it to stop him spending his money how he wishes? If he can afford it, then I have very little problem with an owner using a football club as his play thing.

The problem lies with the trickle down effect whereby clubs with no such benefactor try to compete on the same playing field. In order to do so, they saddle clubs with debt, mortgaging the club's future for short term success.

RD's alternative vision of how to run a club is at least interesting but I fear he's maybe underestimated the cost of running a Championship club and keeping them at that level. Investing in a youth setup is noble and could work in the long term if you can produce a real conveyor belt of top talent. The trouble arises when the conveyor belt runs dry for a couple of years and the club is unwilling to fill the void with players capable of keeping the club up and instead resorts to cast offs from RD's wider network who were an unmitigated failure last year. It does also call into question the club's long term ambition to return to the top flight. Can we realistically fight for promotion using promising youngsters, given that the best will be sold within a season or two of putting in decent performances.

In the long term it may be that there's an oversupply of clubs in the country compared to wealthy benefactors who can afford to run a competitive team. It's unlikely this can go on forever, just got to hope Charlton can find a way to forge their way through.

Christian N said...

The rules need to be made clear for all clubs and the attitude should be directed to more community based and efficiently run enterprises whether there is a benefactor or not

I believe football should follow the banking model that is now being applied whereby money should be segregated to cover all wages for the duration of the contracts (where the banks must cover potential losses etc) and that no club should be allowed to be saddled or bought with loans beyond a certain percentage of income.
The argument for rich benefactors is all well and good but if they saddle any debt on the club and the choose to disappear into the sunset leaving a load of overpaid flops and millions in debt then it is the club and community that suffers

There should be heritage status designated for all clubs within their community and a partnership created between the owner, fans and the local council to ensure that the clubs serves the community and not one individual

I have to say though as a Charlton fan that it is a concern that our turnover is so low relatively speaking and fear that putting prices up would be the only logical way of us competing (and to ensure our wages were less than 100% of turnover)?

Christian N said...

The rules need to be made clear for all clubs and the attitude should be directed to more community based and efficiently run enterprises whether there is a benefactor or not

I believe football should follow the banking model that is now being applied whereby money should be segregated to cover all wages for the duration of the contracts (where the banks must cover potential losses etc) and that no club should be allowed to be saddled or bought with loans beyond a certain percentage of income.
The argument for rich benefactors is all well and good but if they saddle any debt on the club and the choose to disappear into the sunset leaving a load of overpaid flops and millions in debt then it is the club and community that suffers

There should be heritage status designated for all clubs within their community and a partnership created between the owner, fans and the local council to ensure that the clubs serves the community and not one individual

I have to say though as a Charlton fan that it is a concern that our turnover is so low relatively speaking and fear that putting prices up would be the only logical way of us competing (and to ensure our wages were less than 100% of turnover)?