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Spending what you earn...

By Peter Griffin :  25/09/2009 :  Comments (19) :

As some of you may have read this week, Michel Platini and UEFA over the next 3 years are introducing regulations to try to make European clubs self-sufficient.

UEFA President Michel Platini said: "The idea is not to hurt clubs. The idea is to help them. The basic premise is that clubs should not spend more than they earn. Club owners have asked for the introduction of rules, and this will be an adventure for European football and UEFA." Michel Platini said the measures were essential for the long-term health of the European game. Here's the link

This got me wondering, not only about football in general, but our club Everton. As far as I am aware, we made a pre-tax profit of £26k last year. This sum wouldn't pay Mikel's weekly wage, never mind constitute a summer transfer budget. To put this into context with our rivals I found these figures for last season (before tax):

  • Aston Villa = Loss £7.6million
  • Man City = Loss £32.6million
  • Spurs = Profit £3million
  • Arsenal = Profit £36.7million
  • Liverpool figures were unavailable.

I feel these new rules will place even greater importance on scouting youngsters and generating revenue off the pitch. Now in my opinion our scouting network is productive in comparison to some of our rivals. Players like Rodwell, Hibbert, Osman, Baxter, Wallace etc. are in the current first team squad after progressing from the academy. Not to mention players like Rooney, Jeffers, Ball, Dunne etc.

This is what worries me most. We are going to be relying heavily on the performance of the men in suits to back up the performances on the pitch by the players and coaching staff. I don't want to turn this into the usual Kirkby/Kenwright debate but now more than ever this becomes more relevant. There are several scenarios:

  1. We move to Kirkby and miraculously generate this extra £6million per season.
  2. We move to Kirkby with a capped capacity which begins to dwindle and generate less income than at present with GP.
  3. Kirkby is rejected, we stay at GP whilst a new plan is devised and revenue remains on a similar path.
  4. Kirkby is rejected and we redevelop GP with a hotel, bar and club shop on site.
  5. Kirkby is rejected and a ground share on Stanley Park is built.
  6. Kirkby is rejected, a wealthy investor takes control of the club and builds a new stadium on eg. the loop site

I fail to see how Kirkby will help us compete. These rules could create a more level playing field for clubs like us trying to break the Champions League monopoly, but do we have the ability to seize the initiative? I personally don't feel we currently have the required business acumen to do so.

How do we create revenue? Sell out all home games, CL football, win trophies, sell more merchandise, attract investment, more corporate facilities etc. Of course success on the pitch will help breed success off the pitch, but I don't feel the current regime have what it takes to support our improvements on the pitch.

It used to be winning a trophy made you a successful club but now it’s Champions League group stage qualification first, trophy second. I can understand why, particularly with these new rules. Qualifying for the Champions League group stage earns clubs a reported £20-30million and reaching the quarter finals yields a further £8-16million. We are not far away from this, but each season it’s becoming increasingly difficult and this is more down to the men upstairs and not those on the pitch.

I wrote this to hear your views on how to take our club forward whilst trying to avoid the usual arguments, as I'm always impressed with the knowledge of a lot of the people on here. COYB

Reader Comments

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Nick Entwistle
1   Posted 25/09/2009 at 15:23:50

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So other than buying a player for £26,000, we have to sell to buy? Only CL teams make money of any great wealth, so doesn’t this cement their position?

I only know the theory not the specifics, but it sounds like a rule where some are more equal than others.

Frank McGregor
2   Posted 25/09/2009 at 16:06:54

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Peter if we want to move the club forward you have to be realistic the redevepoment of Goodison Park is a pipe dream full of emotion and nostalgia. I would suggest, as I have done in the past, there has to be a realistic alternative to attract a prospective buyer of the club so as the club can progress which is the objective Evertonians want.
Peter Benson
3   Posted 25/09/2009 at 16:11:26

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I can’t see the benefits of this either. The structure of football at the top does need changing, there is no mobility in football anymore.

It goes to show how screwed football is that it takes a billionaire to try and and change the status quo, ie Man City. Yet City get the criticism? No the various Sky 4 types have caused all this, so this rule will just prevent City, and the next Man City club.

The future and the key to football mobility is via the Europa League. This tournament should is the most important tournament in European club football... Why? because it is the stepping stone between Domestic and Champions League.

Therefore, more prize money from the CL has to go into this competition, don’t give the 3rd place CL teams a place in there, and also if the CL has 4 teams then Europa League should have 4 too. How can you maintain a consistent challenge for a CL place when only 1 spot via the League goes to it? It’s nonsensical.

The sport and fair competition has been taken out of football, and replaced by the CL bourgeoisie.
Martin Mason
4   Posted 25/09/2009 at 17:07:54

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It could help clubs like Everton but I doubt it because we are pygmies in the earnings stakes compared to the top 3 or 4. We don’t sell to Singapore, Hong Kong, Bangkok and other world fans. In fact, the only advantage we could ever get over the top 4 in terms of buying power is to get a rich backer to throw money in and that is what they don’t want.

The only difference is Everton’s policy of buying from income would mean no change. Jeez, Liverpool must be in trouble with their debt level. I’d love to see a shared stadium in Stanley Park, surely it’s win-win.

Matthew Lovekin
5   Posted 25/09/2009 at 17:06:11

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If these rule changes do come into effect, football is basically going back in time. This is not necessarily a bad thing. Clubs should be run financially sound, players will be paid less and the only way to improve is by getting results on the pitch which will generate more prize money, television revenue, merchandise and gate receipts increases.

I for one, have lost a slight interest in football. No longer am I interested in the top 4 mini league or get excited over huge transfer fees and players earning £160k per week. Clubs that act like this (Chelsea, Man City) are only financially viable due to when the bills come in, the multi-billionaire owner dips into his pocket and pays... the money is not coming from the club itself.

If Moyes keeps on producing the results, the board need to capitalise and use the prize money, etc wisely. The club will need to be run as a business and money will need to be generated from outside interests such as hotels, casino’s, housing, etc on Bellefield, Goodison (after we’ve moved). Money is there to be made if you think outside the box, but it also needs to be used wisely.

Everton is a bit of an in-between club at present. We have to bring young players through or sign promising players to develop them. We can’t afford the high fees and wages on our current income. However, if a player wants to double his wages, to say £80k/wk, and it’s out of our budget, we will have to sell and find the next promising player in his position, until our income increases the budgets.

John Brennan
6   Posted 25/09/2009 at 17:31:46

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I would be interested in people's thoughts regarding staying at Goodison. Recently, I have had a look at the website of KEIOC and watched the video about the re-development of Goodison. Due to other committments, I haven't had a chance to read that much about their argument for staying at Goodison.

If we were able, I would rather we stayed and Goodison be re-developed because of the hostility towards the Kirkby move and the history, etc. Is it really a pipe-dream, as I believe some well informed and well qualified fans are supporters of KEIOC?

Shaun Brennan
7   Posted 25/09/2009 at 17:43:21

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Redevelop Goodison, I like. But as for having a Hotel... who in their right mind would stay in a hotel in Walton? The roads are covered in dog shit. The contempt some people have for their own doorsteps is unbelievable. The place isn’t exactly tidy either.
Shaun Brennan
8   Posted 25/09/2009 at 17:45:06

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Oh yeah, as for Uefa's rule, I pretty much see it as protectionism. The top (rich) clubs stay in the competition by snapping players up and the less to-do, us, remain where we are.
Chris Stone
9   Posted 25/09/2009 at 18:07:19

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Re Shaun Brennan: I’d stay in Walton!! The distance I have to travel on the odd occasion I can afford to come and see us play, coupled with the lack of hotels available in Liverpool mean this would be seriously considered by the likes of myself. Think it would have to be train or plane journey though, as car parking overnight is maybe not a great idea. I really think if anyone could buy up some land nearby and develop a hotel with secure(ish) parking they’d make a killing, no?
Steve Pugh
10   Posted 25/09/2009 at 18:18:31

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Personally I’d like a hotel at Finch Farm, with a coach laid on to any matches that might be played. I would stay there every time I went to Liverpool. Just imagine looking out of your window and seeing the lads train, how good is that?

As for the Uefa thing, they’re making the right noises, but the sums don’t add up.

Peter, I like your point on Europa League places, they should take one of the CL places and make that EL, and scrap the Intertoto to give another one.
Rupert Sullivan
11   Posted 25/09/2009 at 18:19:20

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Much as I admire what Platini is trying to achieve this can only cause the rich clubs who already compete at CL level to maintain their grip on the money. What is needed are efforts to reduce the money aspect of the game.

The CL should be for Champions only, and the Europa cup for runner’s up and the prize money should be reduced to suit. Allowing top clubs to rake in an extra £20m a year can only increase the gap between the rich and the poor as per the Scottish Premier League.

Unfortunately European legislation prevents a lot of the initiatives such as using local players only etc, and until sport in general is exempted from this I cannot see it changing.

UEFA are content with the status quo since they rake in a fortune from all of this, them and the clubs. Unfortunately if the money is removed so is in large part the incentive, but perhaps that is just what is needed to bring football back to a normal footing.

Alternatively, perhaps the teams to compete in any European cup should be selected completely at random from the participating leagues.

Cloud cuckoo land I’m afraid.

Still, let’s hope the French wizard keeps plugging away, he may hit upon something yet.
Rob Heib
12   Posted 25/09/2009 at 18:38:54

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First off, we need to make sure we’re discussing the right concept. The figures you posted were profit; all it says on that page is:

[[ Under the concept, clubs cannot repeatedly spend more than their generated revenues.]]

If it’s generated revenue then our revenue is WAY higher than anything we’re likely to spend. We’re actually something like 24th in the world for revenue. While City couldn’t have spent quite as much they still have large enough revenues to be able to spend 75-100 million per season. So it’s hardly going to cripple them.

The wording is interesting too in that it says "repeatedly." As in, are they allowed to do it once? Twice?

Honestly I wouldn’t hold your breath that this will change anything. Just like the new homegrown player rules which ALL Premier League teams currently, without making a single change, qualify for already. Some change.

It’s pure theatre and I don’t think either of these rules will change a thing.
Gavin Ramejkis
13   Posted 25/09/2009 at 19:18:32

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If Walton is such a dump, why are the RS building a stadium there? (Well... if they get any cash!) Tom Hughes has posted time after time the factual basis that Liverpool is crying out for hotel rooms and a high occupancy rate in terms of the national average. Given the city being so close and if Castle Greyskull II ever gets off the ground would fill it, the club would be looking at a revenue stream DK simply would never ever give them.
Mark Stone
14   Posted 25/09/2009 at 19:31:49

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The only way this could create a level playing field is if a co-requisite was getting out of debt within a certain timeframe.

If you're saying clubs can no longer go into debt... surely you have to say those that already are need to get out of it.

The shite would be screwed.
Andy Crooks
15   Posted 26/09/2009 at 00:10:26

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Peter, I think that the figures you quote for Champions League success are over the top to put it mildly.
Ian Guess
16   Posted 26/09/2009 at 10:07:58

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Is it not correct that it’s law in Germany is that the clubs have to live within their means and not go into debt.

The result there is the most competitive league in Europe
John Lloyd
17   Posted 26/09/2009 at 15:50:35

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How do Spurs turn a profit???? Their fanbase is comparable to ours, ground is not so big & they pay silly wages and big transfer fees every year??

We need the people who run them running us!!!
Peter Griffin
18   Posted 26/09/2009 at 19:19:28

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Andy Crooks - In the 2007-08 Champions League £102million was earned between Man Utd, Chelsea, Liverpool and Arsenal in tv and sponsorship money alone. Bear in mind Arsenal, for example, receive £3million every home game, and the £102million doesn’t include gate receipts, merchandise or prize money etc. I don’t think "the figures I quote for Champions League success are over the top" — not even mildly.
Mike Green
19   Posted 28/09/2009 at 10:51:18

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John - dont have the figures to hand - I’m sure someone will do though to back this up.

We are very similar to Spurs on revenues until you get to corporate revenues. From memory (don't quote me) I think we make c.£3m pa and they make c.£30m pa... something like that.

How / why? Like it or not there's a lot more money sloshing around down there and they can attract more clients at rates we would baulk at on Merseyside. I think that's the bottom line — plus in fairness to them they must be doing it well.

I’ve been involved in these interactive CDs used for marketing purposes — large hotels chains, car manufacturers etc are quite big on them. I was sent a bag full by the manufacturer to have a look though and in the pile there was one Premier League club — who? Spurs.

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