Liverpool FC Forum

by **Reg** » Wed Nov 04, 2009 7:27 pm

There are always parallels in life and football is no different. We´ve seen massive collective spending in european football over the last 10 years, transfer fees have rocketted, wages become obscenely high and management teams expanded to include bootroom staff and talent spotters. Football academies have sprouted from training grounds, worldwide spotters report back on the latest wannabes and squads have grown in number and in cost. Some clubs wage bills topped 80% of their annual turnover.

Of course revenues have increased, sponsership deals, tv rights, performance realted cash winnings at the end of the season and in general a more profession marketing effort has increased matchday revenues and improved earnings from a clubs worldwide fanbase.

At the same time we are all too aware that vanity, greed and simple bad business has exacerbated the problem leaving clubs in substantial debt. Chelsea will never be able to repay Abramovich, Glazer has watched United fall into massive debt content that whilst he can pay the interest bill at the end of the year then 'things must be ok'. Of course Twit & Tw@t killed our club on the first day because they couldnt even afford to buy us, saddling the club with the debt used to buy us then adding to our woes by failing to provide the investment needed to increase the ground size and through that, matchday revenues. You can deduce we are trying to service debt with a 42,000 capacity when T&T had budgetted for 70,000. Not surprising we dont have a tranfer budget... however this is known, but more importantly I suggest most clubs have a similar problem, be it small, medium or big depending on the clubs status and recklessness.

So where does this lead us and what is our parallel? Well we´ve seen the private Formula 1 teams go by the board over the same 10 year period, Jordan, Benetton, Tyrell, Jaguar, we´ve seen Maclaren sell out to MB, we´ve seen the major car manufacturers bludgeon their way into the sport and onto the podium: Toyota, Honda, Renault, BMW and the big sponserhip money of Red Bull etc.. swamp the pure racing teams. How Frank Williams has survived god only knows.

But suddenly the engine suppliers who in fits of macho-ism took over the sport, realise they cant afford it, its not their job, its not their strength.... Honda, BMW andToyota are out, Renault are reconsidering and MB are considering getting out of McLaren and possibly into Brawn, the bastrad offspring of the Honda team. Ferrari, the Red Fiat have splashed their budget and are looking forward to having a quiet few seasons out of the limelight.

In short, as I always say, there is no free money, there is no secret to making money when others cant doing the same thing. The car manufacturers entered an extremely high tech and high R&D budget sport without a proper business plan that demonstrated that 1 + 1 = 2. If Toyota pull out then believe me no other team can justify being in the game.

So can Real madrid afford to splash out like they did this last closed season on Ronnivestite, Kaka and the others? Of course they cant. Or Abramovich on the Chelsea squad? Or LFC ?

Madrid are in the Toyota 'Oh my god what have we done' position, United are the Ferrari - down shutters and dont touch the Ronaldo money and Liverpool are MacLaren Mercedes seeing the owners wanting to bale out but with no takers.
.
What Formula 1 needs is to return to the current car manufacturers and specialist firms reverting as engine suppliers and Lotus, MacLaren, Williams and the likes of Eddie Jordan providing the the racing technology. Split the roles, the costs and the overhead to create a viable concern.

What european football needs is a debt cap as a percentage of turnover, salary caps as a percentage of turnover and publically declared debt to equity ratios. That way, clubs wont be able to splash obscene amounts on transfers, wages will remain at sensible levels that allows for greater competition and owners will be committed to investing in the CLUB rather than the horses on the field. I would also outlaw third party offbalance sheet 'loans' trying to circumvent the debt/equity issue, hence if a person want to put money into the club it would have to be associated with a purchase of stock in direct proportion to the funds made available as investment capital.

Those two schemes are designed to take the financial stress off the two sports' structures, allow a breathing space to recover and repair balance sheets and allow future growth in a more sustainable manner which protects the sport and provides for future generations.

And the winners are? Stand up Williams F1 team and Arsenal FC.

Copywrite the Regerator whilst waiting for kick off.

by **Reg** » Thu Nov 05, 2009 12:55 am

53 views and no comments? Dont you consider the financial crisis to have equal consequences on all over leveraged business and sport? If the car giants pull out of F1 dont you think our over stretched premier league football club finances must be feeling the same heat?

by **Emerald Red** » Thu Nov 05, 2009 1:13 am

It's a good point you make, Reg, and it's touching on something Rafa came out in the press with after the Fulham game, that is of course, if your analogy is to be correct, which I think it is.

Ever since back when we were the first side to ever get a sponsor on our shirts, no one could have predicted or forseen the impact, or that the game would forever be transformed by such a thing in the not so distant future. We were the top side then and everyone wanted a peice of us, investing in us for the future. It's that money driven future that has contributed to our downfall as we see it today I feel. No longer is the game about the holy trinity as our fans famously put it. There is now a fourth entity that is just as vital to the other three, and posibly even more important. That's the sponsorships, the TV deals, and the investors. It's all money, money, money, which brings me to Rafa's comment in the press that he feels like he doesn't have to win trophies. All he basically has to do is keep the ship steady and make an upturn in the profits; to balance the books. To be a good manager these days is more than being just a good footballing coach and tactician, you have to have a brillaint business brain too and it's one of the reasons why Benitez is still in a job at Anfield IMO. Twit and tw@t are afraid to sack him, because so long as he keeps on increasing the value of the team and club, it's better for them to eventually cut and run when the price is right. Sure, Rafa hasn't won a trophy for us in a few years, but neither has Wenger. The same reasons why Wenger isn't getting the sack is the same reason why Rafa isn't. It's got nout to do with football anymore.

by **big al** » Thu Nov 05, 2009 1:19 am

Reg you make very good points here. I would say though that F1 does not have the religious conatations of football and that in many ways those who go to games are amongst those who can least afford it. Football is their religion so who know where the line is drawn. When I saw you paralells text I tought you where gonna talk about the demise of Houllier. It seemed to start in much the same way as the current Saga with Rafa. Grumblings became moans, moans became arguements. People questioned the players he bought, then right near the end all his best players seemed to get injured, and the journeymen he bought were exposed as charlatans mascarading in a red shirt. Houllier was unlucky in the end, fact is he won more than Rafa. If the paralells are true the Rafa will see out the season. Somehow I don't think that that's the case. " I see great difficulty" that was my go at mystic Meg.

by **big al** » Thu Nov 05, 2009 1:32 am

Reg one other thing is that twit could buy In fact he's cash rich at the moment. He seems to be liqidating his assets for some reason. I have this very uneasy feeling about what has been going on upstairs. I think Benetiz has been instrumental in the fall of Parry and now Gillet. There was a clear taking of sides after the Klinnsmann fiasco. Hicks courted Benetiz and they seemed to get very palsy. Benetiz May well be in a position of power but we should never forget that these American bussiness men are ruthless. So whilst Emerald red is right in one sense about increasing the value of the club, the Chapions league is where its at. Failure to qualify this season is bad, failure to qualify next season is a catasrophe for twit and :censored:

because they need that money to pay their debt (well Hicks needs it). Rafa needs to be careful of the politics he could become a scape goat.

by **Reg** » Thu Nov 05, 2009 1:47 am

Emerald Red wrote:It's a good point you make, Reg, and it's touching on something Rafa came out in the press with after the Fulham game, that is of course, if your analogy is to be correct, which I think it is.

Ever since back when we were the first side to ever get a sponsor on our shirts, no one could have predicted or forseen the impact, or that the game would forever be transformed by such a thing in the not so distant future. We were the top side then and everyone wanted a peice of us, investing in us for the future. It's that money driven future that has contributed to our downfall as we see it today I feel. No longer is the game about the holy trinity as our fans famously put it. There is now a fourth entity that is just as vital to the other three, and posibly even more important. That's the sponsorships, the TV deals, and the investors. It's all money, money, money, which brings me to Rafa's comment in the press that he feels like he doesn't have to win trophies. All he basically has to do is keep the ship steady and make an upturn in the profits; to balance the books. To be a good manager these days is more than being just a good footballing coach and tactician, you have to have a brillaint business brain too and it's one of the reasons why Benitez is still in a job at Anfield IMO. Twit and tw@t are afraid to sack him, because so long as he keeps on increasing the value of the team and club, it's better for them to eventually cut and run when the price is right. Sure, Rafa hasn't won a trophy for us in a few years, but neither has Wenger. The same reasons why Wenger isn't getting the sack is the same reason why Rafa isn't. It's got nout to do with football anymore.

Red you make an excellent point about Rar-far.

Rafa as boss is worth X% or million of turnover per year.
Rafa + Torres + Reina is worth Y% ?
Gerrard is worth how many million of turnover a year.

Standard Chatered agreed was it 20 million quid a year shirt sponsership basis Torres, Gerrad and Rafa being there hence new contracts.
Rafa is sacked Torres leaves and Gerrad gives up and goes to Chelsea = 12 million sponsership value a year?

See what I mean, you can construct revenue predictions given different scenarios and publicity values.
Add the publicity for a new stadium PLUS sell the naming rights and its worth what per annum?

So yes you're right, Rafa is part of the brand and is worth X million a year in revenue so as long as he guarantees media exposure via a CL or high profile UEFA cup campaigns and a reasonable league performance, I understand, dont sack him.

It also adds to the need to get started on the stadium.

And those sad b'stards who travelled to Lyon today thought they'd gone for the footy......... :sniffle

by **Reg** » Thu Nov 05, 2009 1:55 am

Big Al, Rafa brings something to the brand the yanks never will - an acceptable face. Rafa is THE face of the club - dangerous when some section of the fan base want to sack him. Why d'you think Kenny was brought back? As insurance and to give fans the illusion that we're back to the old ways - lets face it, its slightly odd the owners cant show their faces in the city. Its a cheap trick but understandable.

Anyway, we've moved off the subject of parallels.

I believe in the next 5-7 years we'll see the vulgar money go out of football and we'll see Platini's financial revamp, local owners will come back into the game on much lower budgets and hopefully we'll see the game become more fan orientated once again. I believe we'll see the future direction of club football come from the future direction of F1.

Watch this space.

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