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 A lot of attention has been focused this month on the plight of Gretna, the club from a small Borders town that made a rapid transition from non-league status to the Scottish Premier League (SPL), bankrolled by Brooks Mileson. Now the flow of money has suddenly been turned off, after Gretna were already facing enough problems having to play their home games first at Motherwell’s Fir Park and then even further away at Livingston, producing record low attendances for the SPL. Gretna was simply not viable as a top flight club without a sugar daddy. Why Brooks Mileson suddenly withdrew his funding is a matter for speculation, but he has been very seriously ill in hospital.
The moral might seem to be: don’t rely on a benefactor. The casualties are there to see, Rushden and Diamonds in Northamptonshire being another example, although they only fell from League 2 to the Conference. At Gillingham, Paul Scally is showing signs of getting fed up with the stick he takes from the fans and there are indications that changes may be happening at the seriously indebted club. The biggest benefactor club of them all is, of course, Chelsea and from time to time there is speculation about what would happen if their Russian owner walked away. But he shows no sign of doing so and Chelsea are trying to achieve a break even position by 2010, although at the moment they are long way short of their target.
The simple fact of the matter is that modern football needs benefactors. A recent Radio 5 programme on the finances of Football League clubs included the suggestion that, based simply on gate receipts and other income, only one league would exist on a full-time basis outside the Premiership. The fact that so many clubs do manage to survive reflects the fact that there are still many people prepared to underwrite their losses.
The old joke runs: how do you make a small fortune? Start with a large one and buy a football club. Of course, for a business person, it might make sense to run up losses on a football club rather than give your profits to the taxman. However, many of those who put their money into a club in trouble are often motivated by a strong identification with the club that dates from their youth. Once their money is exhausted there always seem to be someone to replace them on the ‘another one along in a minute’ principle.
But how long can this go on? Some clubs seem to lurch from one crisis to another, Rotherham having gone into administration for the second time in fifteen months. Halifax is another Yorkshire club to require the services of a receiver again, this time in the Conference. It can be particularly difficult for small northern clubs when there are clubs in higher leagues a short distance away (the two Sheffield clubs in the case of Rotherham). Some commentators are making the case that the 10 point penalty for going into administration is no longer sufficient and that clubs taking this route should be automatically relegated.
That would not, however, solve the underlying problem which is that clubs are spending well beyond their means in the quest for (relative) success. Some of them blame the collapse of the ITV Digital deal, but this was a case of clubs spending money they hadn’t actually received. Even most clubs in the Conference are now full-time and there are some non-league clubs at lower levels than have full-time players.
Could the answer be to revert to the old system of regional leagues? Even at non-league Level 2 (Conference North and South) clubs have to travel longer distances for matches which pushes up their transport costs. It also reduces the number of away fans able to travel, not helped by the practice of organising weekday evening fixtures between clubs a long way apart. However, such a system would be less competitive in the sense of fewer chances of promotion and relegation. There is no easy answer.
The credit crunch may, however, put a number of clubs in a perilous position. Banks are likely to be less tolerant of large overdrafts, particularly when they are inadequately secured. Clubs very rarely disappear and when they do they are often re-formed at a lower level, making their way back up the pyramid (Accrington Stanley, Aldershot, Maidstone). However, we may be approaching a time when it isn’t actually possible to put together a rescue package. For genuine fans of a club this is tantamount to bereavement. That is why these issues need to be discussed more systematically.
In comparison the continuing troubles at Liverpool are of a different order. They will not lead to the club disappearing, although whilst attempting to appear phlegmatic, manager Rafael Benitez ends up looking harassed as he tries to focus on what is happening on the pitch. George Gillett has publicly criticised his erstwhile business partner Tom Hicks and has said that the pieces on the chess board are moving. Checkmate can sometimes can quickly and unexpectedly. For Liverpool fans it can’t come soon enough.
Football Economy is a monthly article about the business of football by Wyn Grant, the publisher of footballeconomy.com.
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