Designed to Fail: Are Premier League Finances Built on a False Economy?

When the international financial bubble burst back in 2008, courtesy of a pin-prick sharpened by falsified inflation data and the blasé misadventures of a powerful financial elite, the blood-curdling pop could be heard across the globe. Bloomberg’s detailed explanations of ‘credit derivatives’ and ‘asset-backed securities’ left swathes none the wiser, and that pin was emphatically – and perhaps justifiably – turned back upon the bankers.

The moral outcry seemed universally founded in the unwarranted bonuses paid to the very people who plunged us into this crisis; why did AIG pay $218 million in employee bonuses when it had received $170 billion in taxpayer bailouts in the previous fiscal quarter? Truly puzzling.

Yet as the rest of the civilized world tightened it’s belt – in the case of the banks it has long taken the shape of a noose – the football industry loosened yet another couple of notches. The £485 million spent in the most recent summer transfer window by Premier League clubs was an increase of £120 million, or 33%, on the previous term.

In the exceptional case of Manchester City, the club has been passed into the oil-drenched grasp of Sheikh Mansour bin Zayed Al Nahyan; a politician and member of the ruling family of Abu Dhabi believed to be worth a total of £20 billion. Sheikh Mansour is a privileged business mogul and self-professed football novice. Closer inspection of his credentials presents us with the image of a spoiled child that has been left, glazen-eyed and alone, in the world’s most expensive sweet shop.

Yet when said child goes on a binge of Parma Violets and Kola Kubes, an outraged public are abrupt and vociferous in their condemnation. Why is that child eating all of the sweets? Why won’t he let any of the other kids have any? Why doesn’t he care that the last Fizz Wiz Cola cost him thirty-eight million pounds?

These dizzying figures being spent in football are no less incomprehensible than Bloomberg’s mystifying economic-for-dummies spiel; but where did such seemingly unimpeded levels of financing that saw Fernando Torres join Chelsea for £50 million at a time when small businesses were closing at unprecedented rates begin?

Rewind to January 1905, and Middlesbrough break the bank with the record signing of Sunderland’s Alf Commons for £1,000, with the Teesiders consequently quickly leaping from relegation fodder to mid-table anonymity in the earliest recorded instance of money buying relative success.

The Football Association reacted furiously, desperately clinging to beloved amateur ideals; “the buying and selling of players is unsportsmanlike and most objectionable in itself,” former FA member J.C Clegg proclaimed. “It ought not to be entertained by those who desire to see the game played under proper conditions.”

A transfer fee limit of £350 had been introduced by January 1908, but within four months, the FA’s valiant intervention had been withdrawn as player power had grown to sickening levels. By January 1905, Andy McCombie was rumoured to be earning as much as £8-per week at Newcastle, as clubs finally wrestled power away from domestic football’s governing body.

By the time Jimmy Guthrie adopted the position as chairman of the Players’ Union in 1947, the wage cap had reached a preposterous £12-per-week. In all seriousness, it seemed the recurring failures of football’s regulatory organizations to curb the spending of recently privatized clubs sewed the seeds for the enduring malaise we experience today. The FA had lost control in the name of money.

By 1961, the PFA’s new chairman Jimmy Hill took it upon himself to restructure the existing ‘retain and transfer’ process of English league football, ultimately hoping to entirely eradicate the wage-cap system. His successful lobbying – pure in its intentions – had unintentionally opened the door to market forces; the intensification of commercial sponsorship and increased private investment over the subsequent fifty years has lead to the relentless shattering of spending records.

Despite making a record income last year, the Premier League’s twenty clubs collectively lost almost half a billion pounds. Lucrative TV deals and the world’s most expensive ticket prices accumulated revenues of £2.1 billion, but 16 of the 20 still recorded losses. Now the unsustainable model of reliance on wealthy owners poses doubts over the Premier League’s inability to meet UEFA’s proposed financial fair-play rules.

Yet as we take another glance in the direction of Sheikh Mansour’s bankrolling of Manchester City, his use of dynastic oil millions raises the question of private financing. Why shouldn’t he continue to gorge on sugary treats if it is coming out of his own pocket money? Well, perhaps because the gluttonous overindulgence could induce vomiting, and the fear of a cut-and-run escape from Mr Mansour would leave Manchester City in peril, and the Football Association – draped in a pinny and rubber gloves – cleaning up the mess.

The need for regulatory balance only becomes more acute as the financial imbalances of football become more apparent. The gross annual median salary in the UK is £26,000, yet Wayne Rooney and Carlos Tevez earn that amount in a single day for kicking a ball around on a lawn. Is this truly justifiable?

Historically speaking, it seems it is. Gaius Appuleius Diacles, a Lusitanian Spaniard and the most celebrated charioteer of Imperial Rome, earned a total of 36 million sesterces over his 24-year career; the equivalent to a staggering £15 billion in modern terms. The “best paid athlete of all time” could theoretically of provided a year’s supply of grain to the entire city of Rome. He did not, however, and I suspect neither will Wayne or Carlos.

Yet such historic examples provide an alternative outlook; the ‘problem’ is not exclusive to Premier League football. Other leagues (notably La Liga and Serie A) suffer from a similar malaise, so too do different sports (golf and Formula One, for instance). The historical deification of athletes finds its roots, in this country at least, in our canonization of the modern footballer.

Legions of football fans assemble at football grounds around the country on a weekly basis, willingly and of sound-mind, fully aware of the breadline created by their ticket price. Pull on the latest jersey and know that you are funding another goal bonus for the name on the back of the shirt. The fact remains that fans are aware of where their money is going, and have no grounds for complaint so long as they return the following week.

Until the undercurrent of disapproval over spiraling wage demands reaches a level that will cause fans or owners to abstain from their true love, players will continue to push the barriers of taste and decency in their wage demands.

Now we find ourselves in the most retrogressive of positions; fifty years after Jimmy Hill successfully campaigned for the abolition of a wage cap, the most viable of solutions to the financial mess of the Premier League seems to be its reintroduction.