Financial Fair Play in the Football League

The Football League (FL) took a big step towards securing a sustainable future for lower league football last week, when members voted to support the phased introduction of a Financial Fair Play (FFP) rule into the Championship. It has taken them two years, but finally the FL has taken a step in the right direction even if issues still remain unresolved.

The timing of the vote could not have been any more poignant. This year has been a bad year for football clubs, particularly in the Championship. The well-documented drama at Portsmouth is just the tip of the iceberg. A House of Commons (HoC) Select Committee report into football governance estimated that the combined aggregate debt of Championship clubs stood at £825 million by July 2011. In the early 2000s, first division clubs such as Ipswich, Wimbledon and Bradford entered administration, with the latter now plying their trade in League Two. More recently Crystal Palace entered administration in 2010 spending a good chunk of that year restructuring debt and repaying footballing debtors.

With this in mind, it was absolutely right that the FL took action and the best course currently available and acceptable to Championship clubs was clearly the introduction of an FPP rule. The Championship version is relatively clear. By the 2015/16 season, the level of ‘acceptable deviation’ from the break even figure will be £2m, down from £4m in 2011/12 (this in theory means that a club can lose £2m a year). The second provision caps the acceptable level of “shareholder equity investment” (i.e. money that shareholders can invest in return for equity in the football club) from £8m in 2011/12 to £3m in 2012/13. Clubs will be penalised through the introduction of a “Fair Play Tax”, a progressive tax, which will be redistributed amongst compliant clubs in an attempt to even the playing field. This will be levied at six different rates, from 1% of a club’s excess (meaning the amount over the combined loss and equity cap) between £1 and £100,000 and 100% of the excess over £10,000,000. The FL hope this will operate as a deterrent for clubs attempting to buy their way into the Premier League and level the playing field through its redistribution mechanism.

Before you get the wrong impression, may I first say, this system is far from perfect. First and foremost, even by 2015/16, it will still allow clubs to lose up to £2m a year, which is far from sustainable. Secondly, whilst it contains a provision to cap a club’s annual deficit, there seems to be no provision capping the size of a club’s total debt, allowing owners to saddle clubs with fatal debts without contravening this ruling. Thirdly, the £3m yearly limit on shareholder equity investment is still too high and guards against pluralistic ownership of football clubs. A lower rate would have served to level the financial playing field in the Championship which, coupled with reform of parachute payments (as yet, still unresolved), would serve to make the league more competitive. Lastly, the FL would have been better advised to introduce the Salary Costs Management Protocol (SCMP) which limits League Two clubs to spending 55% or less of their turnover on players wages. Such a measure encourages clubs to live within their means.

However, this is a step in the right direction. It demonstrates that the FL has recognised the problems in the Championship and is now taking the issue of football finance seriously. The footballing authorities have a responsibility to promote sustainability within the game, particularly if government is to remain out of the picture. Football is not a traditional business. The profit motive doesn’t exist. Owners tend to invest because they love the game or they enjoy the status that comes with owning a football club. The ‘customers’ in this instance have an emotional attachment to the providers of the ‘product’ and as such will not look elsewhere for the same product. In this environment, it is not difficult to see why debt piles up and clubs go into administration. Owners are encouraged to invest huge sums of money into clubs, by fans thinking with their hearts and not their heads, resulting in the disregard of long-term financial prosperity (the club I support, Barnet, being a notable exception). Therefore the FL and Premier League should take responsibility and regulate as stringently as possible to engender sustainability. In introducing the FFP rule in the Championship, the FL has taken a step in the right direction. However, more needs to be done.

Statement for Barnet FC Supporters’ Trust Election

In the interest of openness and transparency I am publishing my personal statement and ‘manifesto’ for the election of directors to the board of the Supporters’ Trust. Having previously said I wasn’t going to run, I changed my mind because I think I have a valuable contribution to make and I hope the members of the Trust do as well. Over the next few weeks I’ll happily answer questions from supporters, as long as they’re posted on this blog.

Click on this link to read it: Trust Statement

Barnet Supporters’ Jailbreak?

This was an email I sent to some Barnet supporters earlier today, about the possibility of a fundraising event. Let me know what you think. You can email me at oliver.deed[at]gmail.com or leave a comment on here. Thanks.

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Some of you might be familiar with a fundraising event, used by many organisations, called ‘Jailbreak’. For those of you who are not, let me explain.

The idea is that you get as far away as possible from a destination (point x, let’s say) in a certain time period without spending any money. You have to blag lifts (from people you don’t know), trains, buses and as many modes of transport as possible without spending any money to get as far away from point x as possible. I’ve done this twice since attending University and managed on the first occasion to get from Guildford to Portsmouth and on the second to get to Paris. I’ve known people who got to Prague and Basel.

I’d like to propose we put a spin on this and do a Barnet FC version. On Saturday 11^th February, we play Swindon at home and on Tuesday 14^th February we play Plymouth away. For a spin how about this:

Starting at 5pm after the Swindon game, pairs of Barnet fans will set off from the Pavillion Bar to start ‘jailbreak’. Their job is to make it to Plymouth FC, prior to 7pm on Tuesday 14^th February. If successful each team will get 150 points as this task would be relatively easy on its own. In the intervening period between the games, the job of each team is to try and get photographed inside as many football league grounds as possible, with would be worth 10 points each. Each team will be given an item to be photographed with in order to confirm they did it in that time period! The teams would still have to make their way to these grounds by blagging transportation.

The team with the most points by 7pm, the day of the Plymouth game would win (prize to be worked out, if this is a goer). I chose Plymouth primarily as it is far enough away to make this a challenge.

Teams would raise money for a chosen charity – or if it is run by the Trust perhaps for Noah’s Ark Hospice? This could be a great opportunity to generate some good publicity for the Trust and the club.

I’d love to hear some comments, preferably ASAP as I’d like to start garnering interest amongst Barnet fans and speaking to potential sponsors to see if we could get some prizes for participants. This would be very simple to organise and lots of fun, I hope you agree.

Kind regards,

Olly

Labour Group call for council debate on Barnet FC

Release from the Barnet Labour group:

The Labour Group of councillors have submitted a motion to January’s Full Council meeting calling on Barnet’s Conservative administration to renew efforts to help Barnet Football Club stay in the borough.

The text of the motion from Cllr Alison Moore is:

“Council is deeply saddened by the announcement that Barnet Football Club may be leaving Barnet and recognises all the work that the Club does for the benefit of the local community and young people across the Borough.

Council asks that the Leader and Cabinet do everything they can to secure the Club’s future in Barnet for the good of the local community, and all the supporters.”

Leader of the Labour Group, Cllr Alison Moore said: “The Club does great work in the local community and to help young people, and it would be a very sad loss were it to leave the borough – particularly given that the council is slashing the youth service by 75 per cent.

“Labour councillors are ready and willing to work with the council administration to try and secure the future of the Club in Barnet, and I hope the council debate will be the start of some cross-party working to that end.”

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This is excellent news. It has always been my view that the council should work, cross-party, to secure a future for the club in Barnet. Hopefully this motion can generate the sort of cross-party co-operation we need to secure the football clubs long-term future in the borough. I can only encourage Barnet fans to attend the full council meeting at 7pm on Tuesday 24th January at the Town Hall in Hendon. Details about how to get there can be found here: http://www.barnet.gov.uk/getting-to-hendon-town-hall.pdf

12/01/2011

Iowa; the big winner?

The story of the night to emerge from Iowa was Rick Santorum’s strong second placed finish. I certainly didn’t expect that, having predicted that Ron Paul would push Mitt Romney to the wire, finish a close second trailed by Santorum in third. So the pundits have it that the big winner of the Iowa caucus is Santorum.

Being the young contrarian I am, I’d like to disagree with the narrative emanating from Fox News and others. The big winner of the night was President Obama. For the following reasons:

1. The result ensures that the GOP race will be a contest rather than a coronation for Romney. This can only be good for Obama as we’ll see a lot more attack ads directed at participants in the primary contest as opposed to the President. For a flavour of things to come, take a look at this. The more grisly the contest gets, the better for Obama.

2. Santorum is a religious bigot, who has pandered to the most unsavoury elements of the Tea Party wing of the Republican party. His views on abortion, gay rights and religious education are something to behold. The longer he is given the spotlight, the better as this can only serve to shed light on the GOP’s extremist element, damaging Mr Romney in the process. Romney will increasingly have to pander to this wing of the GOP as he tries to assert his conservative credentials. Win win for Obama who can attack this extremist nonsense in order to profit from Independent support in November. Obama is already cultivating this narrative.

3. The longer this contest last, the less time the GOP has to prepare its electoral machine for November, as it fragments behind different, bickering candidates. Obama’s ‘shadow’ campaign in Iowa has been dubbed as the best organised of the primary by the New York Times despite the money that was pumped in by Republican candidates and the President’s unopposed nomination. Obama has been afforded extra time to organise before, most likely, Romney has the chance to rally the GOP machinery in its totality. This can only enhance Obama’s chances of victory in 2012.

It is for those reasons that Obama will be smiling today. This should all come with a very big caveat though. If Obama’s campaign indulges in complacency for a single moment, the GOP will capitalise. Political operators on America’s political  Right have a reputation for ruthlessness. If they catch a whiff of complacency, Obama will be punished.

So Obama must continue to guard against complacency and maintain an effective campaigning network a la Iowa, as the GOP juggernaut chunters across the America.

The GOP and Iowa Caucus: A British perspective

The starting pistol is about to be fired on the 2012 American Presidential election campaign. The people of Iowa have the opportunity to pass their judgment on the potential GOP nominees; which has been a tad tedious.

Yes, there has been a bit of drama. Herman Cain has had to suspend his campaign due to a slew of sexual allegations from a number of women, Michele Bachmann, Newt Gringrich and now Rick Santorum have led the charge against everyone’s least favourite frontrunner Mitt Romney, yet the former pair have fallen away as of late.

But this season of campaigning just doesn’t have the magic of 2008. The race lacks the spark of a Clinton or the inspiration of an Obama which is a sign of the times. The economy will be the central issue of the campaign and the GOP has had very little constructive to say about it. President Obama has set out a clear path for withdrawal of American combat forces in Afghanistan and troops have already departed from Iraq. Bin Laden has been killed and the American government exhibited constraint in its actions vis-a-vis Libya. It is true that healthcare remains controversial. Liberals are disappointed and conservatives furious. His personal approval ratings remain stubbornly low, hovering below the 50% mark.

Despite all that, the poor quality of candidate in the Republican field is testament to the strength of Obama’s re-election prospects. There were many who could have thrown their hat in the ring. Every day another name is mentioned, whether it be Chris Christie the Governor of New Jersey or Marco Rubio, the charismatic Hispanic Florida Senator. Yet they all remain silent, laying the ground for a shot at the nomination in 2016 when a Republican victory is more likely.

So whilst the campaign has been tedious the Iowa caucus will be most intriguing. My feeling is that Romney will scrap home with the maverick Ron Paul trailing in second. Bachmann and Rick Perry will perform poorly and withdraw within weeks. Santorum will finish a respectable third but his momentum will fall away as his lack of organisation across other states starts to tell.

Ultimately, Mitt Romney will be crowned the GOP candidate to face Obama in 2012. It is at that point that the election campaign starts to become interesting.