I rented both Wall Street and Wall Street: Money Never Sleeps (half-decent and crap respectively); inspired I threw out my belts in favour of red braces, and bought a giant brick of a mobile phone. I slick my hair back now and I pretend to pay attention to the financial press by hiding my copy of FourFourTwo or WomensWeekly behind an oversized Financial Review.
With this new found cashmoney devotion of mine it was with interest (pun intended) that I turned to an article sent to me from the Financial Times, from a friend with far greater intellect and financial understanding than me. The article is entitled 'Crunch time for football clubs as costs grow' and concerns the latest annual football finance review from Deloitte.
It should come as no surprise to anyone reading this that wages in the Premier League are on the up. Manchester City have singlehandedly contributed to this no end end - Yaya Toure makes even Gordon Gekko look small-fry. Obviously a mitigating factor to even those clubs without billionaire benefactors is the increased revenue that Premier League clubs are earning from the improved television rights package - however despite this increase in income that amounts to £6m per club, Deloitte estimates that wages have risen and will continue to rise at a rate of around 10% per year.
This paints a pretty bleak picture - not every club can bring in the money that United and Arsenal in particular do; not every club has an owner that can provide the money that Messrs Abramovich and Mansour have proven themselves willing to part with. How are the lesser lights of the Premier League supposed to cope with this increasingly unrealistic expectation of wages to turnover ratio?
Even to my feeble financial mind it is clear that if a business is costing more money to run that it is able to generate, things cannot end well. Football is surely not immune - Portsmouth proved that even Premier League clubs are not invincible - although the fact that they got off so lightly (in my biased opinion) perhaps indicates why football clubs are willing to keep up with the Jones' even when the Jones' make a crazy amount more than you do. Worst case scenario, drop down to the Championship for a year or two, pay off your non-football creditors to the tune of a penny in the pound if at all, and regroup to get back on the gravy train.
The Championship, dwelling ground of Portsmouth and many other clubs who have known the feeling of kicking it up in the promised land, is the ill-fated arena for the financial armageddon, that I believe the current spending trends will surely result in.
Deloitte's report highlighted two pertinent facts regarding the finances of Championship clubs. One: wages now make up on average 88% of revenue. Eighty-eight percent. That is ludicrous. For every £100 that a club takes in, say, a family of four going to a match, £88 of it goes straight into the pockets of their players. Scary.
Two: From the 2012/13 season, the income for Championship clubs from TV revenue will drop by 25%. So they will be earning less money than they currently do, meaning the ratio will increase further.
The knock-on of this is likely to be increased ticket prices for fans, which at Championship level does not hold the same vicelike grip as the upper echelon Premier League clubs have over their own faithful. Clubs will turn fans off and see them spending their time and money elsewhere, further damaging the revenue stream. The 'product' is not as high quality so people have less qualms about giving it a miss. So what can they do?
Recently, Sralun Sugar had a crack at solving the financial state of football in a BBC documentary in which he came up with basically nothing new. I was a bit disappointed in that show, hoping to gain some unique insight from a clearly knowledgeable businessman, but it did not really dish up anything other than was obvious. There was one indisputable fact presented in the show that I had to agree with though.
The way football clubs are currently run in England is not going to work. This cannot go on without some serious casualties, maybe it will take a mega club to disappear before all clubs realize, we simply can't pay these wages. Perhaps we need to take the hit for a few years, allow the players to go abroad in search of the biggest pay packets - who knows it might even improve the development of our young domestic talent.
If football in England does implode and eat itself, and a few giants collapse, it may not be the worst thing to ever happen. The way things are going, can it even be avoided?
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