Member Article

Football and finance…what’s the score?

With a nod to economic times, and the cost of supporting my football club, I cleaned out my wardrobe the other day. Bear with me.

The charity bag on my doorstep proclaims in bold, upper-case helvetica, that my old clothing helps others less fortunate. I’m happy to donate some of my old clothes (while selling my old football kits to my uncle for my cousins!).

Charity 1-1 Austerity

Provoking rose-tinted memories of magical moments at St James’ Park, one football strip seems particularly dated - the emblazoned ‘Northern Rock’ logo set me thinking about Football & Finance…

Last year, research by Moore & Levermore concluded: “the sports industry can be regarded as largely constituted of Small & Medium sized Enterprises, either in entity size, turnover or mentality.”

In their study, 79 of 92 English clubs ticked the SME box - including Capital giants, Spurs & Chelsea.

Dan O’Sullivan of makeitcheaper.com concurs: “many football clubs display archetypal characteristics of SMEs … trying to establish themselves in a market dominated by a powerful minority of established brands.”

On Tyneside there’s a line - marked by the River. The dominant brand is to the north:

In 2010, the publicly owned Northern Rock bank defended their sponsorship of Newcastle United, saying that investing a reported 10 million pounds was in ‘the best interest of the tax payers’.

South of the line, Gateshead Football Club - an SME by all criteria - has partnered with Gateshead Council. The town’s ‘Fit for a City’ slogan used to be on the kit, and the club is a tenant of the council, with plans for a new stadium opposite the Civic Centre. Community links can be invaluable for SME clubs.

But there’s another line in football & finance. And in Spain it may have been crossed:

‘The Independent’ reported in April: “Real Madrid are the subject of a European Commission investigation following allegations they have received illegal state aid.”

The case is linked to a land deal with Madrid Council, and UEFA’s Financial Fair Play regulations forbid state aid.

When a £15billion poverty rescue fund from EU taxpayers was given to Spain, helping the Bankia Group, who in turn controversially agreed loans to Real Madrid enabling their World Record 100 million Euros purchase of Gareth Bale… more eyebrows were raised.

Ironically, in 2005, when Newcastle paid £16m for Michael Owen, they bought him from Real Madrid - helped by funding from Northern Rock (before the British taxpayer was called to the Bank’s rescue). Owen wore number 10 – and I bought the kit.

The deals may make business sense, but most football fans speak a different language: assets are star players - liabilities are dodgy defenders.

I like to think that, somewhere in the Madrid suburbs, a lad’s handing down his Real Madrid shirt to his young cousin. They’re off to the Bernabeu – where a return on their investment is being able to share the cheers, not cheer the shares.

This was posted in Bdaily's Members' News section by Joseph Payne .