The M Word | Football Club Mergers

Ground sharing between clubs is always unpopular with fans, but mergers of clubs attract even more opposition as they destroy a cherished identity. In most sectors of business a merger is a normal rationalisation procedure when businesses are failing, but in football it happens rarely and generally at the lower levels of the game. Dagenham and Redbridge, now in League 2, can trace back its lineage to three clubs. Moor Green, hit by a series of devastating arson attacks, merged with Solihull Borough to form Solihull Moors. However, it’s not a costless process.

Saints Post Big Loss

Southampton FC have announced a loss of £4.9m in the last financial year even after making £12.7m through player sales. Saints PLC chairman Rupert Lowe revealed that at one stage the player and coach wage bill was a huge 81 per cent of the club’s turnover. Also in the Southampton Leisure Holdings plc figures for the year ending 30 June 2008 was the revelation that the Championship club’s overdraft peaked at £6.3m during the summer.

Paul Davidson bid for Real Mallorca

Paul Davidson, the colourful City entrepreneur knwon as the Plumber, is running out of time to clinch a €38m bid to become the first foreign owner of a Spanish football team. Davidson, who this summer agreed to buy Real Mallorca, now has only a few days to seal the deal after requesting an extension to raise finance. If Davidson fails, former Newcastle chairman Freddie Shepherd and an unnamed Russian oligarch could step in. Real Mallorca is a mid-ranking La Liga team.

Leeds United Turn Their Finances Around

They may have been knocked out of the FA Cup by non-league Histon, but the financial position at Leeds United is looking a whole lot brighter. In May 2007 the club owned £35m to a variety of creditors, entered administration and were awarded a ten-point penalty that effectively relegated them to League One. Owner Ken Bates then persuaded the administrators to sell the club to a new company owned by Ken Bates.

West Ham and the Carlos Tevez affair

Some time ago we forecast on this page that West Ham United would have to pay compensation to Sheffield United over the Carlos Tevez affair, but the Blades would not get as much as they hoped. That is the way it looks like turning out. The Court of Arbitration for Sport in Lausanne is not going to look at the issue, so it will have to be resolved in the UK, but probably through an out-of-court settlement. West Ham has had access to United’s books, allowing them to work out the real cost of relegation.

Credit Crunch Starts To Hit Matchday Revenues

The standard assumption in the sports economics literature is that demand for tickets at top flight clubs in any sport is relatively inelastic, i.e., relatively unaffected by changes in (real) prices. That may apply in normal economic conditions, but we are now in what is probably the worst economic downturn since the 1930s and football cannot escape unscathed – although that does not mean that the most doom-laden predictions will be fulfilled. Some of the effects have been masked by the fact that season tickets were bought last summer before the economic crisis hit home.

Gap Between Championship And Lower Leagues To Widen

The Championship will get a big boost next season from a new television contract, but the gap between it and the lower divisions of the Football League will widen. This may revive talk of a two division Premiership with no or limited promotion to the lower leagues. A new contract will increase the broadcasting income of the Football League from £32m a year at present to £88m. Under a long-established formula, Championship clubs will receive 80 per cent of the extra money from BSkyB and the BBC, but League One and Two will receive only 12 per cent and 8 per cent respectively.

Pompey’s New Stadium In Doubt

Portsmouth FC’s ambition to move to a spectacular new waterside stadium could hit the rocks because of the club’s need to include shops in the development. Bankers interested in financing the £100m scheme have told the club that there must be a significant retail element along the 36,000-seater ground and housing, or the necessary cash will not be available. With the credit crunch biting the club have changed their plans to include shops, a hotel and supermarket.

West Rules OK in Bundesliga

Not one side from the former East Germany (DDR) has won a Bundesliga title in the nineteen years since the fall of the Berlin Wall. It looks like the wait could go on for quite a while, as Energie Cottbus are the old East’s sole representative in the top flight and even their position is under threat – they are currently bottom of the division. After reunification, the only DDR sides in a financial condition to join the top flight were Dinamo Dresden and Hansa Rostock.

More Uncertainties At Newcastle United

Long suffering Newcastle United fans face further uncertainties about the future of the club. Two American companies are said to be in the market to buy Newcastle. The usual broker in such deals, Keith Harris of Seymour Pierce, has described the potential purchasers as ‘wealthy investment funds’ and the ‘people behind them [are] first-rate’, but nothing is guaranteed. There have been suggestions that Ashley may be prepared to stay at the club, working in tandem with local businessmen.