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Articles and reports on financial issues within football – soccer – from The Political Economy of Football.
Barcelona is the latest European football club to invest in China on the back of President Xi Jinping’s plans for a football revolution. They have opened a €4m complex featuring a football school, Barcelona shop and fan zone on the island of Hainan. They believe that revenues from China will be critical to Barcelona’s target of generating €1bn of revenue by 2021, up from €679m in the 2015/16 season.
A winding up petition has been issued against Bolton Wanderers over an unpaid £5m loan. The loan, from a finance company, was used to fund the takeover of the club. The case will be heard on May 22nd.
The relationship between the tax authorites and football has been a difficult one in recent years. There was the controversy over payments for players ‘image rights’ while the tendency of clubs in financial difficulties to use their tax payments as a de facto credit card also gave rise to resentments.
In recent years HMRC has collected more than £80m in additional tax payments from clubs, players and agents following probes into ‘image rights’ payments through which parties to a transfer can make large tax savings.
A new offer for Coventry City has been made by a consortium of local businessmen. It includes plans for fan involvement.
It was recently suggested that the Australian consortium reported to be interested in Charlton Athletic had also taken a look at the Sky Blues.
Despite their mismanagement of the club, Sisu has never shown any willingness to sell up.
The Chinese Dai family that are behind a proposed takeover of Reading were previously subject to a Premier League investigation that raised ‘red flags’ about their commercial background. This happened when they made an earlier bid for Hull City.
Their most high profile investment is based on transforming unused air raid shleters in China into shopping malls. They have to be vacated if war ever breaks out. This raises the bizarre spectacle of people sheltering amid displays of luxury western goods.
Premier League clubs have made a combined loss for the first time in three years. Clubs in the Premier League posted combined revenues of £3.6bn for the 2015-16 season, a 9 per cent rise from the previous year, according to Deloitte.
However, spending on players has outpaced revenue growth. Wages increased 12 per cent to £2,3bn which along with other costs, such as splashing out on transfer fees, helped to push clubs into a combined pre-tax loss of £110m.
In 2010 Portsmouth FC were £30m in debt and in danger of going out of business. Today they are free of debt and back in League One. It hasn’t been easy and this blog summarises the story.
Clubs without such a large and loyal fan base might find the journey back even harder.
This weekend’s game between AC Milan and Inter Milan was billed as the ‘Chinese derby’ with both clubs now having Chinese owners. The lunchtime kick off was ideal for the Chinese market.
Inter’s majority owner is a Chinese retailer with revenues in excess of £15bn.. The group has experience in football. owning Jiangsu Sining, runners up in the Chinese Super League last season.
The fall in the value of the pound after the Brexit referendum has hit the Premier League hard. A pre-tax loss of £312m is expected to be announced this week.
For many years the TV contracts that have fuelled the league’s boom have been paid in sterling, dollars and euros with the company paying the league clubs in sterling and using derivatives to manage the exchange rate risk. However, the accounting rules for reporting derivatives have changed.
The acquisition of a 75 per cent stake in Reading by Chinese duo Dai Yongge and Dai Xiu Li appears to be closer. They were involved in an unsuccessful bid for Hull City. This week Lady Sasima Srivikorn, part of the Thai consortium that owns the club, said that running the club had become ‘too costly’.
This was met with scorn by some Reading fans, given that majority shareholding Narin Niruttinanon has a bank balance of over £400m.