As a High Court judge looks to save Liverpool from administration and a nine-point deduction, it has to be asked how one of the biggest football clubs in the world could be put into such financial plight. Liverpool’s turnover for the 07-08 season was £159 million with a profit of £8.3million. And yet three years down the line, Liverpool have debts which could excess £500million.
That just doesn’t happen at clubs like Barcelona and Real Madrid. Real Madrid spent hundreds of millions of Euros in buying Los Galácticos, including the purchase of Cristiano Ronaldo for €94 million. Yet they have topped the football rich list for five consecutive years. So why do English clubs frequently end up in financial ruins? Liverpool tops a comparatively long list of money mishaps with Manchester Untied – who recorded losses of £84 million this year – Portsmouth, West Ham, Cardiff, Crystal Palace, Sheffield Wednesday, Hull City and Leeds United joining them.
Ten years ago Leeds United were a top-four club and playing in the Champion’s League. They signed Rio Ferdinand for £18million and were looking rosy under manager David O’Leary. With established stars such as Robbie Keane, Nigel Martyn and Harry Kewell, Leeds were flying high and looked set to eclipse the glory years of the 60’s and 70’s. But following financial mismanagement of the then-chairman Peter Ridsdale, Leeds spent money they didn’t have. A couple of seasons later, finances dictated a firesale of players and Leeds were relegated to the Championship. In 2007, six years after making to the Champions League semi final, Leeds were relegated to League One in a frankly embarrassing era for the club.
From a fan’s point of view, it is a shameful revelation that the finances can be allowed to get so out of control. Loyal fans, who have supported their teams through thick and thin for many years, pay their hard-earned money each week – only to be let down by incompetence from the owners, shareholders, whatever you want to call them. To say Liverpool FC turn over around £150-200 million per annum, there must be severe misguidance on the running of the club.
Liverpool hasn’t exactly spent heavily. Their last expensive or even flamboyant purchases were those of Fernando Torres and Alberto Aquilani for around £20 million each, with mixed results. But this wouldn’t be seen as breaking the bank for a club with the stature of Liverpool. And the wages aren’t exactly wallet-busting either. Only Steven Gerrard, Jamie Carragher, Joe Cole and Torres can be said to be on lucrative salaries – Liverpool’s wage bill is not excessive. And yet their court case is dominating the headlines. The blame is therefore laid on the big heads, and those heads must roll.
Take Hull City for example, just 10-15 years ago they faced administration. They were even locked out of their own ground and faced closing as a football club for good. But under the leadership of businessman and chairman, Adam Pearson, Hull City stabilised and made their way to the Championship in a mere few seasons. Hull City was then sold to Russell Bartlett, led by Paul Duffen. Duffen allowed the club to spend money very willingly; it led to promotion to the Premier League for the first time in the club’s history. But exuberant spending soon caught up with City, who, branded by their £5 million acquisition of injury-plagued Jimmy Bullard, were relegated last season and once again faced administration.
Hicks and Gillett spent money they didn’t have, mainly on buying the club itself, and it put them in court. The old business cliché of ‘speculate to accumulate’ clearly shouldn’t have a place in football. Spending money that you don’t have may work in business due to likelihood of returns. But no such likelihood exists in football, no matter how good you are. And if you need proof of that – just take a look at Liverpool Football Club.
Andrew Woolston
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