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Football and tax-funded bailouts

I guess it was inevitable. Football, like other aspects of life, has been hit by the credit crunch. In the case of Southampton, a team that once graced the top flight of the English league and has boasted some notable cup wins – famously winning the FA Cup in the 1970s – it has suffered terribly. It is now in danger of extinction. My own team, Ipswich Town FC, was in administration a few years ago although it has been since taken over by Marcus Evans, the man who owns the eponymous conference organising company. Ipswich also has appointed former Manchester Utd and Ireland international player Roy Keane as its manager (gulp, nervous laughter).

Henry Winter, one of the main football scribes in the print press, believes Southampton’s local council should buy the team. He argues that the council and the lucky taxpayers of the south coast will be getting a bargain. Maybe. But it is not the business of councils to be spending money on what has been the money pit of professional sports, particularly when a place such as Southampton has many competing demands for public funds, such as policing, garbage collection, road maintenance and so on. As I said, when my club was in financial dire circumstances, no doubt some people would have been happy to see the Suffolk taxpayer foot the bill to put The Blues back on top. But wiser heads prevailed.

The sad fact is that football clubs can die if the finances run out. We have seen teams like Leeds Utd hit by unsustaintable debts in far happier economic conditions. Even mighty Man Utd has heavy debts stemming from the leveraged buyout by the Glazers, while Chelsea is kept in the lifestyle to which it is accustomed due to Abramovich’s huge Russian oil wealth. The economics of sports clubs are a murky affair at the best of times. So my message to Southampton fans is that it is better for a hard-nosed private investor to sort out the club than a bunch of politicians. If Southampton really is a bargain, why are public funds needed – surely a canny entrepreneur will spot the opportunity? I hope someone does.

I sometimes wonder why as, a football fan, I put myself through all this heartache. My wife shakes her head in wonderment.

6 comments to Football and tax-funded bailouts

  • John Louis Swaine

    I’m in the delightful position of supporting a team which used to be run like a spendthrift council (to the extent that we only survived financially by selling our best player) which is now run well and at a steady profit.

    I speak of course of the mighty Tottenham Hotspur. No public funds for us thanks. Enjoy your new Roy Keane experience – he might do better now as it’s easier to lure players to Suffolk than it is to lure them to the North East. (Can’t think why no one would want to live in a drab part of the country where the state represents 70% of all employment).

    Oh and please turn Dos Santos into the sort of player he can be rather than the player he is.

  • offside

    Daft idea using public money for the business of paying big wages to poor players. Plenty of teams have been stung as a consequence of chucking cash around like water when they thought they were heading for the top. Tough titties, as they say ‘cos that’s the way it goes.

    But maybe if councils ran the team they could discuss team selection at weekly meetings. Should guarantee the public gallery is full, at least. And the players can all wear useful social messages on their shirts such as “Don’t get fined for having your wheelie bin lid open” and more of those trite council messages, like “Working together for better social cohesion.”

  • nostalgic

    Johnathan

    Yes good points. I too support ITFC thro good times and bad and sadly think if it were not for Marcus Evans our great club would now be virtually defunct (like our friends up the road lol=). In my view public funds should never be used to support what is essentially an entertainment business.

  • Robert Sealey

    Johnathan,

    I admire your principled commitment to free-market economics, even when it’s your local football team that’s at stake.

    Robert.

  • mezzrow

    The only remotely related situation I can think of would be the Green Bay Packers of the NFL – here’s their wiki explanation (with apologies for the length):

    The Packers are now the only publicly owned company with a board of directors in American professional sports (although other teams are directly owned by publicly traded companies, such as the New York Rangers and New York Knicks (Cablevision), the Seattle Mariners (Nintendo of America), and the Toronto Blue Jays (Rogers Communications)). Typically, a team is owned by one person, partnership, or corporate entity; thus, a “team owner.” It has been speculated that this is one of the reasons the Green Bay Packers have never been moved from the city of Green Bay, a city of only 102,313 people as of the 2000 census.[10]

    By comparison, the typical NFL city is populated in the millions or higher hundred-thousands. The Packers, however, have long had a large following throughout Wisconsin and parts of the Midwest; in fact, for decades, the Packers played four (one pre-season, three regular-season) home games each year in Milwaukee, first at the State Fair Park fairgrounds, then at Milwaukee County Stadium. The Packers did not move their entire home schedule to Green Bay until 1995.

    County Stadium’s replacement, Miller Park, then being planned, was always intended to be a baseball-only stadium instead of a multipurpose stadium.

    Based on the original “Articles of Incorporation for the (then) Green Bay Football Corporation” put into place in 1923, if the Packers franchise were to have been sold, after the payment of all expenses, any remaining money would go to the Sullivan Post of the American Legion in order to build “a proper soldier’s memorial.” This stipulation was enacted to ensure the club remained in Green Bay and that there could never be any financial enhancement for the shareholders. At the November 1997 annual meeting, shareholders voted to change the beneficiary from the Sullivan-Wallen Post to the Green Bay Packers Foundation, which makes donations to many charities and institutions throughout Wisconsin.

    In 1950, the Packers held a stock sale to again raise money to support the team. In 1956, area voters approved the construction of a new city owned stadium. As with its predecessor, the new field was named City Stadium, but after the death of founder Lambeau in 1965, on September 11, 1965, the stadium was renamed Lambeau Field.

    Another stock sale occurred late in 1997 and early in 1998. It added 105,989 new shareholders and raised over $24 million, money used for the Lambeau Field redevelopment project. Priced at $200 per share, fans bought 120,010 shares during the 17-week sale, which ended March 16, 1998. As of June 8, 2005, 112,015 people (representing 4,750,934 shares) can lay claim to a franchise ownership interest. Shares of stock include voting rights, but the redemption price is minimal, no dividends are ever paid, the stock cannot appreciate in value – though private sales often exceed the face value of the stock, and stock ownership brings no season ticket privileges. No shareholder may own over 200,000 shares, a safeguard to ensure that no individual can assume control of the club. To run the corporation, a board of directors is elected by the stockholders. The board of directors in turn elect a seven-member Executive Committee (officers) of the corporation, consisting of a president, vice president, treasurer, secretary and three members-at-large. The president is the only officer to draw compensation; the rest of the committee is sitting “gratis.”

    The team’s elected president represents the Packers in NFL owners meetings unless someone else is designated. During his time as coach, Vince Lombardi generally represented the team at league meetings in his role as general manager, except at owners-only meetings.

    Green Bay is the only team with this form of ownership structure in the NFL; such ownership is technically in direct violation of league rules, which stipulate a limit of 32 owners of one team and one of those owners having a minimum 30% stake. However, the Packers corporation was grandfathered when the NFL’s current ownership policy was established[when?], and are thus exempt.

    Note that no government entity is involved in ownership, revenues, or decisionmaking. The model here is much more like the organic growth of English football clubs many years ago than your newer NFL franchises. Again, this is one of the original teams of the NFL.

    Best of luck to your Tractor Boys.

    Everton for FA Cup titleists in ’09! COYB!! In Moyes we Trust!

  • el windy

    There is an automatic assumption that the local team actually has majority local support. Here in Tottenham the vast majority of the supporters come from outside. A lot of local kids wear either Arsenal or Chelsea or ManU etc shirts. so whether Spurs sink or swim wouldn’t bother the majority of residents in Tottenham and would definitely be of no interest to the rest of the Borough of Haringey. Football appears to be a majority interest because it gathers a relatively large number of people in a confined place but I suspect that a proper statistical analysis could be quite revealing. Also, just as the banks have come a cropper for “silly money” its probably only a matter of time before football discovers that it is unviable to carry on spending in this extravagant manner. I suspect that many people might secretly think “good riddance”.