How will recession hurt football?
Football finance expert Professor Tom Cannon gives FourFourTwo the lowdown on what to expect over the next 12 monthsÃ¢ÂÂ¦
The Gap Gets Wider
"The first thing that happens to football during a recession is a Ã¢ÂÂflight to qualityÃ¢ÂÂ, so the big clubs are likely to actually get stronger. If youÃ¢ÂÂre a company who are interested in sponsorship Ã¢ÂÂ IÃ¢ÂÂm an Evertonian and I donÃ¢ÂÂt like to say it Ã¢ÂÂ but if you put money into Liverpool youÃ¢ÂÂre going to reach a global audience. All the other clubs are going to find times difficult, because businesses become more discriminating.Ã¢ÂÂ
The Tiny Can Tough It Out
Ã¢ÂÂAt the other end of the spectrum, the ones that survive the recession are at the very bottom. WeÃ¢ÂÂre talking about clubs that are very well-rooted in their local communities, like Bury. TheyÃ¢ÂÂre quite a strong club, they made a profit last season and theyÃ¢ÂÂre well embedded locally: if youÃ¢ÂÂre a viable local business who does sponsorship and you know your marketplace, youÃ¢ÂÂll probably stick with those clubs.Ã¢ÂÂ
The Crunch Will Get YouÃ¢ÂÂ¦ Eventually
Ã¢ÂÂThereÃ¢ÂÂs a lagged effect in football. The television deal, the season tickets Ã¢ÂÂ those are already in place, but then you get the problem of renewals, not just on season tickets but on executive lounges. Season ticket numbers will probably be down by about 10 percent, but renewals will be down by at least 15 or 20 percent. ThatÃ¢ÂÂs where the problems will be as you go down the divisions.Ã¢ÂÂ
It All Adds Up
Ã¢ÂÂMerchandising income is already dipping, local advertising is almost certainly going to dip quite sharply, as are things like player sponsorship. YouÃ¢ÂÂre already seeing a number of clubs where even quite key players donÃ¢ÂÂt have a sponsor, because itÃ¢ÂÂs very hard to see a relationship between what you spend to put your name on Ã¢ÂÂ say, a Mido Ã¢ÂÂ and an end result. ItÃ¢ÂÂs not vast sums of money but it adds up.Ã¢ÂÂ
Even The Loaded Get Shafted
Ã¢ÂÂThose owners who have been in equities, like Mike Ashley, must have taken a hammering. All of the rumours revolve around Portsmouth and West Ham at the moment, financially, and thatÃ¢ÂÂs entirely because of the owners. And a lot of players have invested heavily in property: theyÃ¢ÂÂll take a hammering too, particularly those who have invested in low-cost areas. So I think youÃ¢ÂÂll see a lot of movement in the Rich List over the next 12 months.Ã¢ÂÂ
The Manchester City effect
Ã¢ÂÂMan City are unique. They can pay sums Ã¢ÂÂ as they did for Robinho Ã¢ÂÂ which are out of reach for anyone else. And they have to do that partly because they have to persuade people to go there, as they aren't an established force in the Premier League or Europe."
Players will feel the pinch
Ã¢ÂÂOnly the big names Ã¢ÂÂ Gerrard, Terry, Lampard, Ronaldo, Rooney Ã¢ÂÂ can still demand top wages in this market. The credit crunch wonÃ¢ÂÂt have an immediate effect on a lot of players because most of them are on long contracts, but players whose contracts are up, like Michael Owen, are at that stage in their career where they realise they may have to negotiate a less generous offer. Players in that situation will be feeling the pressure. TheyÃ¢ÂÂre going to find their salaries squeezed.Ã¢ÂÂ
"Is this it?"
Sell to survive? Or speculate to accumulate?
Ã¢ÂÂThere's a whole raft of clubs on the market Ã¢ÂÂ either publicly or privately Ã¢ÂÂ who face a dilemma. They canÃ¢ÂÂt afford relegation but they also need to balance their books. In some cases clubs are going to have to sell to survive financially, but there will be instances where they are going to have to pay their top players more money to renew contracts or to recruit new players because they need their best players to survive relegation. Clubs like Portsmouth, Newcastle and West Ham may find that they need the players more than the players need them.Ã¢ÂÂ
The domino effect
Ã¢ÂÂThere is going to be a squeeze right down the divisions. Clubs further down Ã¢ÂÂ in leagues like the Blue Square Premier Ã¢ÂÂ will feel the pressure to move more players on to part-time contracts, rather than full-time. There are a number of cases in the non-league game where millionaire club owners are no longer millionaires. Club owners face all the same pressures on their costs as we do Ã¢ÂÂ and the only thing they do have some degree of control over is playersÃ¢ÂÂ wages.Ã¢ÂÂ
For the full Rich List, see FourFourTwo magazine, out now. If quoting, credit FourFourTwo magazine and link to FourFourTwo.com.
The new issue of the magazine includes exclusive interviews with Robinho, Dimitar Berbatov, Russell Brand and Woking boss Phil Gilchrist, among many others.
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