Football, circuses and the credit crunch.
One of the more astute remarks on the collapse of Lehman Brothers and the wider economic turmoil was made by thomas over on Liberal Conspiracy:Does anyone see the strange correlation to how the scale of borrowing is in direct proportion to the weekly wages of footballers in the premiership. Now look at the sponsors of football clubs. Football is the circus of our day.
In fact the comparison can go even further than that, directly to how some of the clubs in the Premier League have and are being run and the deals with the sponsors which they proudly display on the breasts of their shirts.
Most notoriously there's Newcastle United, who continue to be sponsored by Northern Rock. Despite the protests against Mike Ashley, which are based on his treatment of the "messiah" Kevin Keegan and Ashley's imposition of a continental style of management, with Dennis Wise in charge of scouting and selling and signing players, his reign at the club has been a time of recovery after the excess of the regime of Freddy Shepherd, which had gone into masses of debt in order to sign players. As Ashley says in his statement announcing that in accordance with the fans' wishes he will be looking to sell the club, he points out that he had spent a quarter of a billion pounds before he had so much as paid any of the players a penny, half on buying the club and the other half on paying off just some of the debt:
This was probably why Ashley and Wise, behind the back of Keegan, attempted to sell both Michael Owen and Joey Barton, but failed in both cases. Newcastle fans will doubtless disagree, but Ashley, as he says, may well have saved the club from the fate of Leeds United.
Also applicable is the tale of West Ham United. Until Saturday their sponsor had been XL; come kick-off the company's logo was strangely missing from their shirts. As their opponents West Bromwich Albion are also looking for a new sponsor after their contract with T-Mobile expired, both teams played without a sponsor on their shirts, something which probably hasn't happened in the top division of the football league for a good few years.
The decision to quickly cancel the sponsorship deal with XL might have been less to do with the embarrassment of having a failed company on their shirts while tens of thousands of customers were stranded abroad courtesy of them than the fact that as well as being the team's sponsor, the team's owner, Bjorgolfur Gudmundsson, the majority shareholder in the Icelandic bank, Landsbanki, was reputed to have invested heavily in XL.
Indeed, the travails of Landsbanki and the bite of the "credit crunch" have much to do with Alan Curbishley's recent decision to resign as manager of the club. Like Keegan, his hands as manager had been tied as a result of financial considerations: he was told he would have to sell in order to buy. Partly this was down to the excess spending under the previous chairman Eggert Magnusson, who had his share of the club bought by Gudmundsson, for which Curbishley was not blameless, having spent large amounts on notoriously injury prone and volatile players such as Craig Bellamy and Lee Bowyer. Again though, like with Keegan, it was clear that transfer policy was being agreed and debated above Curbishley's head. Having Anton Ferdinand sold without his approval to Sunderland, he thought that was the end of this year's transfer affairs, only for George McCartney to follow Ferdinand to the north-east. Curbishley tendered his resignation shortly afterwards.
Finally, there's the link between the latest company begging for funds to keep it afloat and the world's biggest club, the insurance giant AIG and Manchester United. Manchester United's huge financial debt is probably more well-known than that of Newcastle or West Ham's. Having been bought by the US magnate Malcom Glazer in 2005, the club now owes creditors an astonishing £764m. Far from purchasing the club on his own terms, Glazer borrowed at least £374m from various financial institutions to finance the deal, including £152m which is now owed to hedge funds. The more sentimental, and dare I say it, fans that didn't arrive within the last two decades furiously protested the deal, which resulted in the setting up of FC United, on the model of AFC Wimbledon after the Dons were cynically moved from London to Milton Keynes. The deal with AIG to sponsor United came after the contract with Vodafone was tore up by the Glazers, on the rationale that more money could be obtained in a further attempt to lessen the debt taken on by the Glazers to buy the club. The deal with AIG that could potentially now be in doubt was a four-year contract worth £56.5m.
There is though one difference between football's bubble and the other bubbles which are so obviously being pricked all around us: football's is unlikely to pop just yet in its entirety. The takeover of Manchester City and the purchase of Robinho is evidence of that, and while West Ham may yet be sold, there will be doubtless another whole gaggle of potential suitors lining up to takeover, as there apparently is at Newcastle. As long as fans continue to buy their season tickets and they continue to buy their subscriptions to Sky and now also to Setanta, it seems that the already mindboggling wages paid to players and the top managers will continue to grow expotentially. Football may well be the circus of our time, but no one seems to want to throw the Premier League to the lions yet, recession and credit crunch or not.
Labels: bread and circuses, credit crunch, economics, football, Lehman Brothers, we're all doomed
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