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The Gold Rush

The Gold Rush

In June 2009 Aston Villa club captain Gareth Barry moved to Manchester City for £12 million, bringing to end the speculation and uncertainty around Barry's future. City's ambition and direction had won him over and given the fact he is now a league champion it seems like he made the right decision for Gareth Barry. He had been a great player for Aston Villa and after many years of loyal service on the pitch he was now ready to move on and deserved to do so. The reputed salary of £120,000 a week seemed almost irrelevant given such persuasions. Equally, when Steven Gerrard was on the brink of joining Chelsea the possibility of future success with the club he loves convinced him that he belonged in Merseyside red. He duly put pen to paper and signed a new deal worth an estimated £140,000 a week. A great player at the top of his game getting paid what he deserves. Enough said.

The romantic in me wants to believe that such deals have nothing to do with money. The cynic in me tells me otherwise. Indeed, I have to get the calculator to work out how much £140,000 a week is per annum. The digital display assures me that it is a lot. I am forced to reflect that I have been so used to such figures being banded around I have begun to normalise such salaries and financial transactions, as though this was a game of monopoly. How on earth, though, did we get to these mind boggling levels in the first place?

To put things into context, in 1992 when Alan Shearer signed for Blackburn Rovers, the £3.6 million deal broke British transfer records. Today, he is still the Premier League's all time top goal scorer (260) holds the joint record for most Premier League goals in a season (34) and is a three time golden boot winner - just to mention a few of his many accolades. 16 years later Robinho completes a £32 million transfer to Manchester City, signing on for around £160,000 a week. He gifted them 15 goals for 41 appearances in his first season and in his second season he scored 1 goal for 12 appearances in all competitions. How times have changed.

Income from broadcasting rights has changed the landscape of English football. With war chests perennially over flowing, a culture of transfer brinkmanship developed, in which clubs offered more and more money to ensure they got their man. According to recent published figures wages soared by 201 million in 2010/11 to almost 1.6 billion and account for over 70% of revenue, a 14% rise, which is deeply concerning when revenues rose by only 12%. On anyone`s abacus this is a serious deficit. Surely a lot of people have been rubbing their hands gleefully for some time, though if those are the economic conditions, one cannot blame the players for taking their market worth. If you create a gold rush then eventually people are going to come along and stick their pan in the river. Before long there will be crowding on the bank. Such is life.

Only elite clubs with huge commercial arms can seek to offset the cost of paying headline wages and even those, (particularly Chelsea and Man City) might find still the implications of Financial Fair Play a big ask. This will also be tough for clubs outside of the top six. Consider our beloved Villa. At one point it was reported that 88% of our revenue was being spent on wages. We might be the 5th most successful team of all time in the Premier League rankings yet we don't have a lot to show for that in recent silverware. We do have a recent history, however, of spending stupid money on bench warmers and clod hoppers. In terms of the cost in gold, we are right up there. We also have a wealthy benefactor who has pumped around £200 million into Aston Villa Football Club.

Bored yet? Probably - that's because we have stopped talking about football. Remember that business about 22 men, a field of grass, some white posts and a ball? Whatever happened to that? Well it might make a comeback yet. In 2008 the world went into the start of financial collapse owing to irresponsible banking and mismanagement of financial markets. In layman's terms, good old fashioned greed helped open up the gates to economic hell. As a result we are in the grip of a double-dip recession; public services are being stripped down to the bone and everyday house holds are feeling the pain. Clubs are part of economic society and are feeling the strain too. This will force transfers and wages down, with clubs unable or refusing to pay what they once did. I think we are already seeing the shoots of financial sensibility dictate transfers and wages. Villa for one are now cutting cloth accordingly and spending wisely.

Though what of the elite clubs? If yours is run by an Arab dynasty or a Russian oligarch you might think you are safe and that you can win everything until kingdom come. Unfortunately, FFP is about to spoil that and stop exorbitant and unrealistic spending. G20 clubs will need to reconsider. Perhaps this is why Bale has stayed at Spurs and Chelsea are being linked with £10 million deals for the likes of Moses, have shied away from blockbuster buys for the likes of Hulk. Will Man Utd's big summer signing be Leighton Baines? People may see this as ridiculous and expected the gravy train to go on forever. It won't. FFP is happening and clubs will need to get in line.

FFP is FIFA's first real attempt to get their footballing house in order. Long overdue as well in my opinion. With big clubs recording huge losses you don't have to be Einstein to realise that it cannot continue unless we want a league where only the club with an Arab dynasty or an oligarch behind them can actually dream of winning anything. In both sporting and economic terms that is unsustainable as a whole. I do not want to see my beloved Aston Villa either a) going to the wall in a bid to keep up or b) just making up the numbers because we do not have the money to compete. The inevitable question, of course, is this: have we actually been part of a sporting competition over the past 15 years or is this just veiled sporting entertainment?

This question is easy to answer in the NFL. I have remained a big fan of American Football for some years, partly owing to the level of fairness and sporting competition. Nowhere in sport is revenue and finance so equally shared. Moreover, every franchise has a salary cap and as a result every ball club has a chance to make it to the Super Bowl. Wouldn't it be great to start the season knowing that you had, in financial terms, an equal chance to win the Premier League as the other 19 teams; that it was fair across the board. Until financial equality exists and clubs are restricted in what they can spend it does not matter who Villa hire as manager. We will not challenge or win the title in a league where the chequebook wins. The monopoly and strangulation of our game must end if Villa are to challenge for silverware.

Click here to join in the debate on the club forum.

Date:Sunday July 8 2012
Time: 10:33AM


We don't expect to win the league, we just want to watch decent football and see the team (via the management )play better than we see on the local park every week. Wage caps won't happen (unfortunately.) Deal with it and work out ways to get around it and achieve moderate success compared to available expenditure.
08/07/2012 10:44:00
When you look at the very top of the Premier League, it's not football any longer..... it's BUSINESS. A kick around against another team is just a by product.
Pride of Lions
08/07/2012 10:55:00
Grizzly, much of what you say is no doubt true. However under FFP clubs with large stadiums and high ticket prices will still have a considerable advantage as will those that are well positioned in the CL at the start. Even under FFP it is hard to imagine that say Wigan, no disrespect intended, will be able to compete equally and Villa with a medium sized stadium, even if reaches capacity, and relatively low ticket prices will still struggle at the top end of the game. Who knows the Barclays and bank scandles that are beginning to unfold may do as much to even things up over time, by reducing wealthy city jobs, and therefore seat prices in the capital as much as anything else, oligarchs excluded.
08/07/2012 11:00:00
FFP is run by EUFA not FIFA. Villa not being in a European competition at the moment won't be affected in any negative sense at the moment. The "control" only kicks in if you are in Europe. This is part of the reason why EUFA have not looked at the Etihad deal as yet. We are about to start the second season of the process leading to the controls kicking in after the third season. At that point someone will look at the Etihad deal. In the meantime clubs do need to get their houses in order if they wish to comply. In between now and then of course all clubs in the EPL are going to get a pay rise. Under the new deal which kicks in after next season with the UK based TV providers to UK TV screens a £1bn increase in the fees paid will mean that the team finishing bottom of the EPL will get more that Man City got last season for winning it. On top of that that foreign rights are due for re-negotiation shortly and the interest in the EPL is going up & up & up with a corollary rise in price. City pushed a vast amount of losses into the last accounts prior to the accounts that count to the FFP figures - clever eh !! On top of that they won the EPL as you probably noticed. United get £80m for a training kit deal, £400m to the certainly one time EPL champions & maybe more by the time the deal is looked at may well seem like chicken feed. Winning that EPL alone is reckoned to be worth between £100m-250m alone. I don't see City failing it and at the moment Villa really ought to be spending in order to try to get into the big six otherwise their place as 5th most successful team is not likely to last too much longer. Your not exactly owned by a pauper after all !!
08/07/2012 11:08:00
Sorry that one is written by Grayfield18 from Manchester but loves living in Birmingham :-)
08/07/2012 11:09:00
wish they could sort it, put wage caps in, etc... But they won't and I agree with Gordonsleftboot, as usual, the new rules will help the bigger clubs ... hence they didn't look at debt at all, as that would have penalised them! Sad times, I'm hating the PL and what I feel is the ruination of a once very good league.
08/07/2012 11:35:00
Its still a good league...We just need a rule to stop clubs for buying players for more than 20m
08/07/2012 11:58:00
It seems that in the majority of cases football fans are not that interested in the financial side of the Premiership because money's realpolitik is destructive to romance. It is difficult to admire players once you know what disgusting greedy b******* they are. Its impossible to take the Premiership seriously as a competition, once you know the disparity of incomes and the way regulation has locked that disparity in place. Its impossible to have dreams of future glory when you realise how mega-clubs have at least two teams and your club is lucky if it can field one. Its hard to have confidence in UEFA's FFRs until we have seen how they deal with one of the massive European clubs (Milan, Man City et al) should one of them fail to comply (there surely will be at least one). The NFL offers an interesting comparison because we can see the benefits of proper regulation and the absence of the pressures of relegation. No one could accuse the English game of offering much regulation and they tend to leave it to the HMRC and the courts in The Hague, to decide who is a fit and proper owner of a club. The leveraged buy-out mitigates more towards reducing inequality than any football regulatory body in the English game. So for those who can deal with the truth there is nothing better than seeing the underlying financial reality but most fans prefer to keep paying their rip-off prices and carry on their dreaming.
Steve Wade
08/07/2012 12:34:00
A very well-written and well-thought out piece. I do have to beg to differ on the assessment/comparison of the NFL however. As much as the principle of the draft system is sound, the reality is different. Essentially, an NFL team can have one awful season and pop back up as a superbowl contender the following year because they pick up a marquee player in the draft. The best (and most recent) example is that of the Indianapolis Colts, who, having lost ONE player to injury (Payton Maning) last year went from first to worst and are now able to get the best quarterback available in this years' draft. Nobody will convince me that they didn't plan that strategy. As a consequence, the teams in the NFL who are not quite good enough to challenge, but are responsible enough not to "throw" a season to get the highest pick are being hurt. The Browns, Dolphins, Chicago Bears et al will not see the Superbowl until they have a marquee quarterback - and that won't happen while teams such as the Colts do what they have just done. As much as I too love the NFL, it is a far-from-perfect system and is a sport where a single player can be the difference between championships and bottom of the barrel....
08/07/2012 12:43:00
Replies to some comments: 1.The idea that it only applies to clubs competing in Europe is a redundant point. Yes FFP will apply to clubs playing in official UEFA competitions but as everyone aims to be in those competitions all clubs will need to comply. Indeed, the fundamental driver is to make qualification for such tournaments possible for all clubs, thereby breaking the G20 monopoly in Europe. I acknowledge there are abundant criticisms to this idea. 2.FFP is happening and is relevant to all clubs now."The 2011–12 season was the first season which counted towards the 2014–15 assessment. Clubs, however, will be allowed to make a loss of €45 million (£39.4 million) over the three years, falling to €30 million from 2015–16 IF the loss was covered by equity contribution only. The first season that UEFA will begin actively monitoring the financial situation of individual clubs is 2013–14, but this will take into account losses made in the two preceding years (2011–12 and 2012–13). From 2013-14 UEFA will be able to ban clubs from playing in European competitions the following season if the rules have not been met but it is not until 2018 that clubs will be expected to bring their annual losses below £8.8 million (based on 2010 exchange rates) Only actual "football-related expenditure" — a club’s outgoings in transfers and wages — will be counted over income from gate receipts, TV revenue, advertising, merchandising, sales of players and prize money is included in the assessment. Any money spent on infrastructure, training facilities or youth development will not be included." (Taken from -coutesy of Wikipedia)
08/07/2012 13:50:00
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