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Old 7th September 2010, 10:55   #1
TanyaT
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Default Football’s new age of fan power?

Football’s new age of fan power?
Sam Knight
Prospect Magazine 24th August 2010 — Issue 174


As the football season unfolds, will Manchester United’s fans topple its US owners and set a pattern for returning English clubs to their communities?


Fever pitch:
Manchester United supporters protest outside Old Trafford against the Glazer family, the club’s American owners


On a bright morning in July, in football’s brief off-season, the red patch of concrete in front of Old Trafford, Manchester United’s vast, girder-pronged stadium, was almost deserted. A few days earlier and thousands of miles away, England’s static and over-hyped team had been knocked out of the World Cup by Germany. Next to a bronze statue of the United Trinity—the imperious attacking line of George Best, Denis Law and Bobby Charlton from the late 1960s—a plump girl, perhaps eight years old, was jumping up and down in front of her father’s camera.

The background on which the father was trying to pin the girl, mid-air, was a giant poster showing Old Trafford through the ages. Above the words “100 years in the making,” was a football match—black-and-white on the left, full colour on the right—showing the sport’s evolution from a game played in baggy shorts before flat-capped crowds, open to the grey skies, to the unmitigated sunshine of the Premier League.

Standing nearby was a man called Willy. Willy was a clown until he got a job last year selling £8 scarves outside Old Trafford. He carried his merchandise—great coils of green and gold polyester like cartoon pythons—around his neck and shoulders. Green and gold were the colours once worn by Newton Heath, a football team formed by railway workers in 1878, which went bust and was rescued by four businessmen in 1902, who rechristened the club Manchester United.

Last season, the forgotten colours of Newton Heath became the shades of unrest at Manchester United, as thousands of fans donned the scarves to protest against the club’s owners, the Glazer family of Palm Beach, Florida. The Glazers, shopping mall magnates who also own the Tampa Bay Buccaneers, an American football team, took over in 2005. The team has enjoyed major sporting success in the last five years, but the period has—in the fans’ eyes at least—been defined by the Glazers’ extraction of money from the club for personal loans, mysterious “management fees” and, chiefly, to service the interest on the £700m they still owe for buying the club.

Willy looked up at the poster. “There’s five things wrong with it,” he said. He moved to the edge of the pavement—he is not allowed on Manchester United’s land—and listed them: “There’s only one linesman. There’s no referee. There’s no ball. A hundred years ago there was no stand down that end and you never had a black player in the league.” (One of the yesteryear players, at right back, appeared to be black.) “The Glazers spent 35 grand putting that up,” Willy said. “How can you play football with no ref and no ball?” When I suggested that the Glazers might not have personally overseen the poster design, Willy shook his head. That wasn’t the point. They had no right to be involved in football. “They’ll go,” he said. “They’ll definitely go. They won’t have a choice.”

The red concrete in front of Old Trafford was the stage for some of the angriest fan protests earlier this year. After the final game of the season, in which Manchester United beat Stoke City 4-0 to finish second to Chelsea in the league, supporters set fire to their season tickets and sang songs about Malcolm Glazer, the family’s self-made 82-year-old patriarch, who has not been seen in public since he suffered a stroke in 2006. “He’s gonna die, he’s gonna die,” they sang. “Malcolm Glazer is gonna die./ How we kill him I don’t know./ Cut him up from head to toe./ All I know is Glazer’s gonna die.”

Fomented by internet forums and talk radio, the unrest at England’s richest and most successful football club appeared on both the front and back pages of newspapers last season, as it will surely do in the months to come. (”New Season, Same Goal,” is the campaign’s latest slogan.) But it is not just the prominence of the club, or the quasi-comic villainy of the Glazers—a Panorama investigation of the family’s finances, broadcast in June, depicted them as a set of garden gnomes—that has made the stand-off so absorbing. It is because the rage at Manchester United feels part of a wider anxiety about the national sport. Players who earn £150,000 a week; tickets that cost £50 a game; clubs in colossal debt or bankrolled by foreign tycoons; a national team that can’t beat Algeria—it all seems to signify that English football has gone wrong somewhere. In this year’s general election, all three main political parties felt the need to promise to reform the game, while among many football fans, a millenarian air prevails. As Willy concluded: “I think it’s all going to crash.”

Yet the source of this foreboding can be hard to make out, let alone articulate. English football is not going to crash. In 2008-09, the last season covered by Deloitte’s “Annual Review of Football Finance” (the industry bible), the top four divisions of English professional football earned revenues of just over £2.5bn, around 80 per cent of which went to the Premier League, the richest league in the world. “It ain’t broke,” said Paul Rawnsley, a Deloitte director who worked on the report. “The fundamentals of the game are very strong.”

Attendances, which contribute a third of the income of Premiership clubs and a higher proportion to clubs in the leagues below, have thrived during the recession. Last season, more than 29m tickets were sold to watch English league football, the most since the introduction of all-seater stadiums in the mid-1990s. For the 13th year in a row, Premiership grounds were, on average, more than 90 per cent full, while league clubs enjoyed average capacities of 59 per cent, a new record. There is no sign of football’s income, or popularity, drying up. The beginning of this season marked the start of a new, three-year broadcast deal for the Premier League, worth £1.2bn a year—30 per cent more than the last one. The extra money came mainly from the sale of international rights. Greater future revenues are not just limited to the top clubs either. New broadcast and sponsorship deals will see the income of the Championship (the second tier of English football) increase by 25 per cent over the next two seasons.

From a business point of view, football’s great problem is that it doesn’t generate profits. In 2008-09, the Premier League had a profit margin of just 4 per cent; Manchester United made £48m, but 14 out of the 20 clubs lost money; and the Championship lost £190m. Taken as a whole, England’s 92 league clubs have not managed to break even once since the start of football’s moneyed era 18 years ago, when the Premier League was founded and pay TV introduced. The reason is simple and self-inflicted: competition, the cash-swirled pursuit of the world’s best players and managers. Premier League revenues have increased tenfold since 1992, but players’ wages have grown twice as fast, with the 20 clubs spending a total of £915m on salaries in 2008-09. Between them, Premiership clubs have £3.3bn of debt, 40 per cent of which is in the form of interest-free loans from owners.

But such getting and spending—Alan Sugar, a former chairman of Tottenham Hotspur, called it the “prune juice effect” (it comes in and goes out straight away)—is a strange thing for supporters to complain about. When they are not expressing their disbelief at how much players get paid these days, most fans are demanding that their clubs sign a minimum of three new players. “Ultimately, what do supporters want? Supporters want success,” a former director of a Premiership club told me. “They want to see that they have achieved something… and to let tomorrow take care of itself.”

The shared giddiness of fans and owners—plus the odd outbreak of fraud—has meant that, in the midst of the game’s biggest-ever boom, 44 out of England’s 92 league clubs have been involved in insolvency proceedings. Eight teams have gone bust twice since 1992 and one—step forward Darlington FC, nicknamed “the Quakers”—has gone under three times in 12 years. Last season, Portsmouth, with debts of £137m, became the first Premiership team to go into administration.

But when they hit the wall, clubs bounce back. All 44 once-bankrupt teams will compete in the leagues this season. Their fans have mostly stayed loyal, while their rivals have been protected by the arcane “football creditors rule,” under which insolvent clubs honour their debts to their players and other clubs ahead of “ordinary” creditors. (HMRC is challenging the rule in the courts.) In 2003, the Football Association tried to instil better behaviour by docking clubs ten points for entering administration, but the punishment—the cost of three wins and a draw—is not outside the normal topsy-turvy of a season.

There is an argument that the financial recklessness of English clubs is an extension of the breathless, high-energy game that so many of us like to watch. American sports, with their relegation-less leagues, salary caps and draft systems (in which teams take turns to pick eligible players from a pool), might be profitable and stable, but they are, well, profitable and stable. English competition is entire; it extends right through to bond issues, summing-up orders and the deus ex machina of an Arabian prince or a Siberian oligarch coming to town. Certainly the rising attendances, increasing number of Sky subscriptions (now at around 10m British households) and seep of football coverage into every corner of the media suggest that, even if we find the financial side of the game obnoxious, we also enjoy watching it and talking about it.

And yet, and yet, something is awry. We feel it in our bones. We feel it despite the colourful boots, despite the people of Singapore paying £10 to watch Blackburn play at midnight. We feel it in the four owners that Portsmouth had last season, one of whom never visited the stadium. We feel it in Wayne Rooney’s reaction to England’s draw with Algeria: “Nice to have your home fans booing you.” We feel it when we hear Liverpool fans talking about leveraged buyouts on the radio, and when Dave Whelan, owner of Wigan Athletic (£70m in debt) is considered one of the Premier League’s few reformers.

Identifying this angst, and deciding whether it is justified, means going beyond ordinary financial or sporting measures. And that is not an easy conversation to have. “Football’s answer to all your questions is to dispute your analysis,” says Dave Boyle, chief executive of Supporters Direct, which promotes fans’ involvement in clubs. “As far as we are concerned: the stadiums are full, we’re winning trophies, we’ve got amazing viewing figures all over the world, our players are renowned for being brilliant… We’re still in the denial phase.” Boyle is right: when I asked a financier who raises money for clubs if the game was losing its soul, he crossed his arms and pointed two fingers of one hand while wiggling the fingers of the other. “This is sign language,” he said. “It means bullshit.”

Boyle thinks the source of our disquiet is that we can no longer find the social and cultural qualities that bound us to football in the first place. “We’ve lost the sense of what it is for,” he said. If England’s clubs were entertainment companies, mini-Hollywood studios, then this wouldn’t be a problem. But no one thinks of them that way. They are, in most towns, 100-year-old repositories of shared feeling. As he puts it: “To say that it is just about the team and the players is like saying a family is a group of people who eat at a table together; or a marriage is about two people who like each other. It doesn’t recognise that we are into an emotional realm.”

Since the late 1990s, concern over football’s intangible goods—the communities and identities it creates—has focused on the institution of the club itself: how it should be bought, sold and run. In an attempt to soften the game’s commercial forces, Labour set up Supporters Direct in 2000 to help fans formalise their relationship with their clubs and, if possible, to take control. Ten years on, almost every league club has a supporters’ trust, and 40 per cent of them have a fan on their board. Two league clubs, Brentford and Exeter City, are owned by supporters.

But it is hard to see what impact this has had. Typically, fans only gain influence once their clubs have gone bankrupt. There have been a dozen or so such rescues over the last ten years—most of them after ITV Digital collapsed in 2002, cancelling a broadcast deal for the lower leagues—but fans have rarely proved lasting saviours, or able to resist the next sharp-suited suitor. In 2009, the supporters of Notts County, the oldest league club in the world, sold it to a group called Munto Finance, which signed Sven-Goeran Eriksson as manager and then turned out to have no money after all.

Other, better examples of fan-owned, sustainably-run football clubs tend to be abroad, or too small to be noticed, like AFC Wimbledon or AFC Telford, which play in the fifth and sixth tiers of league football. Arsenal is the only top club trying to involve fans in its operation. Its supporters’ trust (AST) announced a new scheme in August that will allow fans to buy small fractions of shares in the club at an affordable price. While “fanshare” holders will be able to vote on policy, Arsenal is majority-owned by four directors and it remains to be seen if a tiny shareholding group of fans can have any influence.

In the Premiership as a whole, though, the huge sums of money, the debts, have seemed too great for supporters to do anything but shake their heads and gossip. That is why what is happening at Manchester United is important. Suddenly, the abstract questions—about the proper form of a club, whether a fan is a customer or a somehow-citizen, about whether the game has a social character that we should protect—can be examined. We can ask whether clubs are the right vehicle for reform, or whether other kinds of regulation are needed. We can even ask whether we enjoy the soap opera as it is. “This is a fantastic moment,” said Boyle. “Something has got to give.”


Those were the days:
Newton Heath football team was formed by railway workers in 1878
and renamed Manchester United in 1902


Manchester United has never had great owners. From the early 1960s, the club was controlled by “Champagne” Louis Edwards, a butcher accused of selling meat unfit for human consumption to schools. In 2005, his son and the club chairman, Martin Edwards, made £93m from selling it to the Glazers. The origins of the current protests, however, lie in Rupert Murdoch’s attempt to buy the club in 1998. Supporters including Michael Crick, the Newsnight journalist, and Jonathan Michie, an Oxford professor, formed “Shareholders United Against Murdoch”—an attempt to buy shares (the club was then a plc) to stop the takeover. Murdoch’s bid was blocked on competition grounds since he owns Sky TV, which broadcasts the Premiership, but the protest group endured and became the Manchester United Supporters Trust (Must).

If the green and gold movement has an organised heart, it is Must. The trust has a small office, full of cardboard boxes, in a tower block around the corner from the stadium. The letters LUHG (Love United, Hate Glazer) are stencilled on the pavement. Inside I met Duncan Drasdo, the chief executive. When he joined the anti-Murdoch campaign in the late 1990s he was a chemist working on his PhD on the role of aluminium in Alzheimer’s disease; he never finished it. A decade on, Drasdo has the mien of a perennial student—lean and learned. He laughed when I asked him if he felt like Lenin.

Must almost disintegrated after the Glazer takeover. It stayed intact only because some members did not want the bother of setting it up again one day. Other supporters broke away and founded FC United of Manchester, now a successful, co-operatively owned non-league team. “For five years we were trudging through a dark tunnel,” said Drasdo.

The light appeared in January, when the Glazers had to disclose their financial arrangements at Manchester United for a bond issue. The bond prospectus had two immediate consequences. Andy Green, a fund manager and fan sympathetic to Must, worked out that the Glazers could now use 79 per cent of the club’s profits to service their own debts—£500m over the next five years—a finding that made headlines and outraged fans. The document also persuaded a handful of wealthy supporters, led by Jim O’Neill, head of global economic research for Goldman Sachs and a former Manchester United director, that the Glazers’ debt (at least £100m of which is now attracting 16.25 per cent interest) could be so unwieldy they might be willing to sell the club.

This secretive band—the “Red Knights”—announced that if they could raise the money to buy Manchester United, they would sell part of it to the fans. Their existence ignited the protests. More than 100,000 people joined Must in five days. Green and gold scarves became abundant inside Old Trafford, along with anti-Glazer banners and songs. Drasdo, who gave up his season ticket a few years ago, returned to the stadium and found an atmosphere that he remembered from the 1980s, one that he believes is borne of the idea of ownership—belonging in all senses. “The rawness, the emotion in it,” he said. “If United becomes supporter-owned, it will be transformed. This will be our club again.”

Inevitably, the movement has ebbed and flowed. After the excitement of January, there were rumours in the City that the Red Knights, a group of around 20, estimated that Manchester United might be worth £800-900m rather than the £1.5bn that the Glazers are thought to be holding out for. In April, there was talk that the Red Knights had given up altogether. Calls for a boycott of Old Trafford, meanwhile, seen by many as the fans’ best tactic for financially hurting the Glazers, have split the protesters. “Some people have dropped their season tickets, some people are carrying on,” Drasdo told me. He seemed undecided about what form the protests would take this season. Instead, he mused about whether the Tories might see fan-owned football clubs as a useful expression of their big society idea. “I think football is a great angle for them to get in on,” said Drasdo.

Politics—in the interplay of the market and communities—is never far from these questions. One of the original Red Knights is Paul Marshall, co-founder of the hedge fund Marshall Wace. He is also a Liberal Democrat. A former parliamentary candidate and adviser to Charles Kennedy, Marshall helped edit The Orange Book, a collection of essays that catalysed the more classically liberal, Cleggish wing of the party in 2004. He is reported to be worth about £200m, and when we spoke on the phone, he was on his way to the airport.

Marshall told me that the Red Knights was a settled group of interested investors, many from abroad. “The potential funding that we have uncovered is much more than we expected,” he said. Now, he added, it was a matter of waiting for the Red Knight and the Glazer valuations of Manchester United to coincide. “We are delighted to wait while the Glazers acclimatise themselves to the double dip.”

Marshall argues that involving fans in the ownership of even the largest football clubs should make both social and commercial sense. The Red Knights have not finalised the structure they would put in place at Manchester United, but it would probably combine a membership scheme along the lines of Barcelona—where supporters pay €78 a year to take part in club elections—and a long-term plan to sell a minority stake in the club to a trust held by supporters.

Marshall sees the yearning symbolised by green and gold as an untapped resource that could one day rival the spending power of the oligarchs. “If anything, the bond between clubs and their fans is strengthening,” he said. “As other types of social bonds diminish, this is one of the most important sources of identity for people.” He believes the internet could harness the devotion—both existential and financial—of football supporters, as it has for music fans. It could also offer a mode of belonging for Manchester United’s international followers. “Bands have benefited from the internet to build huge followings for what are often very narrow genres,” he said. “The same globalisation of passion can benefit football clubs as well.”

It sounds exciting, but there is no way of knowing whether Marshall’s vision makes for a better or more sustainable game. The German Bundesliga, which is considered Europe’s best-run league, is dominated by fan-owned clubs, but has a thicket of other regulations (see box, opposite). Imagining Manchester United as a member-run organisation in the faster, looser world of the Premier League calls to mind the Spanish behemoths, Real Madrid and Barcelona, the largest revenue-generating football clubs in the world. Both are fan-owned and relentlessly successful, but they are hardly messengers from a happier footballing planet. Last summer, Real Madrid spent £200m on new players in a market-distorting spree. And in June, Barcelona, which provided seven of Spain’s World Cup-winning starting 11 players, needed an emergency loan to pay them. Spain’s 40 other professional clubs, almost all privately owned, do not see the big two as good citizens. Between them, Barcelona and Real Madrid earned 51 per cent of the income of Spain’s Premier League (La Liga) in 2008-09, mostly because of an uneven split in broadcast revenues. Last season, the big two competed mainly against each other, finishing 25 points clear of other teams at the top of the league.

Looking for an example closer to home, I went to visit Exeter City, England’s highest-riding supporter-owned club. The Grecians, as they are known, are poster children for the loopiness of English professional football in the last decade. Ten years ago, they were owned by a local jeweller, Ivor Doble, a chairman of the old school. “Keep your money in Exeter, shop at Ivor Doble,” a sign at the ground said. In 2002, Doble sold the club to two entrepreneurs, John Russell and Michael Lewis, who took Exeter—solid denizens of the third tier of English football—on an adventure that briefly included the magician Uri Geller and Michael Jackson as honorary directors of the club. (Jackson gave a memorable speech to season-ticket holders. “We must learn to live and love each other before it is too late,” he said. Not a word on new signings.)

Within a year, the club was £4m in debt, Russell and Lewis were arrested and Exeter City was taken over by its supporters. It was saved from its creditors by luck in 2005: a televised replay in the FA Cup against Manchester United, of all clubs, brought in enough money to pay off the debts. Five years and two promotions later, Exeter City is in League One and is proof that a club owned by its supporters can prosper in England. Last season, at a game at Leeds United—another club brought low by wild spending—its fans broke out singing, to the tune of La Donna e Mobile: “We own our football club.”

On the sunny morning I went there, the club’s 9,000-capacity stadium, St James’ Park, bore the marks of shared ownership. A plaque listed the 42 local businesses that gave money in the darkest days, and bricks were carved with the names of contributing supporters. Norrie Stewart, the club’s chief executive, took me upstairs where we looked down at a man mowing the new pitch, which had been partly paid for by fans’ donations. “We were only able to afford one new lawnmower and one second-hand one,” said Stewart. “That absolutely sums it up. That is life at a trust-owned football club.”

It turns out that what is unusual about Exeter City is not just its structure, but the consequences that has for its behaviour. Without a tycoon, and scarred by debt, the club must live within its means. “Throughout every element of our trading, we have to buy and sell at a profit,” said Stewart, who is from Kilmarnock and used to work in retail. And as he spoke, it was striking to me that what he wanted from the club’s fans—its involved citizens—was for them to act more like paying customers. The supporters’ trust, which controls the club, only contributes about 3 per cent of its revenues each year, and of its 3,000 members, only a third regularly come to games. “I think the real value is in the number of trust holders who buy season tickets,” Stewart told me. When I asked him whether he felt Exeter City’s social make-up had any sort of improving influence on other clubs in the league, Stewart looked at me as if I was very naive. “Nobody else is really that interested,” he said.

Fiscal responsibility seems a natural bedfellow for fan-owned clubs. This is the inherent logic—Real Madrid and Barcelona aside—that makes them so attractive to football’s reformers, like Boyle, who see in them a solution to both football’s commercial self-harm and its fraying cultural relationship with its fans. To some extent, new regulations will improve the finances of the game, whether it likes it or not. From 2013-14, English clubs will not be allowed in European competitions unless their income from football more or less covers their spending. And because the “break-even” rule will affect the biggest six or seven clubs, you can be sure that it will affect the rest of the sport soon enough. Whether more fans will rise up and assert their grip on the game’s means of production, however, whether green and gold flies over Old Trafford one day, most likely depends on whether we decide professional football as it is played today—22 men, mostly foreign and improbably skilled, zipping about—is an expression of our latter-day identity, or a merciful escape from it.


THE BUNDESLIGA: REGULATED TO PERFECTION

Germany’s top division, Bundesliga 1, overtook the Premier League as Europe’s most profitable league in 2009. The Bundesliga also has the largest attendances in Europe (an average of 42,000 compared with 34,000 for the Premier League) and tickets that cost around €15. The success of the national team at the World Cup, in which they beat England and played exciting football en route to the semi-finals, added to the impression that the German game is better run than England’s.

It is also more regulated. The Bundesliga puts two constraints on clubs. First, they are only licensed to take part in the competition if they can show positive cash flow—the inspiration for Uefa’s impending “break-even” rule. Club structures are also closely monitored. Most clubs are controlled by an Eingetragener Verein: membership associations recognised in their own section of German law. They cannot be bought or sold, and while the Bundesliga allows companies and private investors to also hold stakes in clubs, the members must always hold a “50+1” controlling stake. “Football shouldn’t be seen as a private good. It is close to a public good,” says Christian Müller, the chief financial officer of the Bundesliga last season, who is completing a PhD on the risk of overspending in sports leagues.

http://www.prospectmagazine.co.uk/20...-of-fan-power/
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