While it’s inevitable that the current mess at Aston Villa has reignited the debate about foreign owners, I would suggest that there is actually a much deeper issue that should be debated more openly.
Although it’s increasingly clear that Dr Tony Xia effectively decided to gamble the club’s future on promotion, that’s a question of recklessness rather than race. The real issue is, why he was tempted to do so?
It’s now being widely reported that Villa’s finances have long been held together by regular infusions of cash from China while £88 million was spent on transfers in the season before last, including a total of £17 million on Ross McCormack and Aaron Tshibola, neither of whom actually kicked a ball for the club in the season just ended as they were loaned out.
It was unsustainable and irresponsible but yet it could have paid off *if* Villa had beaten Fulham in the Play-off Final, and this, to me, is where the problem lies.
Year on year we read about how much that one game is worth to the winner. Each year the sum quoted becomes ever bigger and more obscene as Sky pump more and more money into the Premier League in return for a level of control. This, in itself, is an increasing source of irritation for the many fans who object to games being moved at short notice at the broadcaster’s behest, as the tradition of 3pm on Saturdays being the time for football is gradually whittled away.
The Premier League is a financial honeypot which, year on year, is becoming further and further divorced from the rest of English football. And as that gap grows, the more rich owners will be tempted to make the ultimate gamble.
The 2010–2012 parliamentary report into English football noted that, “Much of the overspending [by non-Premier league clubs] is as a result of the desire to get into the ‘promised land’ of the Premier League or indeed to simply stay there… the prevailing reasoning amongst Football League sides seems to be that excessive levels of spending can be sustained for a few years within which time promotion must be achieved. After that, Premier League revenues can be used to pay off all the debts accrued.”
That is exactly what has happened at Villa Park and could yet have drastic ramifications for Aston Villa and, more importantly, the Villa fans, with Xia now talking about the need to revert to a sustainable financial model.
The problem is that while Villa are the club making the headlines, there will be others looking on with a degree of apprehension about their own situations. Derby County are already talking about the need to cut back having also spent bucketloads on trying unsuccessfully to buy promotion in the last couple of seasons.
Inevitably there will be those fans who would rather see everything their club owns gambled on the roulette wheel rather than build long-term using a sustainable model, but the implications for the game are genuinely frightening, not just because more owners will be inevitably tempted down a similar route to Xia, but because the whole house of cards is dependent upon Sky pumping more and more money into the game.
It’s a bubble, and like all bubbles, it has to burst at some point. Of course, the Financial Fair Play (FFP) rules were designed to discourage such gambles but their actual effect has been largely to insulate clubs in the Premier League from the risks and pressures faced by those in the EFL, to whom the full force of the FFP rules seem to be applied much more readily.
One of the major criticisms of FFP is that it effectively secures the position of the big clubs that generate the largest revenue and profits and can consequently spend more money on transfers. Martin Samuel of the Daily Mail, amongst others, has criticised FFP, believing that the rules will create a procession instead of competition and has compared them to “a giant drawbridge that is being pulled up.”
Ultimately only three clubs can be promoted each year, with those with parachute payments theoretically starting as favourites. Therefore the risk of failure is significant, yet the reward for success becomes greater every year, so for a businessman like Xia whose whole working live has been based on the relationship between risk and reward, it is easy to see why the gamble was attractive.
The problem, of course, is that losing that gamble doesn’t just carry the risk of ruining the owner, it can also destroy the club.
While Xia’s self-satisfied tweet in the summer of 2016 about outbidding City for McCormack (“One club bid low, other club bid high”) annoyed me as much as it did all City fans, he certainly got his comeuppance in respect of the ever-expanding Scot whose huge wages (because pies don’t come cheap) will not be helping Villa’s financial situation one jot. But while karma is wonderful, the fact that one of England’s most famous clubs could end up in administration should be no laughing matter for any real football fan.
We all know that “Dr Tony got it wrong”, we could have told him that at the beginning, we could have told him that a good football team has to evolve over 3-4 years, we could have told him that you can’t buy success, we could have told him that 11 highly paid transfers and loanees will play as 11 individuals not a team but then he’s a businessman first and a football fan second, he’s not in it for the love of the club he’s in it for financial gain, he’s a gambler and he’s made losses and like all gamblers he doesn’t want to quit while he’s down, just hope that someone will pay him off before he sells all the clubs assets to try and make his money back.
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I really want Norwich to compete in the Prem. To do this we will need significant investment. The present board, made up entirely (I think) by people who identify as Norwich fans, don’t have the necessary funds to plough into the club. Therefore, someone else needs to be found to provide funds.
The more I think of this scenario and the more I see of clubs in Villa’s position, the closer I am to thinking more strongly that we are better to make ourselves a self financing entity. Perhaps this will become the norm in the Championship and we will have a head start.
I have no answers and am constantly self-contradictory but I am distinctly uncomfortable with chasing after someone with a few quid whose motives are nebulous.
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Another Lunatic hides in Beijing, and he’s too frightened to face the fans while
Avfc is brought to its final end. The fans will smell deceitful incompetence now.
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Important to identify the issue as one of ‘recklessness, not race’, as you have done.
It’s interesting to note, too, that the not-so-good doctor bought Villa from Randy Lerner, the American who was initially feted by the club’s supporters but eventually palled at the level of spending which was required and simply turned off the cash tap.
And Randy followed ‘Deadly’ Doug Ellis, who was detested by fans for being ‘careful’ with his money.
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A good manager with finance behind him will achieve greater success than a good manager without finance.
People should stop crowing about foreign owners who failed and look at the numbers who have succeeded.
It is clear that if we are ever going to gain promotion to the premier league and stay there we need new owners with deep pockets.
You can rest assured that any income received from Maddison will be wasted subsidising our current owners inibility to provide adequate finance.
We cannot afford to smirk at others misfortune when we are heading backwards ourselves.
I honestly think that football is such a crazy business that a self financing model, unless you are an exception like Manchester United, doesn’t stand a chance of achieving success.
Nowadays you need wealthy owners in order to compete on level terms let alone guarantee success!
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Interesting that you think I was “smirking” John. If you re-read the article you will see that I said that no true fan would enjoy Villa going into administration.
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I assume the smirk comment was directed at other fans who have posted on social media rather than this article
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Robin, I apologise for any misunderstanding as I was talking generally about the many items I had seen on streams from city fans following the recent Aston Villa story.
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Spot on John.
The undisguised glee amongst some that accompanied villas distress was palpable. As if it somehow exonerates the decline experienced closer to home.
No mention of wolves, Fulham and Cardiff, whose dalliance with rich foreign ownership has left them very nicely placed thankyou very much.
The latter two poorly supported outfits owe everything to the assistance provided by rich benefactors.
It should be remembered too, that had Alex Neil been successful in wresting Ross McCormack from villas grasp in all likelihood we would be where they are now. His replacement, Pritchard, has already been hawked for a profit, in stark contrast to the money pit McCormack.
I have no doubts that the problems at villa park will be overcome, probably with the help of more external investment and they will be competitive soon enough. In fact, had the referee been doing his job properly at Wembley Fulham would have spent 70 minutes with ten men after their centre half wiped his feet on grealish abdomen. Doctor Tony might well have been spread his ignominy.
Money doesn’t guarantee success, it simply makes it vastly easier to achieve. The complete dearth of investment at carrow road is a handicap. Just how much we are hamstrung remains to be seen.
We shouldn’t be focussing on Aston villas problems – we have enough of those gathering to keep us fully exercised over the next ten months.
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The Championship has been unsustainable for a few years. Looking at a selection of accounts it looks like even the highest natural income (gates, commercial, cup runs, EFL TV) is not enough to cover the average playing budget for this level, this is the reality of our situation. This gap exists partly because the potential reward is enough to persuade many to gamble and partly the cost of a player who has the choice of EFL place or PL squad position is inflated due to the wages on offer to the latter option. I would not want to see us throwing pots of money that we do not have at promotion but I do think we need access to reasonably cheap finance (the bond was a good example) and I don’t think we have this unless we are prepared to mortgage the ground or have new owners. I really thought we had cracked it when we stayed in the PL for 2 years and that self funding football to a respectable level for a club our size was possible. I think the two relegations proved that even if it is possible we lacked the ruthlessness to make it happen. The comments by McNally shortly before the Arsenal match in 2016 that all the money went on players was a nasty wake up call regarding sustainable football
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It’s not just Sky pouring the money into the Premier League, BT and now Amazon are also doing it. I can see a day coming where the whole house of cards comes down, probably when the Premier League splits up so that the top four or six jump ship to help form a European Super League, or alternatively the Premier League becomes a closed shop with no relegation. If the latter happens, I guess a lot of fans will lose interest (except, of course, those whose fans are still in the Premier League).
A sustainable model is going to be the only that works for the rest, and that should work for us, as long as we retain our present fan base.
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My point exactly Jim. Its simply unsustainable particularly with the big 6 now carving up even more revenue between them, effectively precluding the chances of another Leicester. Sadly many fans just see your situation as an aberration and continue the mantra of “If we have rich owners all will be well.”
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There’s a club not a million miles from here with a rich owner!
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We are starting to mirror their losses without the backing of a wealthy owner. Evans regularly puts £5 million pounds a year into keeping them afloat, where is our £5 million coming from after the Maddison money is gone?
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I don’t think the PL would be keen to exclude clubs currently out of it in favour of clubs currently in it. For instance I am sure the door would be kept open for Forest or Leeds etc but I do think that the longer the same clubs end up in the top 6 or even 4 then we could see some kind of breakaway
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Great article Robin and as you rightly say, Dr Tony certainly won’t be the last to try to ‘buy’ success. I do wonder if getting into the PL and staying there is achievable using the current NCFC model, as even Huddersfield have significant financial backing and Wagner didn’t exactly ‘set the ground alight’ during his first season at the John Smith Stadium and I’m looking forward to next season and seeing how NCFC performs minus Maddison and also seeing how McClean can fill the void.
I find it odd that Wolves can sign the players they did without falling foul of the FFP rules and it will also to see how they fare in the PL next season.
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The PL and the EFL operate their FFP rules independently, so there’s nothing the EFL can do about Wolves (if they have broken FFP rules) until such time as Wolves get relegated, when they could face sanctions, as happened to QPR.
Time the FA took on the policing role.
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Wagner got Huddersfield promoted in his first full season, He inherited a struggling team partway through the earlier season so comparisons to us are not entirely possible
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Sky said earlier today that the Premiership spent on average 55% of income on players wages it also said no Premiership club for the first time in its short history didn’t make a profit, it the sais that the EFL spent 99% of its income on players wages but didn’t state how many didn’t make a profit.
Sky and BT have both made footballer as their prime channels to get subscription from viewers yes the money will drop but never to the level of pre Premiership days, I have read over the ladt couple of years that the Premiership want to take the championship under its control if this happens then I can see promotion and relegation would stop from leagues 1 and 2 that would kill off football.
The Liverpool owner’s stated when the purchased the club that the premiership should be a stand alone league like they have in the USA, and with more foreign owners this could happen as they will see it as away of keeping the cash cow flowing.
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The view that “it’s all about having money” is demonstrably wrong, if you analyse the teams that have succeeded (and failed) in the Championship over the past decade.
It might be an understandable assumption, though, if we weren’t Norwich fans. For it to be said by people who’ve witnessed Norwich in 2010-11 (no financial advantages, automatic promotion) and in 2016-17 (big financial advantages, never challenged) seems distinctly strange.
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It’s worth noting that we don’t have a sustainable model. We’d like one. We don’t have one.
Assuming we get 20M for Maddison, we’ve had to generate 50-60M in player sales (Dorrans, Jerome, Howson, Murphy, Pritchard) this season alone. Reducing wage budget from some of the bigger contracts will help. But there’s more to our problems than Naismith and Jarvis.
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It’s not the model that’s the issue; it’s the huge drop in TV monies following relegation from the Premier League. That’s a huge challenge for anyone, not just NCFC
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Sorry Gary, it’s the model. Even with every big contract off the books we don’t raise enough for player and non player costs. So it’s going to become a lottery as to whether we can sign and sell players at enough profit to cover costs. Inevitably there will come a season where we can’t. What happens then?
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Not quite true, Dave (wish I had a pound for every time I’ve had to say that). If you’re lumping together the sales of Dorrans/Howson/Murphy from last summer’s window with the sale of Maddison from this summer, you can’t say they’re all in “this season alone”.
Why do you do this?
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Well Stewart “our finances aren’t so bad that we need to sell Pritchard and Maddison” Lewis, it really depends on how you slice up a season. If you go from pre-season to pre-season they could all go “this season”. Dorran’s, Howson and Murphy were all here for the start of pre-season.
But realistically, do the dates matter? The point is our “business model” counts on is requiring 10m’s of transfer profit each season.
No one ever answers this, so let’s see how you dodge it again…
Non-player costs regularly run around 30M. Our revenue is now around 30M. Where’s the money for player and staff wages coming from in the future?
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Realistically, Dave, the truth does matter for some of us.
You can’t claim I’ve understated the financial challenges now facing the club because of past failings (which I also criticised, at the time and since).
Pritchard was sold because he wanted to go and was becoming a disruptive influence. I’ve always said we’d need to sell Maddison this summer.
Webber and Farke have a tough gig, rebuilding against a difficult background. But why do you feel the need to distort and lie to make it seem worse than it is? Unless you’re an Ipswich fan, I’m genuinely puzzled.
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“But let’s not fall into the trap of saying that all our key assets will be sold. One of Maddison or Pritchard would almost certainly have to go – but not both, and certainly not both plus others.”
“Our point of discussion is whether, at the end of this season, we’ll need to sell both Maddison and Pritchard. I’m still not convinced we will.”
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I see you dodged my question, yet again. Suggesting I’m ‘distorting’ and ‘lying’, yet I’m willing to put actual numbers to my analysis and fwiw, it’s surprisingly accurate…
http://norwichcity.myfootballwriter.com/2017/12/14/guest-blog-in-transition-patience-the-key-or-is-the-simple-truth-were-out-of-money-and-out-of-time/
While Stewart, I have never, ever, seen you give a run down of the finances that you claim to know so well that, yet you claim… “One of Maddison or Pritchard would almost certainly have to go – but not both, and certainly not both plus others.”
I guess it’s easy to point fingers when you never provide evidence.
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I’d also add that the club reports finances through end of June, so selling Maddison this month would show all those player sales in the 2018 reports.
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Interesting silence from some regulars on here!
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I’ve just read that some Premiership teams are prepared to pay up to 40m for Grealish – to ease Villa’s financial woes….
So, if that’s the going rate, what price Madderz now??
On a level playing field then, his sale should sort our financial problems out for at least two, and not just the one season.
Yes, we can look at the Villa situation with a little smirk, but they are not the first, and given the enormous financial disparity between Premier League and Championship they certainly will not be the last.
I didn’t realise that each had their own set of FFP rules – this surely means that if Bournemouth are ever relegated than they will be in a worse plight than Villa are now.
O T B C
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My sympathy is generally going to be reserved for the smaller businesses that Villa going into admin will hurt most, Villa and its fans will have a spoonful of humble pie, maybe points docked (If there is to be some level of justice) possibly relegation and then they will steadily return to what ever their level is? Am I laughing, maybe a little, one of my best friends is a Villa fan so it would be remiss of me not to prod him with this a little.
I still believe we need some form of external funding/new owners, as we are a club in decline,
At some point we will have extracated all the expensive deadwood, but the continued need to sell our best and brightest will hamper any progress.
if Webber and Farke can’t get things right (I take note that some folk are already trying to write off next season as further transition.) can we really continue to charge amoungst the highest prices in the Championship even the country? Even if we reduce them will we start to see the sort of decline in attendances the binners have? The way many are talking, more insipid and uninspiring football, especially at home and season ticket numbers will drop further. Did I hear right that for the first time in a while we actually had no waiting list? OK we were still getting gates of 24k+ in lge1 but the apathy levels seem to have grown since then. In no way are things as bad now as then, but the gallows humour of the situation feels the same at times.
How do we improve is the million dollar question. In the long term everyone must be self funding, unless you get very lucky with an Abramovich, Monsour etc Some can bend rules through stadia sponsorship and other means, FFP is too full of holes to preclude everyone outspending their supposed means. Will anyone be better than the current lot? Some yes others no, But we appear stuck with them for good or ill so all we can do is cross our fingers and hope the new model gamble performs OK.
Bah!
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As many will know I favour a change of ownership at NCFC. Not because (as Robin puts it) I think “If we have rich owners all will be well.”, but if we have richer owners we can afford to make mistakes. As a longer standing supporter nothing would make me more pleased than seeing talent being developed through the academy, however all I can see at the moment is any “Crown Jewels” being sold off……….
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That’s a fair point BB. If having wealthier ownership meant we’d be more likely to benefit from the fruits of our academy rather than cash in before we’d had the chance to reap any rewards ourselves, that would have to be a good thing wouldn’t it?
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Certainly would Gary. The days of any player “Doing a Wes” and lasting 10 years at NCFC is diddly squat without further investment from what we have currently.
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Good comment General.
It was evident at the end of last season that the period of transition was at best, flexible and at worst never ending. The number of transfer windows apparently required to sort out the squad, (sell all our best players) appeared to grow.
“Self funding” or rather “supporter funding” will only last until greater numbers of supporters get royally peed off with the six monthly car boot sale which ushers more of the likes of Redmond, Murphy, Brady, Ollsson, dorrans, Pritchard et al out of the door while ushering in Dennis srbeny. Believe me, the novelty will wear off soon enough.
Even with one of the biggest supporter bases around and allowing for the excessive way they are milked dry, we will still have to budget for a burton Albion existence.
A massive few months ahead. Not just for farke and Webber, but for the whole shooting match. Continued decline will be precipitous in the extreme.
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The present owners stated a few years ago that she wanted to follow the way Charlton Athletic were run under Allan Curbishly, which meant a yo-yo club between the Prem and championship.
They then stated to follow the example of WBA of building the club during a period of promotions and relegation.
My thoughts are during the good times, clubs saw us as a soft touch and we always paid top dollar for the players, the manager at the time wanted. We were also seen the same way by the agents – again getting players paid more than they would get elsewhere.
Naismith, a bit part player at Everton, cost in the region of £9m and got a wage we couldn’t afford with no pay cut on relegation.
Moxley walked away from City with a bigger payoff than he got from Wolves after 16 years – it is ok for the Smiths to say we hire people that know football but surely there should be someone that says lets do due diligence on a players career, injury record, how many games he played in the last couple of seasons, bookings record etc
You wouldn’t buy a second-hand car without a service history or check to see if it has been written off, so why spend millions on a footballer without the same checks.
Investment in a football club is a risk for everyone involved and it is by luck if you get a good owner. Aston Villa threw money at getting promotion and their manager has done that at all his clubs – can anyone tell me of any academy players he has produced since being a manager?
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