Football’s Financial Models Compared
Thanks to all those who responded to my first article. Your only problem is you may have unleashed a monster… only time will tell.
While checking out some of the comments an idea sprang into my head about what we call, for want of a better term, the “self-funding” and the “buy/develop/sell” models. My first thought was ‘Are they not the same thing?’ so I asked that question and, with thanks to Tim Ball for taking the time to give me his thoughts, it led me to this article.
The interesting thing about this discussion is that City have been claiming to be one thing but may have slipped up trying to be the other. Allow me to explain.
Let’s start by clarifying the two models a bit.
Self-Funding – Steady as She Goes!
This is the financial equivalent of building a team like constructing a Lego masterpiece – piece by piece, with patience and precision. Clubs using this model rely on their own revenue streams – think match-day sales, broadcasting rights, and merchandising. It’s all about living within your means, much like most of us, as we try to balance our bank accounts.
The beauty of this model? Sustainability. Teams should not be throwing cash around like they’re trying to win a jackpot. Instead, they focus on nurturing young talent and making smart, calculated signings. Sure, this might mean they are not always splashing the cash on big names, but it’s like a slow-cooked meal – it takes time but the results can be deliciously rewarding.
Buy/Develop/Sell – The High Rollers
On the flip side, we have the ‘Buy/Develop/Sell Model,’ the financial equivalent of a high-stakes poker game. Here, clubs play the market – buying promising players, developing them, and then selling them for a tidy profit. It’s a bit like flipping houses only using footballers.
This model can be super exciting. Imagine signing a young unknown player and watching them blossom into the next big star – only to sell them for a huge profit! However, it’s risky – like betting big on red in roulette. If those player investments don’t pay off, clubs can find themselves in a financial pickle. (More on that later).
Impact on the Pitch
With the self-funding approach, you might see a team that grows together over time, which can be a heartwarming journey. But let’s be real – it can be frustrating when your team can’t compete with the financial heavyweights.
With buy/develop/sell it’s a rollercoaster. One season they might uncover a gem and soar up the table, and the next, they’re struggling because their star player has been sold. But when it works, it’s like hitting a jackpot – thrilling and potentially rewarding.
The big question is – which model is better in the long run? The self-funding model is like a stable investment – less glamorous, but with fewer heartaches. It aligns nicely with Financial Fair Play regulations, too. The buy/develop/sell model, though? It’s a bit of a gamble. High risk, but potentially high reward.
So, let’s take a look at some recent players. Jamal Lewis, the Murphy twins, and James Maddison, Andrew Omobamidele, Max Aarons and Todd Cantwell would all be examples of the self-funding model – all players brought through our academy and developed.
Even though he was a free signing, the wonderful Teemu Pukki was brought in as an established player and Emi Buendia was bought, so therefore, do they not fall into the buy/develop/sell model?
See what I mean about them being the same thing but different?
The conundrum is, if the Canaries are a self-funding club, how have we ended up with such a big debt (according to the most recent report – £82.7m) when the self-funding model is supposed to be more careful and less risky?
For me, it all seemed to go wrong at the start of our last trip to the Premier League. It looks like there was a conscious decision to change from self-funding to buy etc, which I am guessing was mainly brought about in an attempt to mitigate what happened during our previous visit to the EPL.
I have maintained in the past that we got promoted at least a year too early the first time around. Our self-funded, developing squad was too inexperienced and lightweight to make the grade, so the second time there was a decision to buy some players to bolster what we already had.
Let me also say, if this is the case, I completely understand what they were trying to do.
Unfortunately, instead of spending £60m on four or five players, they spent it on eight/nine players and basically ended up with nothing much better than what they already had, and the result was inevitable.
No, the self-funding model did not work! But I do not believe that it is unworkable.
The problem that must be overcome is that if you are developing a squad to go to the Premier League you cannot control when they are ready to make the step up. If you are top two in the Championship – up you go.
Both Norwich and Burnley walked the Championship. One is already relegated and the other is not far off.
I look forward to your thoughts on this, but for me, the fault with our current debt situation probably falls to Stuart Webber, who, despite some fantastic work, made some wrong decisions about incoming talent on this occasion.
This just demonstrates the fine line that people in his job really do walk. Had Webber got it right we would probably have stayed in the EPL and the whole debt issue would be irrelevant.
But he didn’t.