FOOTBALL
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Football Association (FA) history, in 1991 the Women’s Football Association launched a national league with 24 clubs. The following year, 137 teams entered the Women’s FA Challenge Cup, and by 1994, the league became the FA Women’s Premier League. More recently, women’s football in England reached new heights when England won the UEFA European Women’s Championship in July 2022, beating Germany 2-1. When you compare this representation at the highest level to the finance sector, there is a stark difference. Since the late 1990s, women’s representation at board level has been slow-moving – it was only in 2021 that the number of women on the board of financial firms hit 32%, according to HM Treasury’s annual review, published in March 2021.
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DEMOGRAPHIC OF PREMIER LEAGUE MATCH GOERS HAS ALSO CHANGED AS AVERAGE TICKETS PRICES HAVE GONE UP //
Runaway wage growth In 1992, the country’s biggest club, Manchester United, paid wages of £5.3m to its squad, representing 43% of its income. In 2021, the total wage bill was £312m, some 67% of total revenues. Compared to the average weekly earnings of £71.50 (around £3,718 per year) in 1992 (according to the National Average Earnings index) and the national median weekly wage of £611 (around £32,000 per year) in 2021 (according to the Office for National Statistics), footballers’ salaries have grown out of all proportion – Manchester United’s wages effectively rose by almost 6,000% in 30 years compared to an average wage rise of 761%.
Increasing investment Several headlines in recent years have drawn attention to the ‘gentrification’ of football. Today, no stadium is complete without its bankers, celebrities, and CEOs, and clubs have tried to meet this new client base, with Chelsea FC, for example, charging from around £4,000 to £85,000 for annual VIP packages. It charges between £25 and £76 for individual tickets, compared to 1992, when the average price for an individual ticket was between £8 and £30. Football has become an attractive
asset. The traditional model of club ownership, largely philanthropic, has given way to soft power plays and portfolio investments. Like the corporate world, UK clubs have been taken over by foreign investors and only four Premier League
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clubs in the 2021–2 season were 100% owned by British investors. As the Premier League grew, the
financial sector moved closer to the game and, as well as consultancies producing reports about the finance of football, clubs are now using a broad range of financial instruments to refinance debts, hedge risk, issue shares, and securitise their assets. In addition, alternative investors such as hedge funds, private equity, and family offices have also become involved, such as US private equity investors Silver Lake at Manchester City, US sports investment firm ALK Capital at Burnley, US investment group RedBird Capital at Italian club AC Milan, and US investment group MSD Holdings, the investment arm of the Dell family, with several clubs.
Catalysts for change In financial services, the catalyst for greater regulation and governance was the global financial crisis of 2007-8. Football is currently going through a similar period of reassessment following three crises: misaligned incentives to ‘chase success’, club corporate structures that lack governance and diversity, and the inability of the existing regulatory structure to address new structural challenges. A UK government study, led by Member of Parliament Tracey Crouch, has concluded that the game needs an independent regulator. This project will also introduce greater levels of financial discipline.
FTSE and football Over the past three decades, the English Premier League has developed into a fully fledged industry. Moreover, the financial sector and football have become partners, with investors seeking value from sports team ownership and banks providing sophisticated products and services for football clubs. The world has been volatile in recent years, with economic, social, and geopolitical disruptions challenging both football and the financial sector. How the world will look in the aftermath of the pandemic, the war in Ukraine, oil price rises, and economic turmoil remains to be seen, but as football and finance emerge from this period of extreme uncertainty, it is likely that the partnership between the two will become much stronger.
Neil Jensen is a member of the Football Writers’ Association and writes about the finance of football.
THE REVIEW SEPTEMBER 2022
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