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Rich Benefactors – The End Of History

Sat, 29 May 2010

In response to:

53. At 1:56pm on 29 May 2010, Cynical_Joe MUFC OK wrote:

Man United, Barca, AC Milan, Real Madrid. etc have large revenue streams that took decades of on-field success, trophy wins, stadium reconstruction and global marketing to produce.

Yes, I think it is fair to say these clubs did EARN that money and they have every right to spend a proportion of that annually on transfers and wages.

What is ludicrous is Chelsea, and particularly Man City, both clubs who have far smaller revenue streams and are run at losses every year, spending £100s of millions on transfer spending and wages. Only to have this debt ‘written off’ at the end of every year.

This is to ignore the fact the most successful clubs have had benefactors at some point in their history.

Manchester United for example, had rich benefactors early in their history.

On the face of it Newton Heath began the twentieth century well, but they had failed to gain promotion and the money was running out fast. The financial situation only worsened, dragging down their on-field play. … with ticket sales flagging and debts mounting, the club decided to hold a four-day bazaar to raise money. One of the attractions was a St. Bernard dog, which escaped with a collection tin on one of the nights after the bazaar had closed. The dog then found its way to John Henry Davies whose daughter became so smitten with it that he enquired about the origin of the tin, and in doing so saved the club from near ruin.

It was the escape and recapturing of the dog which led to the meeting between team captain Harry Stafford and Davies, who would lead a group of businessmen. Together, they came up with £2,000 to save the club from bankruptcy.

John Henry Davies became the club president, and on 28 April 1902, the new owners renamed the club Manchester United Football Club, after considering the alternate names “Manchester Celtic” and “Manchester Central”. They also changed the team’s colours to red and white. ….

They also financed Old Trafford, a ground that has served the club well for more than a 100 years.

1909 was also a milestone for United for another reason. John Henry Davies once again lent financial support by lending £60,000, a huge sum at the time, to finalise the team’s move to Old Trafford.

The world’s wealthiest club, Real Madrid, received benefaction in more recent times:

Real Madrid has sold its training ground to the local government in order to wipe out its estimated 46,000-million peseta (US$245.4 million) debt.

The value of Monday’s sale was not made public but it had been reported in the Spanish media to be worth up to 75,000 million pesetas (US$400 million).

However, the operation has been condemned by politicians from opposition parties who accuse the Madrid Regional Council of utilizing public finances to rectify what they claim to be Real Madrid’s financial mismanagement.

….

Under the terms of the agreement, the club is expected to vacate the 110,000 square meter (133,100 square yard) Ciudad Deportiva training ground in 2004 and relocate to a new state-of-the-art complex ten times the size.

Undeveloped land in the northeastern outskirts of the city has been provided by the Council.

Assistance from the City of Madrid was multifarious:

The City of Madrid had re-zoned Real Madrid’s training grounds for development, vastly increasing its value, and the club then sold the site to the Madrid city council and regional government for office buildings.

It is one thing to prevent the continuation or recurrence of the financial excesses of the past decade, of English football in particular, it is another to protect the dominant forces in Europe.

It is not apparent that UEFA’s new financial regulations fall on the right side of the line.

While the regulations seek to require football clubs to live within their means while allowing some amount of outside investment, it also deters wealthy benefactors from making a leap of faith with a lesser or struggling club – which was not an uncommon way for clubs to achieve success in the past.  UEFA risk drawing a line through history.

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3 comments

  1. [...] new financial regulations may be aimed at reducing levels of  debt in European football, but if it is also applied to [...]


  2. [...] Rich Benefactors – The End Of History [...]


  3. [...] (1) The club v country debate is one about money – clubs pay players, countries use their services with minimal recompense, insufficient when top players are injured on international duty. (2) The extent to which the wealth of football is concentrated in Europe, and the efforts of European clubs and leagues to develop markets outside of Europe. (3) The distribution of wealth in European football, and how it is controlled – you have UEFA, ECA, EPFL, and the most powerful clubs and their owners. [...]



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