Daniel Levy - Chairman

[DubaiSpur]

As always, good video from Tifo Football - some references to Sugar's time at the club in there from 0:55 onwards.

Also, two interesting things to consider, at least in my opinion.

Firstly, he quotes the authors of Soccernomics at 1:38 to describe how clubs run as businesses first and football clubs second tend not to do well at either, given the essentially utility-maximizing nature of football. The argument there is that the game is not meant to be about profit at all costs, like it is in closed-shop American leagues with no promotion or relegation - football is a game of utility maximisation, where pursuit of sporting success is the aim above all. Not profit maximisation.

Secondly, at 3:15 he describes the findings of the House of Commons Sport, Media and Culture Committee's inquiry into the governance of football, and quotes Stefan Szymanski (author of Soccernomics, who appeared before the committee) who argued that financial overextension *didn't really matter in football* - there would always be rich owners/prospective buyers to bail you out. He also quotes another economist named Sean Hamil, who argued against that view, but also implictly reinforced it when he admitted that taxpayers are the ultimate guarantors for football clubs, because in the event of them going into administration, their tax debts are the last to be paid (if at all).

He also pointed out that very few clubs actually went bust after going into administration - using Leicester as an example. Leicester went into administration in 2002, paid 700k out of the 7 mil it owed, and won the league 14 years later after an injection of cash by Thai owners.

Finally, he quotes someone named Egon Franck who pointed out that football is essentially an arms race filled to the brim with moral hazard, where all the clubs operate in the expectation of being bailed out, and thus spend to the edge of insolvency, confident that they won't go under.

It's interesting (if unsurprising) stuff. Is there actually a risk to being run in a free-spending way? People point at Leeds, and that's fair, but the reason they stand out is because they are an exception - City were on the verge of being broke when they were bought by Thaksin Sinawatra and then Sheikh Mansour, Chelsea likewise before being bought by Abramovich, and so on, and so forth. Rich owners bailed them out. And Leicester is the other example, quoted in the video.

And of course, every club's golden age of trophies (including ours in the 60s) came about at least partly because of generous cash injections by the owners.

So is there really a point to being profitable in football? It's worth thinking about. Certainly, sustainability is always important. But is football geared to reward sustainability?

 

[DubaiSpur]

And before the usual suspects pipe up, this is only tangentially about us - it's more of a question about the nature of football itself.

 

[braineclipse]

As always, good video from Tifo Football - some references to Sugar's time at the club in there from 0:55 onwards.

Also, two interesting things to consider, at least in my opinion.

Firstly, he quotes the authors of Soccernomics at 1:38 to describe how clubs run as businesses first and football clubs second tend not to do well at either, given the essentially utility-maximizing nature of football. The argument there is that the game is not meant to be about profit at all costs, like it is in closed-shop American leagues with no promotion or relegation - football is a game of utility maximisation, where pursuit of sporting success is the aim above all. Not profit maximisation.

Secondly, at 3:15 he describes the findings of the House of Commons Sport, Media and Culture Committee's inquiry into the governance of football, and quotes Stefan Szymanski (author of Soccernomics, who appeared before the committee) who argued that financial overextension *didn't really matter in football* - there would always be rich owners/prospective buyers to bail you out. He also quotes another economist named Sean Hamil, who argued against that view, but also implictly reinforced it when he admitted that taxpayers are the ultimate guarantors for football clubs, because in the event of them going into administration, their tax debts are the last to be paid (if at all).

He also pointed out that very few clubs actually went bust after going into administration - using Leicester as an example. Leicester went into administration in 2002, paid 700k out of the 7 mil it owed, and won the league 14 years later after an injection of cash by Thai owners.

Finally, he quotes someone named Egon Franck who pointed out that football is essentially an arms race filled to the brim with moral hazard, where all the clubs operate in the expectation of being bailed out, and thus spend to the edge of insolvency, confident that they won't go under.

It's interesting (if unsurprising) stuff. Is there actually a risk to being run in a free-spending way? People point at Leeds, and that's fair, but the reason they stand out is because they are an exception - City were on the verge of being broke when they were bought by Thaksin Sinawatra and then Sheikh Mansour, Chelsea likewise before being bought by Abramovich, and so on, and so forth. Rich owners bailed them out. And Leicester is the other example, quoted in the video.

And of course, every club's golden age of trophies (including ours in the 60s) came about at least partly because of generous cash injections by the owners.

So is there really a point to being profitable in football? It's worth thinking about. Certainly, sustainability is always important. But is football geared to reward sustainability?

Leeds, Leicester... 14 years for Leicester, around 14 years for Leeds now out of the Premier League. How long until they can realistically be back in the Champions League, even if someone wealthy do a takeover?

14 years out of the Premier League might not be the kind of thing economists think of as something that matters at all. Would it matter to you at all if we spent 14 years outside the PL?

There are other consequences than going out of business, closing down, ending as a club that are worth considering imo.

 

[billyiddo]

Wouldn't say Leeds are the exception, Portsmouth and Villa all spent beyond their means and suffered as a result, Rangers folded and had to build their way up from the bottom tier again - im sure there are plenty of other examples but those are the furst that come to mind

 

[scaramanga]

Wouldn't say Leeds are the exception, Portsmouth and Villa all spent beyond their means and suffered as a result, Rangers folded and had to build their way up from the bottom tier again - im sure there are plenty of other examples but those are the furst that come to mind

QPR, Southampton, Birmingham City... Etc.

Hang on, I think I've found a link

 

[DubaiSpur]

Leeds, Leicester... 14 years for Leicester, around 14 years for Leeds now out of the Premier League. How long until they can realistically be back in the Champions League, even if someone wealthy do a takeover?

14 years out of the Premier League might not be the kind of thing economists think of as something that matters at all. Would it matter to you at all if we spent 14 years outside the PL?

There are other consequences than going out of business, closing down, ending as a club that are worth considering imo.

That's fair - even if it doesn't actually mean going bust, there are negative consequences for overextension that Szymanski never really considered.

But that argument only states that you're not unduly punished for staying sustainable - you avoid the pain that can come with overextending. But do you gain any benefit to it? Is the game of football geared towards rewarding long-term sustainability over the boom-and-bust model that clubs like City and Chelsea evidently profit by?

 

[DubaiSpur]

Wouldn't say Leeds are the exception, Portsmouth and Villa all spent beyond their means and suffered as a result, Rangers folded and had to build their way up from the bottom tier again - im sure there are plenty of other examples but those are the furst that come to mind

Also true - QPR too. But for those examples, others (City, Chelsea, Everton, West Ham, Liverpool with the Hicks and Gillett - FSG transition) come to mind as having spent beyond their means and avoided it. So, do you think that it is essentially a random chance that you actually suffer any negative consequences for over-extending?

 

[billyiddo]

Also true - QPR too. But for those examples, others (City, Chelsea, Everton, West Ham, Liverpool with the Hicks and Gillett - FSG transition) come to mind as having spent beyond their means and avoided it. So, do you think that it is essentially a random chance that you actually suffer any negative consequences for over-extending?

Since when have Everton Liverpool or West Ham spent beyond their means?

I wouldnt say it was random, no - id say unless your gamble in over spending pays off over a number of years in establishing you at the top table thereby resetting the natural order (City/Chelsea) it will always come back to bite you in the arse - the money will dry up and the owners will look to get out leaving the club in debt and an unattractive proposition for would be buyers.

Super clubs would be a different kettle of fish though as suggested as they are always likely to have a queue of people ready to come in and pick up the tab and start over

 

[Danishfurniturelover]

Wouldn't say Leeds are the exception, Portsmouth and Villa all spent beyond their means and suffered as a result, Rangers folded and had to build their way up from the bottom tier again - im sure there are plenty of other examples but those are the furst that come to mind

Blackpool were destroyed by poor financial miss management, not sure it was actual over spending more poor wage contracts.

 

[Grays_1890]

Since when have Everton Liverpool or West Ham spent beyond their means?

I wouldnt say it was random, no - id say unless your gamble in over spending pays off over a number of years in establishing you at the top table thereby resetting the natural order (City/Chelsea) it will always come back to bite you in the arse - the money will dry up and the owners will look to get out leaving the club in debt and an unattractive proposition for would be buyers.

Super clubs would be a different kettle of fish though as suggested as they are always likely to have a queue of people ready to come in and pick up the tab and start over

West Ham still suffering from Icelandic miss management

 

[parklane1]

There have been plenty of examples of clubs running into trouble ( some more so then others) by overspending and trying to live the dream. DubaiSpur is just trying getting yet another dig at Levy ( as usual).

 

[MKSpur]

QPR, Southampton, Birmingham City... Etc.

Hang on, I think I've found a link

 

[thfcsteff]

As always, good video from Tifo Football - some references to Sugar's time at the club in there from 0:55 onwards.

Also, two interesting things to consider, at least in my opinion.

Firstly, he quotes the authors of Soccernomics at 1:38 to describe how clubs run as businesses first and football clubs second tend not to do well at either, given the essentially utility-maximizing nature of football. The argument there is that the game is not meant to be about profit at all costs, like it is in closed-shop American leagues with no promotion or relegation - football is a game of utility maximisation, where pursuit of sporting success is the aim above all. Not profit maximisation.

Secondly, at 3:15 he describes the findings of the House of Commons Sport, Media and Culture Committee's inquiry into the governance of football, and quotes Stefan Szymanski (author of Soccernomics, who appeared before the committee) who argued that financial overextension *didn't really matter in football* - there would always be rich owners/prospective buyers to bail you out. He also quotes another economist named Sean Hamil, who argued against that view, but also implictly reinforced it when he admitted that taxpayers are the ultimate guarantors for football clubs, because in the event of them going into administration, their tax debts are the last to be paid (if at all).

He also pointed out that very few clubs actually went bust after going into administration - using Leicester as an example. Leicester went into administration in 2002, paid 700k out of the 7 mil it owed, and won the league 14 years later after an injection of cash by Thai owners.

Finally, he quotes someone named Egon Franck who pointed out that football is essentially an arms race filled to the brim with moral hazard, where all the clubs operate in the expectation of being bailed out, and thus spend to the edge of insolvency, confident that they won't go under.

It's interesting (if unsurprising) stuff. Is there actually a risk to being run in a free-spending way? People point at Leeds, and that's fair, but the reason they stand out is because they are an exception - City were on the verge of being broke when they were bought by Thaksin Sinawatra and then Sheikh Mansour, Chelsea likewise before being bought by Abramovich, and so on, and so forth. Rich owners bailed them out. And Leicester is the other example, quoted in the video.

And of course, every club's golden age of trophies (including ours in the 60s) came about at least partly because of generous cash injections by the owners.

So is there really a point to being profitable in football? It's worth thinking about. Certainly, sustainability is always important. But is football geared to reward sustainability?

An intriguing post. I look forward to listening to the link provided.

I think the simple upshot is whether one wants their club to be driven into the ground to the point where it has to hitch it's knickers to oligarchs, dictators and generally dubious billionaires for the "life injection"...

I personally think it is a horrible way to be, and would prefer to look at clubs who have not behaved like that and remain "proper football clubs" as opposed to playthings.

Levy created a plan a long time ago, which revolved around regenerating the facilities at the club, then building a new stadium which could provide multiple economic opportunities whilst cultivating a culture of aggressive youth policies and prudence on the playing side. That he found Poch -a man who has catapulted way beyond the parameters of expectancy on the playing side- is the sort of thing you literally pray for but cannot reasonably plan for.

I think that we are in a position of such strength right now that even Levy has to pinch himself. It is an argument for prudence and careful operation when the plan, and tools, are all working.
We are now in a position where we can afford to make a couple of large money signings without threatening our immediate future/putting us in the Red Light District window should we bottom out.
It is why I believe we will 100% sign Ndombele and whoever else Pochettino REALLY wants.
The consequences of not would be too great a risk.
This is another moment in which we have to trust Levy.
I trust him.

Again, interesting discussion mate...

 

[DubaiSpur]

There have been plenty of examples of clubs running into trouble ( some more so then others) by overspending and trying to live the dream. DubaiSpur is just trying getting yet another dig at Levy ( as usual).

And before the usual suspects pipe up, this is only tangentially about us - it's more of a question about the nature of football itself.

 

[DubaiSpur]

Since when have Everton Liverpool or West Ham spent beyond their means?

I wouldnt say it was random, no - id say unless your gamble in over spending pays off over a number of years in establishing you at the top table thereby resetting the natural order (City/Chelsea) it will always come back to bite you in the arse - the money will dry up and the owners will look to get out leaving the club in debt and an unattractive proposition for would be buyers.

Super clubs would be a different kettle of fish though as suggested as they are always likely to have a queue of people ready to come in and pick up the tab and start over

https://www.express.co.uk/sport/football/152885/West-Ham-s-debt-grew-so-quickly
https://bleacherreport.com/articles/378517-why-has-nobody-bought-everton

As I remember, Liverpool have also spent 250m plus in owner financing beyond revenues since FSG took over. They have been rewarded for it with a CL trophy, among other things.

It's an interesting distinction between the super clubs and the rest in terms of willing buyers - would you say Everton/West Ham level, or only Chelsea/City/Arsenal/Liverpool/United?

Because what we're seeing now is an influx of wealthy new owners into the game at lower levels than the super clubs - Chinese owners, American owners, and the usual Middle Eastern owners. They're often buying from previous owners who spent beyond their means and then sold up - and this isn't restricted to England. AC Milan, Inter Milan, Atletico, Valencia, Roma and so on. So it's not just the super clubs getting a stream of willing buyers.

 

[DubaiSpur]

An intriguing post. I look forward to listening to the link provided.

I think the simple upshot is whether one wants their club to be driven into the ground to the point where it has to hitch it's knickers to oligarchs, dictators and generally dubious billionaires for the "life injection"...

I personally think it is a horrible way to be, and would prefer to look at clubs who have not behaved like that and remain "proper football clubs" as opposed to playthings.

That's fair, mate. But in the end, does football make the distinction? You might, but I doubt the wider footballing world will remember to put an asterisk next to City or Chelsea's constant, unending stream of trophies 10, 25 or 50 years from now. How they won them will have faded - but the fact that they won them will probably not.

That's really what I mean. It's perfectly reasonable and moral to prefer sensibly-run clubs like Spurs or (yes) the Arse, but is the game itself built to recognize sustainability as worthy? That's the troubling question for me.

It seems like football is, as Egon Franck put it, a constant arms race where clubs push themselves to the edge to pursue utility maximisation, risks be damned. And the thing is, clubs that don't participate in that arms race, like us and Arse, aren't lauded for it - we're mocked, as other clubs spend ambitiously, win trophies and race ahead of us in the long-term tables.

So does it matter? That's what's troubling me since I watched that video. Will history remember that we were sustainable, and Chelsea/City/Liverpool et al weren't as they won all those things? I don't know.

Levy created a plan a long time ago, which revolved around regenerating the facilities at the club, then building a new stadium which could provide multiple economic opportunities whilst cultivating a culture of aggressive youth policies and prudence on the playing side. That he found Poch -a man who has catapulted way beyond the parameters of expectancy on the playing side- is the sort of thing you literally pray for but cannot reasonably plan for.

I think that we are in a position of such strength right now that even Levy has to pinch himself. It is an argument for prudence and careful operation when the plan, and tools, are all working.
We are now in a position where we can afford to make a couple of large money signings without threatening our immediate future/putting us in the Red Light District window should we bottom out.
It is why I believe we will 400% sign Ndombele and whoever else Pochettino REALLY wants.
The consequences of not would be too great a risk.
This is another moment in which we have to trust Levy.
I trust him.

Again, interesting discussion mate...

Well, this is a bit of a tangent, but suffice it to say - I trust Poch with all my heart. Even if he gets crap, he'll turn it into gold.

But Levy? No, not much. He's a sensible steward, but I've seen him fall short of really backing the best manager we've had in 50 years too many times to believe in his willingness to do so now.

So, seeing is believing for me this summer. And I'll wait and see.

And tinkle off @parklane1 and co in the process, no doubt.

 

[thfcsteff]

That's fair, mate. But in the end, does football make the distinction? You might, but I doubt the wider footballing world will remember to put an asterisk next to City or Chelsea's constant, unending stream of trophies 10, 25 or 50 years from now. How they won them will have faded - but the fact that they won them will probably not.

That's really what I mean. It's perfectly reasonable and moral to prefer sensibly-run clubs like Spurs or (yes) the Arse, but is the game itself built to recognize sustainability as worthy? That's the troubling question for me.

It seems like football is, as Egon Franck put it, a constant arms race where clubs push themselves to the edge to pursue utility maximisation, risks be damned. And the thing is, clubs that don't participate in that arms race, like us and Arse, aren't lauded for it - we're mocked, as other clubs spend ambitiously, win trophies and race ahead of us in the long-term tables.

So does it matter? That's what's troubling me since I watched that video. Will history remember that we were sustainable, and Chelsea/City/Liverpool et al weren't as they won all those things? I don't know.



Well, this is a bit of a tangent, but suffice it to say - I trust Poch with all my heart. Even if he gets crap, he'll turn it into gold.

But Levy? No, not much. He's a sensible steward, but I've seen him fall short of really backing the best manager we've had in 50 years too many times to believe in his willingness to do so now.

So, seeing is believing for me this summer. And I'll wait and see.

And tinkle off @parklane1 and co in the process, no doubt.

Sadly I cannot disagree with your first point. I think the world is sadly becoming “chavvy” in that regard (winning is all that matters, etc) but I live in hope that there are enough people around who realize that football has to be about more than that.

As for your second point, I believe the reason Poch is still here is because he and Levy have an honest relationship. It is why I both believe, and trust, that everyone will be happy when the season starts...

 

[billyiddo]

https://www.express.co.uk/sport/football/152885/West-Ham-s-debt-grew-so-quickly
https://bleacherreport.com/articles/378517-why-has-nobody-bought-everton

As I remember, Liverpool have also spent 250m plus in owner financing beyond revenues since FSG took over. They have been rewarded for it with a CL trophy, among other things.

It's an interesting distinction between the super clubs and the rest in terms of willing buyers - would you say Everton/West Ham level, or only Chelsea/City/Arsenal/Liverpool/United?

Because what we're seeing now is an influx of wealthy new owners into the game at lower levels than the super clubs - Chinese owners, American owners, and the usual Middle Eastern owners. They're often buying from previous owners who spent beyond their means and then sold up - and this isn't restricted to England. AC Milan, Inter Milan, Atletico, Valencia, Roma and so on. So it's not just the super clubs getting a stream of willing buyers.

Point taken on West Ham but then i wouldn't say that it has been a success for them to have been run the way they have over the last few years.

As much as some don't like Liverpool they are still a huge club with a reach that dwarfs all but a handful of others in world football. Everton are famously frugal as a club and it's only their new owners who have started to spend (whilst remaining within their means i believe) the new tv deal in England has somewhat skewed things and bailed a few clubs out whilst ffp is preventing them from spending more than they generate so it's all moot really atm

 

[ricky2tricky4city]

That's fair, mate. But in the end, does football make the distinction? You might, but I doubt the wider footballing world will remember to put an asterisk next to City or Chelsea's constant, unending stream of trophies 10, 25 or 50 years from now. How they won them will have faded - but the fact that they won them will probably not.

That's really what I mean. It's perfectly reasonable and moral to prefer sensibly-run clubs like Spurs or (yes) the Arse, but is the game itself built to recognize sustainability as worthy? That's the troubling question for me.

It seems like football is, as Egon Franck put it, a constant arms race where clubs push themselves to the edge to pursue utility maximisation, risks be damned. And the thing is, clubs that don't participate in that arms race, like us and Arse, aren't lauded for it - we're mocked, as other clubs spend ambitiously, win trophies and race ahead of us in the long-term tables.

So does it matter? That's what's troubling me since I watched that video. Will history remember that we were sustainable, and Chelsea/City/Liverpool et al weren't as they won all those things? I don't know.

That's all about the outward view, what other people think.

What's more important (to me) is the inward view, what I think and how I feel about the club and who we are.

And that may reflect how we are different people in the first place. Not a judgement, just we're different.

 

[braineclipse]

That's fair - even if it doesn't actually mean going bust, there are negative consequences for overextension that Szymanski never really considered.

But that argument only states that you're not unduly punished for staying sustainable - you avoid the pain that can come with overextending. But do you gain any benefit to it? Is the game of football geared towards rewarding long-term sustainability over the boom-and-bust model that clubs like City and Chelsea evidently profit by?

I would say staying sustainable has worked out well for us, Dortmund and Atletico. That's only examples from the big leagues. I don't know any Leeds fans, ask them if they could go back 20 years and get Levy in charge if they would have bet on that bringing any benefit to the club.

Let's use us as the primary example? Have we seen any benefit to our long term sustainable model since Levy took over? I would say undoubtedly yes, I find it astonishing that anyone would disagree.

City and Chelsea haven't been through boom and bust cycles under Abramovich or Mansour. They've had owners that have been willing to sustain extended financial losses. An actual bust, leading to a change in ownership is at best a crapshoot, most owners aren't great. I think there are more examples of owners coming in promising big things than there are owners succeeding like at City and Chelsea.