Football's delicate balancing act

For a while it seemed that football was somehow immune to harsh economic realities facing the world. While Governments talked of cuts and tax rises, the likes of Real Madrid and Man City spent millions to chase dreams of domestic and European glory. It really did appear that Football, certainly the Premier League and other top European clubs were in their own economic bubble.

Within a few days of the new year however and we are reminded that no one is immune. First of all Portsmouth struggled again to pay their wages and received a winding order from the Inland Revenue. A few days later Leeds, now playing in the third tier of English football, took on Man United in a game that could have conceivably been in the Champions League only half a decade ago. Leeds' only realistic cup hopes come in the form of the Johnstone's Paint Trophy, as opposed to trips to Milan and Madrid.

The example of Leeds, along with the likes of Newcastle, Forest, Southampton, Sheffield Wednesday and a long list of others shows that success is only temporary but financial mismanagement could have permanent effects. Despite an inconsistant season Man United appear no different since the Glazier's famously bought the club in 20XX, yet a fan of FC United of Manchester will tell you different. FC United was of course set up in protest of the Glaziers takeover, which has seen Man United take on millions of pounds of debt. Using the club as collateral for bigger loans the Glaziers have put a financial weight around the club that seems extremely difficult to remove. Similarly, Liverpool, owned by two US businessmen who are seemingly no longer on talking terms, could face ruin on the scale of Leeds if they don't ensure Champions League football.

Many football clubs across a range of divisions spend outside of their means, taking a gamble to get the next level or in some circumstances, just to remain competitive. Leeds are perhaps the most famous example of this, with the club's demise linked to their failure to gain entry to the Champions League. However, other examples, such as Southampton also come to mind. Southampton took a gamble to spend money they didn't have in their second season outside the Premier League. The gamble of high transfer fees and wages was lost when the club was knocked out of the Championship play-off semi-final on a penalty shoot-out. The club struggled on for two seasons, introducing cost saving measures as wide ranging as selling players to shutting down parts of the stadium but inevitably ended up in relegation and administration. Southampton took a gamble and it failed. Fortunately the club was saved at the eleventh hour by a new owner but it could have been so different.

Of course not all football teams are run in debt and indeed not all of those who are in debt are there through taking a fanciful gamble. Many teams in the lower leagues simple struggle like many small businesses do. However, there does seem a culture of debt and short term gain, over thinking about the longer term. Our credit cards, foreign holidays and new cars can all testify for that. Perhaps football is less in a bubble after all. The fact is clubs as wide ranging as Liverpool, Crystal Palace, Watford and Bournemouth struggle with their debts everyday and if we're not careful we're going to lose one of them forever.