By Jesse Fink
September 5th 2008 @ 9:09am
Boardroom bullying a cancer on coaches
Really, who would be a Premier League manager right now? While you and I might answer that question with some alacrity – “When (cough) can I start?” – it’s worth considering just what you’d be
letting yourself in for.
This includes abuse from fans, abuse from players, abuse from the media (I should know) and, perhaps the worst of a catalogue of pissers, the incontrovertible reality that you really, at the end of the day, have not one skerrick of power at all.
Still interested? Yeah, me too.
One pay cheque would buy me that bar in the Caribbean I’m dreaming about.
Even so, this week signified a worrying development in English football.
Alan Curbishley, West Ham’s gaffer, left in a huff and won’t be back. Kevin Keegan, Newcastle’s prodigal son, followed him this morning.
The season has barely started.
The issue for both men, and one facing football all around the world, is the diminution of the manager in the running of the modern-day club.
Where once managers held sway over every conceivable aspect of a football team’s day-to-day affairs, they are now being emasculated when it comes to perhaps the most important decision of all: who plays.
As Curbishley made clear in the press release that announced his exit from Upton Park: “The selection of players is critical to the job of the manager and I had an agreement with the club that I alone would determine the composition of the squad.
“However, the club continued to make significant player decisions without involving me. In the end such a breach of trust and confidence meant that I had no option but to leave.”
Meanwhile at St James’ Park, Keegan was all week embroiled in his own cold war with club directors over transfer policy.
As the Times’ Matt Dickinson wrote: “The power battle between Keegan on one side and Wise and Tony Jimenez, the directors, over transfer policy on the other was the main cause of the manager walking out on Monday, seemingly for good … [Keegan] has been outraged that his wishes in the transfer market have been blatantly ignored.
Players have been signed without his approval, while others, such as [Joey] Barton and [Michael] Owen, were hawked around to other clubs behind his back.”
There were hopes the Keegan-NUFC standoff could be resolved – the club said as much, saying they had no intention of sacking the manager – but, like the Curbishley affair, it’s now all gone pear-shaped.
Keegan didn’t mince his words on his departure: “It’s my opinion a manager must have the right to manage and that clubs should not impose upon any manager any player he does not want.”
In the space of 24 hours, two club talismans, two very capable managers, gone. And at the heart of both stories, the same issue: boardroom bullying.
Intelligent football fans appreciate what it takes to run a modern-day football club – it’s as much about ringing cash registers as it is winning trophies – but the manager is still, and should always be, the
master of all he surveys.
When you put your faith in a football club, you’re essentially handing over your trust to an individual who will carry yours and your fellow fans’ hopes for the season (and seasons) ahead. There is an implicit understanding that your club’s fortunes will rise, fall and rise again on the decisions this individual makes.
Which all sounds great – in theory.
Practically, though, more and more FCs are now being run like corporations, where managers are just “yes men” for their shadowy and egostical owners.
Look at Avram Grant at Chelsea. Jose Mourinho wouldn’t have a bar of what Roman Abramovich was asking of him in regard to playing certain players, but Grant, his patsy, was far more accommodating.
How many minutes before Sulaiman Al-Fahim starts telling Mark Hughes who to play at Manchester City?
No bookie would take your money.
There are notable exceptions – Arsene Wenger at Arsenal, Sir Alex Ferguson at Manchester United – but old-style coaches who have muscle in front of the cameras and behind the scenes are a dying breed, and the Premier League, with its rapacious greed and moral destitution, is the cancer that’s killing them
Jesse Fink's columns now appear every Wednesday and Friday on The Roar.
Free Email updates:
Our daily emails are only sent if there is content for the sport or that author. You can subscribe to multiple daily emails; or get the daily Roar email with all our content in it. We value privacy. More...
(33)
Spiro Zavos said | September 5th 2008 @ 9:25am | Report comment
Jesse has put his finger on the dangers of privatised sports clubs, in any code. The people who own them, generally billionaires etc regard the clubs as their play-thing. They don’t have the emotional investment of the supporters. The owners fancy themselves as experts and interfere in a way that would never allow in their own business which, presumably, they know something about.
What is the answer? None really if clubs are to be privatised. You see the same thing in other codes, gridion, baseball, RL and in RU wtih the tensions between the clubs, their national unions and the national unions with the IRB.
If you follow a team, you love the dollars the rich list people can bring in to the club - and hope like hell they let the club manager get on with the job of making the team a winner.
Great stuff Jesse.
True Tah said | September 5th 2008 @ 9:30am | Report comment
Can you imagine how Bill Shankley would react to billionaire owners trying to tell him what is best??
LeftArmSpinner said | September 5th 2008 @ 9:47am | Report comment
the problem is that ultimately, they are money men and judged as such.
Because football and sport are inherently unprofitable, the only way to make a profit is to use a small amount of equity and a large amount of debt.
Its pretty scary to be using debt to buy a soccer player for US 30-40m, and not be able to control the value of that purchase and knowing that over time, even the best players value will decline.
EPL is now in the stratosphere of investors. We are seeing the high turnover now, as even very wealthy guys cant afford , or wont pay the cash required for new stadia, players etc!!!
It is coming to an end, the question is simply how these clubs will land after it all. The supporters are partly to blame. They have put incredible and unfair pressure and abuse on the owners to continually buy new players. At some point, it just gets too hard!!! Of course, the supporters never stump up their own capital!!!!
Aust. Rugby needs to heed this experience and I expect we will see the same in Euro rugby as the current benefactors lose interest and move on. Just look at the Elton John Experience at watford. Bought club in div 4, invested and took it to div 1 and FA cup, lost interest and sold out. club fell back towards origins and EJ came back in, lower profile and smaller investment!
Koala Bear said | September 5th 2008 @ 9:55am | Report comment
Sir Alex Ferguson at Manchester United is an interesting throw-up; as I recall before the American owners, Fergie, was saddled with our own Mark Bosnich; a play (keeper) he did not sign, but the signing of the Man U chairman. The end result Fergie immediately went out and signed the “French National Goal Keeper” and the rest is history. Mark was told Fergie didn’t want him and saw out his contract in the reserves before heading off to Chelsea…
~~~~~~~
KB
True Tah said | September 5th 2008 @ 9:56am | Report comment
LAS,
maybe the clubs should start charging the fans more to attend games.
I disagree re: using more debt than equity creates a larger profit, however this is accounting/financial stuff, and not what the Roar is about.
Pippinu said | September 5th 2008 @ 10:36am | Report comment
We only need to look to last season in the A-League, when the Jets’ owner pretty much forced GVE, perhaps the best coach in the A-League, to play an overweight and unfit Jardel, when even the casual observer could see that he was clearly no where near being match fit.
Spiro’s explanation is spot on - if someone is putting their own coin into a particular venture - they expect to be able to call the shots. On the other hand, there are plenty with business acument who know that you hire specialists to do what you can’t do, and you’d think that would include football managers and coaches.
The one area where the coach and the owner will constantly cross paths is in the actual purchase of players. In an age where the cost of players is around the GDP of 3rd world countries, it’s understandable that the one putting up the coin is going to want to have a bit of a say as to where his money is going.
Mick of Newie said | September 5th 2008 @ 10:43am | Report comment
Tah
Who is to say what the roar is about and not about.
If you don’t discuss the economics of modern sport you are playing with less than a half a deck of cards. Try understanding Harbahjan Singh and Andrew Symonds, Sonny Bil Williams, or the AFL’s deal with Blacktown Council without discussing “accounting/financial stuff”.
You may want to talk about Super 14 teams in Campbelltown or Coffs Harbour and other rose coloured illusions. A bit more time thinking about “accounting/financial stuff” might be elucidating.
Midfielder said | September 5th 2008 @ 10:45am | Report comment
Pip
Your Lardel example is spot on.
True Tah said | September 5th 2008 @ 11:23am | Report comment
Mick of Newie,
I guess my point was that LAS refers to using debt v equity…as someone who works in the field of accounting and finance and a CA, I believe I am qualified to comment on the whole debt v equity argument, and I don’t think this is relevant to this particular discussion, and I did not want to get into something too technical which would be boring.
If you like we can discuss the merits of using debt v equity, I have a few debates with many other accountants over my career about which is better, however I thought this article is to do with the struggle between sports clubs owners and the manager.
dasilva said | September 5th 2008 @ 11:36am | Report comment
Even clubs that aren’t privately own but members own club such as Barcelona and Real Madrid (really every club should work under their model of ownership. These clubs are actual clubs rather soulless business and if English club adopt this model we wouldn’t have this discussion about billionaire owners buying clubs) have chairman pressurising coach to sign certain type of players. REal Madrid signing truck loads of attacking players and no defenders reeks of chairman interference.
I don’t think there is an answer to this. Even if you put in a contract that the coach has control there is still problems as Alan Curbishley found out.
I think this is a problem in the media as well. I think a while a go news presenter quit her job due to interference from the board despite the fact it is in her contract that she has editorial control. Perhaps as long as you have a job there’s no such thing as professional independence.
dasilva said | September 5th 2008 @ 11:57am | Report comment
IF there is one benefit to this is that instead of the big 4, there is a big 5. More competition for the title is a good thing. WHo knows maybe 20 years in future all 20 clubs in the EPL is bought by oil tycoons, investors and corporation then we actually have an evenly balance EPL with all sides can compete evenly with each other financially.
Mick of Newie said | September 5th 2008 @ 12:11pm | Report comment
I defer Tah
I read an interesting theory yesterday on West Ham which was that they are being set up for sale. They have cashed in all the players they could sell for a decent price (Ferdinand and McCartney). They have concluded they might be able to survive mid table given the weakness of the 3 promoted teams (Stoke, Hull and WBA), they have a threadbare squad built around a core of about 7 experience players and a bunch of youth players. They would have loved to have offloaded Lucas Niell’s massive salary but finding a buyer for those wages is hard to find. They are in the shop window for the next oil billionaire.
dasilva said | September 5th 2008 @ 12:17pm | Report comment
Maybe clubs should rename their side to the name of the owners. Abramovich FC, Glazer United
Kazama said | September 5th 2008 @ 12:24pm | Report comment
dasilva
You’ve already got Red Bull changing the names of the clubs they own, so I think it won’t be long before you have EPL clubs changing their names to represent their owners’ interests.
Prepare to kiss some sacred football traditions goodbye. Nothing is safe from the money of the bored billionaires.
Slippery Jim said | September 5th 2008 @ 12:32pm | Report comment
Not all the bullying came from the Boardroom, with Alan Curbishley having to put up with abuse and accusations from Lucas Neill, with our charming Aussie defender also putting in his two cents worth about who should be new manager. Perhaps Neill should shut his overpaid gob and stick to sprawling full length in front of smarter Italian players in the penalty area.
dasilva said | September 5th 2008 @ 1:04pm | Report comment
I don’t think the reports said that Neill told him who should be new manager. He just was upset about Curbishley performance. I heard that Neill felt betrayed when he mistakenly believe that Curbishley tried to sold him behind his back when it was the board.
In any case I’m becoming less enamoured by Neill as time gone on. He’s act like he is Australian golden child. His performance in the Asia Cup was dismal. His move to West Ham reeks of mercinary behaviour. The fact is that he stuffed up against Italy and it was a fair penalty. We weren’t rob. lot of people give Kalac a lot of stick when it was Lucas Neill that cost as a quarter final place (admittently we probably wouldn’t made it to round of 16 without Lucas Neill’s performance). From reports - Frank Rijkaard considered buying Lucas Neill until he stuffed up against Italy. After that he crossed him off from the list of potential purchase saying he can’t buy a player who makes crucial mistake under pressure. Lucas Neill is a decent player and that’s it but sometime he acts like he is more than that.
Pippinu said | September 5th 2008 @ 1:31pm | Report comment
sj
heh, heh…
Let us also not forget that just when Neill’s star was on the rise to previously unimaginable levels, Giansiracusa was voted Australia’s sexiest sportsman just ahead of Neill (for those who don’t know, he will line up against the Hawks tonight).
Going back a post or two:
Debt to equity ratios?! Now I know I”m in Nirvana!
So True Tah, I want to hear about your thoughts re debt to equity and football (any code, doesn’t really matter - or does it?)
All I know is that in the old VFL in the late 70s and early 80s, virtually all the clubs were bankrupt, as was the VFL itself.
The whole comp (and most of the clubs) were saved by:
1. creating an independent governing body that was able to put strategic business plans in place without pandering to the self-interest of the clubs;
2. pinching ideas from America re drafts and salary caps, and perhaps most importantly, learning how to package TV rights and sell them; and
3. creating new licenses and selling them for $4 million a pop (big money in Australian terms 20 years ago).
In the intervening period of two decades or so, the economics of Australian club football has changed significantly in many respects (and stayed depressingly similar in some others). Over half the clubs now generate significant profits year in, year out - 20 years ago this was thought unthinkable.
What’s depressingly similar? That Footscray/Bulldogs still don’t have a spare two bob, and struggle to top up the petty cash float once a month.
Debt to equity ratio? Something like 999:1.
As I said, depressing…
jimbo said | September 5th 2008 @ 1:50pm | Report comment
It used to be race horses and yachts, now its football teams . . the new status symbol of the rich and infamous.
The bottom line is that managers and players are employees of a club and get paid huge amounts of money to do a job and the owner of the club has the last say.
Yes, its not ideal and at times unpleasant, but if you want to be a player and a manager or an employee you often have to do things you don’t like for the good of the club, or whoever or whatever . . .
A lot of players and managers leave of their own accord, whether they get to do all they like or not. I think Keegan and Curbishley have done the right thing and they are free now to get another job.
First Nicky Carle, now its Lucas Neill’s fault.
Gosh, some of you are hard to please.
True Tah said | September 5th 2008 @ 2:08pm | Report comment
Pippinu,
my thoughts on debt-to-equity re: sporting clubs.
I guess the whole issue of which is better would reflect on the ownership structure used, because the key difference is due to tax purposes. I can’t speak for other nations, but in Oz, sporting clubs such as the Tahs which are community oriented are exempt from tax under a specific section of the tax code.
The benefit of using debt over equity, is that debt payments are tax deductible, whereas equity payments (such as dividends) are not. Take away the tax element, and suddenly debt is whole lot less attractive, which is why public clubs should only look at debt as a means of last resort, and I guess if it gets to that stage, things are not looking too good.
However the A-League clubs are run as private companies. Whilst I am unsure as to whether or not they would be exempt, as the accounts do not need to be disclosed, Im going to assume that they are not exempt from income tax. Ultimately the private owners may want to sink money into the club, through either equity or debt.
Re: paying tax, I guess its the good situation, it means you are actually making money!
I guess using equity acknowledges that the investment is risky, and you are essentially prepared to lose the lot, and I guess if you love your sport and are a millionaire, you can afford to do this. The sporting club does not need to repay you the money, and it would only do so as a dividend or less likely as a capital return.
Using debt ensures (on paper at least) that you will get repaid your contribution, plus interest. Debt is less risky for the person providing the funds as the obligation to receive the amount is upfront, and you expect to get paid…if things dont go so well, then you will rank ahead of equity holders. I understand from a source that Frank Lowy’s investment in Sydney FC is through debt (i.e. Frank or his entity loans the money to the club and charges interest on it).
Funding a sporting club using equity is the preferred option, as the alternative can result in undue pressure on the club to fund debt repayments, and ultimately it will cost a hell of a lot more. Alternatively, if a club owner makes an equity contribution to their club, but instead of pulling the money out of their own pocket, they use debt financing, then this creates pressure on the club to make money for their owner…the club owner struggles to make debt repayments, then they may be forced to sell the club or undertake other actions to fund repayments like selling start players for transfer fees or selling off assets/downsizing operations.
In summary, I guess if you know a millionaire is in it for the love of the game, they would make an equity contribution…if they are looking to make a buck from it, then debt is the preferred option.
This is pretty much based on my experiences working in tax and forensic accounting, and would be interested to hear your thoughts.
Pippinu said | September 5th 2008 @ 2:53pm | Report comment
True Tah
Good summary of the ins and outs of debt vs equity!
That’s a good question about whether certain types of clubs, like privately owned A-League clubs, pay tax or not. I would expect that the member-based AFL clubs do not pay tax.
Bottom-line, you touch on this and its difficult to argue with: if your cash flow is pretty dodgy at the best of times (as that of football clubs can often be), the club will be immensely better off with a private benefactor who isn’t interested in seeing his money returned in a hurry (hopefull, ever) - coz if you are having to pay 8% or so per annum on a debt that’s about the size of your annual turnover - then that 8% impost is going to kill you off every time.
Interestingly, the start up capital of A-League clubs was around the $5mill to $7mill mark - which also roughly equates with the minimum turnover you need to generate those first few years to survive.
Nothing magical about those numbers of itself, except 8% of $7 mill is a lot more difficult to scrounge out of $7 mill of turnover than it is of, say, $14 or $21 mill in turnover.
At the end of the day - this is probably where our answer to the debt to equity riddle lies (and perhaps why A-League clubs will remain vulnerable until they can push their turnover to beyond $10 mill per annum, which is difficult, but doable).
Redb said | September 5th 2008 @ 3:01pm | Report comment
Pip,
The bullies problem is lack of critical mass of its supporter base. One flag in 80 years is not a great return. If the AFL did not require such a massive amout of revenue to run the smaller clubs would survive.
Should North Melb, Bulldogs, Melb, consider a return to the VFL in the future?
Redb
Pippinu said | September 5th 2008 @ 3:05pm | Report comment
True Tah
I can add one more thing about which you most certainly will have more experience than I , and that is the use to which the debt is put.
So, let us assume an new A-League franchise has to borrow $5mill to $7mill to start up. There will be the usual upfront cost, maybe a license fee payable to the FFA, etc - the rest is basically in the kitty for a rainy day, i.e. to get them over the first three to four years of inevitable losses (current experience of most clubs). It goes without saying that the longer that loss making period lasts, the more likely it is that particular club will not survive without a wealthy benefactor intervening.
I think you know where I am heading with this. The debt isn’t established to invest in an asset with a known revenue generating capacity - in fact, I would say if one aspect is unknown about the business of football - it is the question of revenue!
So to take on debt to commence a business where revenue is uncertain and where virtually no assets are actually owned, well, you and I would not want to be the ones putting up our hard earned!!
Redb said | September 5th 2008 @ 3:05pm | Report comment
True Tah,
There have been a few wealthy benefactors for AFL clubs, Joseph Gutnick poured at least 3 million into the Melbourne Demons to keep them afloat. The problem is eventually the same revenue restricting issues turn up again down the track.
Redb
Slippery Jim said | September 5th 2008 @ 3:06pm | Report comment
dasilva, I was referring to the daily telegraph article bottom of page 132 today “Neill to be consulted as Hammers seek new coach.” Now we know where the saying ‘dumb as a box of hammers’ comes from…
The fact that Curbishley bought Neill as one of his first signings in the first place, made him captain of the team, and then Neill turns around and arrogantly tells Curbishley ‘the players kept him in a job’.
Pippinu said | September 5th 2008 @ 3:09pm | Report comment
Redb
“Should North Melb, Bulldogs, Melb, consider a return to the VFL in the future?”
Wash your mouth out with soap!! (actually, I don’t care where the roos and dees end up)
Re wealthy benefactors, there have been a couple of other examples as well - but you’re right, if the underlying prospects for revenue growth are poor, it’s hard to imagine any right thinking person pouring money into a footy club forever.
Redb said | September 5th 2008 @ 3:16pm | Report comment
Pip,
thought you might react like that
Cant say I blame you. What if there was a promotion/relegation trigger involved?
Redb
Pippinu said | September 5th 2008 @ 3:17pm | Report comment
Not interested!!
Redb said | September 5th 2008 @ 3:23pm | Report comment
Ok, if the doggies can’t fight heir way out of the current financial malaise say in 5 years would you: (a) prefer relocation to western Sydney? (b) relegation to the VFL? (c) merge with North or Melb, or (d) liquidation?
Redb
True Tah said | September 5th 2008 @ 3:28pm | Report comment
Redb,
with Diamond Joe’s contribution, was it like a gift or sponsorship, or did he loan it to the Demons?
Pippinu,
its easier to normally get debt financing, as banks would be willing to take some sort of security, whether it is in the name of the club, or the directors make a personal guarantee as opposed to equity.
Sport is not generally a good business to get into, unless you happen to be a player or a coach…if you want a good ROI, then stay away from investing in a sports business. As you said, revenue uncertainty is going to have some say in how you fund the club, basically it is not a business decision to invest in a club, but a feel-good passion for the team, and maybe its an ego thing as well.
Redb said | September 5th 2008 @ 3:34pm | Report comment
True Tah,
Fully gifted to the club no strings
“The Demons are also about to allow a consultancy firm to conduct an analysis of the club, which Gardner believes will update, and perhaps transform, the way Melbourne conducts itself as a business.
The club has produced losses of over $5 million in the last three years, largely as a consequence of not being able to raise sufficient revenue”
That quote above from an article written in January 2004. Sounds familiar eh!.
Redn
Millster said | September 8th 2008 @ 4:38pm | Report comment
Mornin’ all…
First contribution since weekend return from Olympics / holidays for a month.
Coming back to the core of Jesse’s post (though as an economist I also don’t mind the technical accounting debate going on in recent responses) I take a more simple view, albeit contrary to some of the responses here.
If I’m about to fork out somewhere between $100m and $500m for a franchise in a major sport, whether I do that through debt, equity or some clever structured combination of the two, then I’d damn well expect to be buying a significant amount of control over how my team - my asset - is run.
At the end of the day, sure the gaffer is a highly specialised and often expert employee whose views should not be treated lightly, but they are an employee nontheless. And while its easy for the sports pages to sensationalise the volatility of coaching careers, the REAL risk in big club sports does not in fact lie with them. It is not them who have the many millions of dollars invested in the clubs and who - as pointed out well in the comments above - have to deal with the balance of on-field performance, infrastructure, marketing and merchandise decisions that create the ROI to justify their investment.
As for Kazama’s “bored billionaries”, while the nostalgic football traditionalists might regard current goings on as a real-life horror movie, for mine if I can see the best players in the best stadiums in the best leagues competing for 40 weeks of each year then I’ll embrace that over the ‘wooden bench and cold shower’ alternative anytime.
True Tah said | September 8th 2008 @ 5:06pm | Report comment
Millster I agree with your point.
Roman Abramovich came out and said that if he was purely concerned with making money, then he would never have invested the 600 million pounds in the club, as there are less risky ways to make more money.
The most immediate beneficiaries of millionaire owners are players and coaches, these guys become millionaires themselves because of these benefactors willing to sink bucketloads of cash into the clubs.
I guess for all the pressures a coach can go under, if he does not win and gets sacked for this, the buck stops there…I have not heard of a coach getting sued by a club for failing to win games. Ditto for players…however I am open to being corrected if this is incorrect.
However, if a club goes under, the club owner could be in real strife…if the club trades whilst insolvent, then the club owner (whom I expect would be on the board) would be in some strife, the owner may have made personal guarantees for the clubs debts, their corporate reputation would take a real hit.
Millster said | September 8th 2008 @ 5:15pm | Report comment
True Tah - you could in fact take that further. Whatever their woes are at the moment, the Keegans and Curbishleys of this world have in fact been MADE by the very billionaires that they rail against. Sure they may be currently out of favour in the 3 or 4 top leagues in the world, but you can’t tell me that managers with EPL and national team experience (even if they havee been mediocre) wouldn’t command a most comfortable living from many hundreds of clubs, not to mention second-tier national associations, around the planet seeking a dose of their experience and celebrity razzle-dazzle…