Soccer--Going into Administration

[kserra]

Happily surprised to find an EPL match on Fox Sports today...Fulham and Leeds United...

So Leeds is in some serious financial trouble, the commentators mentioned this several times...

Can someone with some knowledge of the subject fill me in, what happens when a team goes into Administration? Can you give me an idea of what that might mean in terms of an American sport? Leeds just seems flat...defeated...the way the commentators are talking, it seems as though this financial problem is sapping their strength...

Thanks guys...always enjoy the soccer discussions here...on an American football board! :)

Kevin

[kserra]

dola...btw, Brian McBride has just gotten into the game for Fulham...

[Desnudo]

Happily surprised to find an EPL match on Fox Sports today...Fulham and Leeds United...

So Leeds is in some serious financial trouble, the commentators mentioned this several times...

Can someone with some knowledge of the subject fill me in, what happens when a team goes into Administration? Can you give me an idea of what that might mean in terms of an American sport? Leeds just seems flat...defeated...the way the commentators are talking, it seems as though this financial problem is sapping their strength...

Thanks guys...always enjoy the soccer discussions here...on an American football board! :)

Kevin

Going by what happens in CM, EPL appointed financial adminstrators take over the day to day management of the club and work to cut costs substantially. Since players are the highest cost, that means shipping out the good ones at a cut rate. If I remember correctly Leeds is somewhere aroudn $80 million Pounds in debt, so they have a ways to go to pay off their creditors. There's a lot of speculation that the club will simply fold if a wealthy buyer is not found.

[cartman]

It's a little hard to compare it to American sports, but in Europe, going into Administration is the equivalent of declaring bankruptcy.

What's going to happen sports-wise is that they will be fined league points, which assuredly is going to send them out of the Premiership and down into First Division soccer. That can't happen with American sports. Case in point, the Pittsburgh Penguins. They went bankrupt but continued to be a NHL team, not a minor league team. For Leeds to make money, they will have to probably sell some of their players. But that won't help a lot. I saw a figure that they are still paying something like 100 million pounds over the next 5 years for players not on their roster anymore. Now that is something that American sports fans can relate to! :)

[SirFozzie]

Administration is like Chapter 11 Bankruptcy here in the US.

Basically, you have a court appointed person come in and do their best to secure repayment for the teams debts in the name of the creditors.

Basically, the team has to sell off assets to satisfy the debts or risk the company being wound up and closed down, so it's always a buyer's market when it comes to transfer.

[Mac Howard]

The above posts have it about right. The interesting thing is, that though many clubs have been reported as being in severe financial trouble and about to fold, I can only think of one team that has indeed folded in English football. That's off the top of my head and it may be my memory is fading as I age but I can't recall a higher league club like Leeds folding ever - someone always seems to come in and pick up the pieces. Always a first time though and it will be a pity if Leeds is the first :rolleyes:

[Mr. Wednesday]

Happily surprised to find an EPL match on Fox Sports today...Fulham and Leeds United...Actually, a taped match from Saturday, I watched the end of the first half then (on a shorter delay) but bailed on the second half when I found out during halftime that McBride wouldn't be getting in until late in the game.

[Crapshoot]

Most people have covered the ground already. I'd like to add that another downside of administration that hinders the clubs even further is that they have to sell their assets at pennies on the dollar- last summer for example, Harry Kewell was sold for 5 million pounds(well 7, but 2 was the agents comission)- 1/3 the price that Damien Duff, a more standard (but IMO less talented) winger/forward went for. Its a vicious circle, and Peter Risdale (and David O Leary) deserve the blame.

[kserra]

Thanks guys...makes sense...

So Leeds is being punished by the EPL for being in debt by losing points in the standings? If true, that is pretty remarkable...

Could a team like Leeds survive a move to the First Division, where income is much lower than in the EPL? Seems that this would just put them further in a bind and make the process of getting out of the red that much tougher...

Any thoughts to having the team become a city team...having the city purchase the club and tax payers basically become the shareholders? Seems Leeds, at least at one time, had a great following...would something like that even be considered? Again, I may be showing my complete lack of knowledge on the EPL, but I do enjoy what little I get to see and learn about it...

Instead of the saying, "All I ever learned about life, I learned in Kindergarden" my motto should be, "All I ever learned about soccer, I learned from Championship Manager"

Kevin

[Crapshoot]

Leeds would probably go bankrupt if they were relegated- they could be the English Fiorentina.

[Desnudo]

Thanks guys...makes sense...

So Leeds is being punished by the EPL for being in debt by losing points in the standings? If true, that is pretty remarkable...

Could a team like Leeds survive a move to the First Division, where income is much lower than in the EPL? Seems that this would just put them further in a bind and make the process of getting out of the red that much tougher...

Any thoughts to having the team become a city team...having the city purchase the club and tax payers basically become the shareholders? Seems Leeds, at least at one time, had a great following...would something like that even be considered? Again, I may be showing my complete lack of knowledge on the EPL, but I do enjoy what little I get to see and learn about it...

Instead of the saying, "All I ever learned about life, I learned in Kindergarden" my motto should be, "All I ever learned about soccer, I learned from Championship Manager"

Kevin

They haven't gone into administration yet. If they went down it would be tougher to attract the kind of money necessary to dig out of their hole. At the same time, I think we usually see in sport that teams seem to find a way out. Any more Russian mob boss/soccer fans out there?

Edit: on a side note Lazio is in deep do-do financially in Italy's Serie A. Roma isn't doing so hot either.

[Mac Howard]

The idea that the fans could take over the club is a nice one but the numbers just don't add up.

Man Utd are a PLC - their shares are quoted on the stock exchamge. There is a supporters group who pool their money and buy shares in the hope that they can influence things in favour of the club itself (as against most shareholders who're only interested in the financial returns they get from their investment).

Currently this group, indeed most Utd fans, are troubled by the Cubic Expression Group owned by an Irish racehorse trainer/owner named Magnier. This guy has had a dispute with the club manager over a shared racehorse.

Magnier's group owns 29% of Man Utd shares - around $300 million. He used the power that this gives him over the board of directors to pursure the manager and force him to accept a solution to the dispute that clearly benefitted himself (Magnier). He interfered with the negotiations over the manager's new contract with the club, insisted on investigations into financial dealings in the transfer market (because of his position as a major shareholder the board was legally required to agree though there was no reason to suspect any wrongdoing) and made it plain to the board that if he didn't get his own way he would make life hell for them.

The board caved in and only gave the manager a rolling one-year-at-a-time contract - this despite the fact he is regarded as the most successful manager in the English league having won 9 of the last 11 Premiership titles (imagine the respect for a headcoach that had won 9 out of 11 Superbowls).

Fans were furious at the way Magnier dragged the name of the club through the mud to gain his own ends and looked to see if they could use their position as shareholders to stop him taking over the club. But these are the numbers they faced: just to match Magnier's holding you would require 300,000 fans to come up with $1000 each. You can play with those numbers how you like but you just can't come up with anything practical.

There is something sick about a setup that allows one man, with no commitment whatsoever towards the club, to totally override the interests of 300,000 commited fans. It's an unpleasant indictment of what has happened to sport as the sporting interests give way to business interests.

[finkenst]

imagine the respect for a headcoach that had won 9 out of 11 Superbowls
damn, he lost twice?

fire his ass.

There is something sick about a setup that allows one man, with no commitment whatsoever towards the club, to totally override the interests of 300,000 commited fans. It's an unpleasant indictment of what has happened to sport as the sporting interests give way to business interests.
the owner of the bucks? the owner of the reds? the owner of the bengals? the owner o... need I go on?

[Mac Howard]

damn, he lost twice?

fire his ass.


the owner of the bucks? the owner of the reds? the owner of the bengals? the owner o... need I go on?


That there are owners who run the club entirely in their own interests I'm sure is true but can you imagine any of those owners being so disinterested in the performance of the club that they would get rid of a headcoach who brought them 9 Superbowls out of the last 11? Would any of them ask the NFL to go through the financial dealings of the club with a fine toothcomb with the possibility of finding irregularities that could send the value of the club plummeting?

[Crapshoot]

Mac, some of the transfer dealing with Jason Ferguson are unneccesarily shady- and the higher transfer fees that have been paid when he's involved (Ronaldo was listed at 6-8 million) or with Ferguson's other exploits (Tim Howard- what the hell did an agent need 500K there for ?) surely are worth questioning. Winning doesnt excusing Tapping- George Graham didn't get away with it.

[Ryan S]

having won 9 of the last 11 Premiership titles
8 of the last 11 titles. Blackburn Rovers won in 94/95.

[Desnudo]

That there are owners who run the club entirely in their own interests I'm sure is true but can you imagine any of those owners being so disinterested in the performance of the club that they would get rid of a headcoach who brought them 9 Superbowls out of the last 11? Would any of them ask the NFL to go through the financial dealings of the club with a fine toothcomb with the possibility of finding irregularities that could send the value of the club plummeting?

Yes. Often it doesn't come down to success or failure, but personality conflict. Robert Kraft and Bill Parcells for example. As for the second one, no, I don't think that would ever happen.

[Mac Howard]

It's early days yet but the news this morning is that a consortium of local businessmen are close to agreeing a rescue package to keep Leeds out of administration. The Leeds fans deserve that this succeed.

Aadik, that agents play a somewhat dubious role in the transfer of players is certainly true but the figures paid by Utd are not the least unusual - Kewell insisted that his agent receive $3 million before agreeing to his move to Liverpool which was the equal of Leeds part of the deal. Because Utd are a PLC then they are legally required to list openly all payments made and only journalists looking for sensation have suggested there is anything untoward. Nor is Alex Ferguson the one who negotiates these deals - it was Kenyon.

But whether the deals are shady or not, my point is about the total lack of concern of the impact on the club of Magnier's actions. Indeed, if the deals are dubious, one would reasonably expect the owner to be the last person to require an investigation. My revulsion at the situation is that the PLC status should allow a man so totally disinterested in the success and reputation of the club to override the concerns of the a hundred thousand fans or more whose every interest are those.

Conspiracy theorists have suggested that his purpose is to force down the value of the club and allow him to pick up the rest of the shares at a bargain price but most observers reject this. His actions appear to be pure vindictiveness over the dispute with Ferguson who he believes has impugned his integrity by suggesting that he (Magnier) is backing out of the agreement he made over the ownership of the racehorse. It was a verbal agreement between friends and he perceives that his word is said to be worthless (he was suing Ferguson for defamation of character).

Money, and the impact on thousands of others of one's actions, is no object where self esteem is involved and the dislocation between owner and club in a PLC allows him to ignore totally the interests of the club in pursuing his own ends.