Are Chelsea and City onfield success just side effects of a false economy?

World cup wins by England ?

 

I'm saying that we had stability in the league long before Abramovich came and those 14 years include 4 years of being in the old first division.

 

I'm pretty sure this Gruber/Kyle is that Matth kid from the United board.

 

Yeah Chelsea had stability but it wasn't until you were the benefactors of the false economy via Romans arrival that you were able to build a title winning squad.
(even though you tried for 5 decades) There really is nothing to argue about on this thread other than Chelsea and City fans stating that Arsenal fans would be happy if the situation presented itself. It's delusional because why would we sell our club to a billionaire who wants to put our club in debt to win trophies. It's not logical but the need to win trophies for some fans is more than their own club is worth. It's an irony that City and Chelsea fans just don't understand. Hey I'm the first to congratulate any teams fans that win a title but there is no denying that Chelsea and City's achievements thus far are somewhat diluted by their inability to run their club as a business and not as a money laundering tool.

 

I never made an argument that we were a title winning side before Abramovich. I responded to a point that we were merely a yo-yo club until he came along. I haven't tried to push any of my opinions on how a club should be run or said that one should take preference to being a successful side over a financially stable side to anyone. We're also not in debt.

 

£50m being invested into a club in the early 90s was certainly not a small amount. And as Queenslander correctly points out, to simply adjust that figure to today's amount in line with inflation is wrong - football has throughout it's history, from wages, transfer fees, club values, ticket costs, increased at a rate far higher than the rate of inflation.

Let's put that figure of £50m into context. Jack Walker, when he took over Blackburn in 1991, spent £25m on transfers, and approximately £20m rebuilding Ewood Park between 1991 and 1994. That figure enabled the club to go from a then 2nd Division club to the League title. If we were to simply adjust that figure in line with inflation, it would be equivalent to a club spending circa £80m today. The £25m spent on transfers would be equivalent to circa £45m today. Would a £45m transfer spend over 3-4 years be enough to see a club today go from the Championship to the Premier League title? I very much doubt it. So that alone shows just how silly it is to compare figures from today to 20 years ago purely in inflation terms.

How much were Arsenal worth in the early 90s? I personally don't know the answer to that question, but to put it into some kind of context, in 1989, Manchester United were valued at £20m. In April 2013, United were, according to Forbes, valued at just over £2 billion. Had their value since 1989 risen purely in line with inflation, then the club would be valued at £42m today. That's some disparity, I think we can all agree.

Anyway, people can moan about investment all they like. The fact is that there are numerous examples of clubs, throughout the history of the game, benefiting from huge (at the time) amounts of investment. Henry Norris, for example, investing a significant amount into Arsenal, resulting in the acquisition of an eventual title winning team, as well as funding the move from South London to Highbury (at a cost reported to be around £125,000). Had that move happened today, if we were to simply put it in line with inflation, it would be equivalent to such a move costing the club just over £12m today. A figure which is ridiculed when we consider that the cost of Arsenal building the Emirates was reported to be £390m upon its completion in 2006.

 

Very good post.

 

Great to have you on here

 

I think you'll find that for all the figures and comparative speculation about what those figures are worth now, Arsenal have always paid their way. Our spending has never been out of proportion to our earnings or our ability to manage any debt.

That is the real issue at the heart this matter. We are where we are because we have earned it.

City were a midtable club with debts of three hundred million before the Sheikh and Abramovich was considering buying Spurs before he sunk his millions into Chelsea. Those clubs are there because of an arbitrary and artificial injection of massive wealth.

 

These guys just don't get it. They try and dig out some dirt about Arsenal a few million years back to justify their mega spending. Both Chelsea and Man City have benefited by HUGE AMOUNTS of money from some Mr Moneybags type dude and try to justify it. We do things the right way.

 

It certainly wasn't my intention to "dig out some dirt" about Arsenal. It's telling that you yourself use that phrase. You clearly think the intent is to blacken Arsenal's name in order to stop fans of said club from belittling the current situation at City. The intent behind my post was to merely counter the point made that a £50m investment in the early 90s is a small amount. It clearly isn't, when it's taken in the correct context.

Both City and Chelsea have benefited from huge amounts of investment. You're right about that, and to be honest, I don't think any Chelsea or City fan would, or indeed has, tried to say otherwise. But many have pointed out that pretty much every major club has benefited from significant investment at at least one point in their history. When this point is made, usually the discussion changes from "investment per se being a bad thing" to "it's the amount of investment that's made that is the problem". Straight away we begin to see how such proponents of this argument are basing it on a house of cards. And it's probably because you, lazarus, view investment (or even merely significant investment) in such a bad light that you automatically assume that anyone who points to the investment that Arsenal have benefited from in the past as "digging out some dirt". It isn't. It's merely pointing out a fact.

There is nothing "artificial" about an injection of cash - investment. And in City's case at least, the investment made into the club has resulted in a growth in terms of revenue, turnover, and indeed value, that, in percentage terms, surpasses the vast majority of clubs over the same period of time (coming up to 5 1/2 years since the owners took control). So just over halfway into the owner's 10 year plan, the club, and indeed the owner's themselves, are already seeing a return on that investment. Given the amount invested (which year on year is comparable with the earning (revenue) potential of the very top clubs - which City hope to become), it was always going to be the case that the club would make significant losses in the first few years of said spending. But those losses are being reduced, the club is now beginning to balance out, and in a few years (coming up to the conclusion of the original 10 year plan), it is expected that the club will become self-sustainable and indeed profitable.

If that should not be regarded as a "right way" of running a business, running a football club, and indeed of having an ambition to reside among the very best, then all hope is lost for any club that should ever seek to better itself, and indeed find itself fortunate enough to be able to do so.

 

I think the key phrase in all this is sustainable debt. If Mansoor or Abramovich walk away from their clubs, could they maintain their current spending. I suspect Arsenal repaid their £50m from club finances rather than the pocket of a rich man (I don't know though) and I would class that as different.

The problem with the City and Chelsea spending is that it changed the whole market. The fact that teams like Spurs can not hold on to their players because of the artificial sums Chelsea/City/Real pay makes it an uneven playing field. City and Chelsea are not the only ones at fault here. The FA/Prem/UEFA should treat football like the sport it is and regulate it in a way that spending beyond it's means is not possible and then the teams with the best scouts/coaches will triumph rather than the richest.

 

If Mansoor or Abramovich walk away from their clubs, of course the situation would change. Of course, given the respective values of either club, it will take someone who isn't short of a few bob to be able to buy them.

But it's a hypothetical argument as it stands anyway. The clubs have spent within the means of their owner, no argument there. But both are working towards a goal of being able to spend within the means of generated income while (and here's the crux) remaining successful. Chelsea are now finding themselves in that position. It'll be a few years yet before we're able to determine the case at City one way or the other.

Has City's and Chelsea's spending really changed the whole market? Wages, ticket prices, transfer fees have always risen, and at a rate that is much higher than inflation (especially so in regards to transfer fees and wages). Long before the likes of Abramovich came along. In more recent years, the vast increase in revenue potential that the Premier League and Champions League provides has seen a vast increase in wealth for the elite clubs (in terms of Champions League), and domestically the disparity between the Premier League and the divisions below has never been greater. Highlighted even more so with the new TV deal that commenced this season (which, I believe, will now see the club that finishes 20th this season earn more from TV than City did when they won the title the season before last).

In 2001, United paid almost £28m for Veron. A year later, they signed Ferdinand for almost £30m. Six years before the Ferdinand transfer, the transfer record involving a British club stood at £15m (almost £15m less than what Ferdinand cost). Six years after the Ferdinand transfer, City broke the British transfer record by signing Robinho - for a mere £4m more than what Ferdinand cost. City's transfer record to date stands at around £38m for Aguero - around £8m more than what Ferdinand cost.

Even Chelsea's record signing (Torres - £50m), represents a percentage increase over a longer period of time that is less than the percentage increase between 1996 and 2001, long before Sheikh Mansour and Abramovich came onto the scene.

You say it's a fact that teams like Spurs can't hold to their players because of City and Chelsea (and indeed Real). Is that really a fact that City and Chelsea are the reason for this? Or has it always been that way? Spurs couldn't hold on to Waddle or Gascoigne (when they left to go abroad back in the late 80s/early 90s respectively), nor could Everton hold on to Lineker when he left to join Barcelona back in 1986. Spurs not being in a position to hold on to their players (Bale, Berbatov, Carrick, Gascoigne, etc etc etc) isn't because of Abramovich or Mansour. Not by any stretch.

 

Interesting. Thanks for the response

 

I think the benefactor model was going to be the natural progression of things. The reward system in the English league (the better you do, the more money you get) coupled with the huge marketability of the Premier League has meant that this influx of money rose to the top very fast, allowing the successful teams to not only invest far more money in retaining their initial success but can also use their reputation to negotiate investment from outside companies (sponsorship and the like) that easily outstrips the total income of other teams in the league. As time goes on, the rich get richer and the poorer teams struggle in their wake, which we’ve seen starkly over the course of the Premier League era. The only way for clubs to counter this would be to either hope for some incredible failure in operations from the top teams (which never came), a miracle-working manager and backroom team who can assemble a great squad for next to nothing, or hope for someone to buy out the club and liberally spend their own cash in order to try and create a title-winning squad – ready-made success. The last option, I'd argue, was the most realistic way for City and Chelsea (or any team really) to ‘reside among the very best’: the rewards for being the best – in terms of both personal status worldwide and maybe taking advantage of the vast sums now available to the best (though both Abrahmovic and Mansour can cover their losses with their financial gains elsewhere) – were bigger than ever, and attracted investors pretty quickly.

The problem with the rich owner model is that it can only realistically bring success to a select few – I guess the ones who got there first and/or having the most money to burn. After all, the way that player prices and especially wages have inflated over the last few years means that any new rich owner would have to be willing to part with hundreds of millions if not billions in the vain hope that they can match the success of the current five or six teams with the ability to outlay similar amounts with less risk, and maybe never expect to see that money again. Would anyone do that if they weren’t largely guaranteed top 4 football, let alone top half of the table? I'm wondering if this is at all possible for anyone else now, as it's already getting pretty crowded at the top and the potentialities for failure for the next generation of investors must be much higher than they were 5-10 years ago.

As it is, I find neither the ‘rewarding the best with the most money and watch them dominate’ approach nor the ‘invest tonnes of your own money and buy success very quickly’ approach any worse than one another. The outcome will likely be the same each way – a small group of rich teams are created who then strangle the competition, with the only difference coming in speed of implementation. As my old pop would say, they are ‘two cheeks of the same arse’; either that, or ‘its capitalism 101, son’.

 

Great post.

 

Treat, in all honesty, the benefactor model has always existed in football. What (for want of a better word) exaggerates it today is a reflection of the disparity in wealth and revenue that exists in the game today, than when it did, say 50 years ago for example. Today we live in a world that can see a premier league club earn more in revenue in one season for competing in the Champions League alone (not winning, just competing), than another premier league club will earn in total revenue for that season. But money has always played a part in the game. And historically speaking, those clubs who in the past were fortunate enough to get significant investment (above and beyond what clubs could expect to earn at the times when such investment was made), have by and large gone on to become the biggest clubs in football. Real Madrid and Barcelona, AC and Inter, Liverpool, United, Arsenal - all have benefited from significant amounts of investment that has enabled the clubs to establish themselves (and in some cases, United for example, not just establish themselves, but enabling the club to continue to exist).

Of course, one significant difference, which shouldn't be ignored, is that in the early period of football, clubs had had less opportunity in which to establish themselves as an elite club, and as such, to usurp such clubs wouldn't be as difficult as it would be to usurp, or merely compete with, the elite clubs today. Take City for example. Historically not a small club. Historically a club that has had sporadic success throughout its history, a club that historically speaking has spent the vast majority of its history in the top flight and been among the best supported clubs in the country. Not a small club by any means, but also not a club that would be among anyone's lips when identifying the biggest clubs in football. Yet it has taken a substantial amount of investment in order for the club to get where it is today. And the point with investment is - no one, ever, invests more than they have to. But the amount invested into the club is comparable, over a period of 5 years, to the earning potential of the elite clubs. That is, what has been invested is a reflection upon the game today - it isn't a cause of the game we see today.

Wages have gone up since the abolition of the maximum wage in 1961. At a rate much higher than inflation. Transfer fees have progressed throughout the history of the game at a rate much higher than inflation. 20 years ago, we saw a club owner invest circa £50m in order to be successful. At a time when clubs were valued at a not-too-dissimilar figure. Today, we've seen a club owner invest hundreds of millions, at a time when clubs are valued at such. The point is, comparisons can be made, quite easily, between what is happening today to what has happened time and time again many years ago in the past.

So City and Chelsea go on to establish themselves as a result of investment. Something that has always happened in football. And in 20 - 30 - 40 - 50 years time, the levels of investment into City and Chelsea will be regarded in the same way as the levels of past investment into the likes of Arsenal, United, Madrid, Milan, etc etc are regarded today. That is, it will be dismissed as insignificant (or in the words of another poster, "small"). And no doubt, in 20 - 30 - 40 - 50 years time, there will be examples of people who are investing "unprecedented" amounts into clubs in the hope of making the club they own successful. And who knows, there may even be City and Chelsea fans in many years time who are bemoaning such levels of investment, just as fans of Arsenal, United, Liverpool are bemoaning the levels of investment into City today.

 

I liked the system where the more fans you had, the better your chances of success, but not so much better that no one had a chance. It made the fans feel like they contributed.

I don't think the benefactor model is good for football in general, because it means that poorly supported clubs can win disproportionately more than they "should" based on their support.

Football was one of the games where the supporters rightfully considered themselves part of their clubs success, both financially and vocally.

 

Why should the amount of fans be a determining factor in the amount of success that a club has?

If anything, that would simply suggest that an outside influence determines how good a sportsman, or sports club, should or should not be.

And isn't that the very thing many are arguing against here? That an outside influence - for example a very rich owner - shouldn't be able to determine how good the club he owns can possibly be?

Remember, in terms of the number of fans a club has, it is only ever determined by two things. One - the location of the club in question (which is a completely arbitrary factor). And two, how successful a club is (and thus how many fans in turn jump on the bandwagon).

 

They should just have another league and call it the Billionaires Super League or something. There they can get rid of the transfer window and be allowed to buy as many players and for as much as they want, at any time of the day. Woooohooo.