The Wealth Divide

Wigan’s demise is the latest of many grim and sudden fates to befall clubs in the region. Last season, Bolton Wanderers, until recently a mainstay of the Premier League and at one point even competing in Europe, were relegated to League Two after half a decade of financial turmoil ended in administration. Blackburn won the Premier League in 1995 but have sunk like a stone in the last decade, at one point as low as the third tier and last year posting record losses.

Oldham Athletic – founder members of the Premier League in 1992 – avoided administration by the skin of their teeth last year, but they are currently in the fourth tier, struggling badly to make ends meet. Stockport County were another side that flew high in the ’90s, reaching the League Cup semi-finals before (this may start to sound familiar) falling into financial quicksand, going into administration in 2009 and dropping into lower-league obscurity.

Blackpool’s rise didn’t come until the 2000s, with a season in the Premier League in 2010-’11. By 2016, the club had tumbled to League Two and, although they recently gained promotion back to League One, Blackpool was placed into receivership by the High Court in 2019 – with its financial future still precarious.

Macclesfield Town are another to have hit the financial skids last year. So far they have kept the wolves from the door – just – but their players have gone unpaid on various recent occasions and the prospect of extinction remains. They are due to present the Football League with a business plan by the end of this month.

Bleakest of all is the case of Bury, a 134-year-old club, twice winners of the FA Cup, that went bankrupt and was expelled from the Football League last summer. Bury FC still technically exists, but at this stage only as a legal entity – and probably not for much longer.

That the North-West is home to some of football’s most destitute clubs is perhaps no great surprise given general struggles of postindustrial Britain in recent decades, as well as the disproportionate impact the austerity era has had on the region. Yet the poverty of these neighbouring clubs is thrown into starker relief by the fact that the region is also home to three bona fide footballing superpowers – not just of the country, but of the world.

In east Manchester, a 20-minute drive from Bury’s defunct Gigg Lane ground, stands Manchester City’s gleaming Etihad Stadium, part of a sprawling campus built by the Abu Dhabi elite since buying the club in 2008. In the intervening years Man City, formerly famed for a slapstick propensity to shoot themselves in the foot, have amassed trophies at a rate one of per season, the result of an all-star squad compiled with the owners’ eye-watering investment: about £150m a year. 

Across town, you could be forgiven for thinking Manchester United had been in decline of late. In fact, that’s only partly true. While the team has deteriorated since the departure of Alex Ferguson seven years ago, the club’s commercial operation has grown ever more successful. United’s revenues have doubled over the past decade, and when Deloitte released its latest Football Rich List in January, United was ranked as the planet’s third wealthiest club, behind only Barcelona and Real Madrid.

Manchester United is, in fact, so successful that its footballing fortunes have become almost completely divorced from its financial ones, a fact admitted by the guys in charge. “Playing performance doesn’t really have a meaningful impact on what we can do on the commercial side,” says Ed Woodward, the de facto chief executive.

And then, just down the M62 are Liverpool, the current English, European and world champions, and the club seventh – just behind Manchester City – in the global rich list. Liverpool’s success is often told in terms that evoke romance and destiny, but they are also a commercial behemoth who need no lessons in how to monetise a worldwide fanbase.

At first glance, this juxtaposition of rich and poor might not seem especially notable. There are, after all, 92 football league clubs across the country: by the simple law of averages, many of them are going be in close proximity, and some are going to be more successful than others. This has always been the case. What has changed, however, is the staggering gulf in wealth. Not just between the top and bottom clubs, but between the top clubs and everyone else.

What has also changed is the increasingly hand-to-mouth existence of the less well-off. Until the end of 1992 – the year the Premier League was formed – English football had recorded 10 instances of a club entering administration. Since then there has been 54, with five fully dissolved since 2010. There was a time when it was unheard of for a club to meet extinction. Now, for many, it is a real possibility.

The state of football in the North-West, then, is much like the state of the sport itself: spectacularly imbalanced, weighted in favour of the big cities and forcing its less well-off to turn their ambitions, over the last quarter-century or so, from upward mobility to simple year-on-year survival. How did it come to this?

How Capitalism Changed Football

The backdrop to the modern football environment in England is, undoubtedly, the successive governments of Thatcher, Major and Blair in the 1980s and 1990s. Thatcher famously deregulated the financial sector, dismantled state ownership and championed the free movement of capital – policies which both of her successors maintained. These were to provide the conditions for the growth of football capitalism.

English football took its lead from the 1983 move by the Football Association allowing clubs to evade a rule that prohibited directors from being paid. The move effectively gave the go-ahead for clubs to float on the stock exchange, providing shareholders with a rich and immediate dividend. But the truly seminal moment came in 1992, when the country’s top 22 clubs formed a breakaway division and cut an unprecedented deal with Rupert Murdoch’s BSkyB for TV rights.

It gave rise to a flow of money to the top of the sport which, due to the country’s insatiable appetite for televised live football, has only increased with each new contract. (In 1992 Sky paid the league £61m a year to show live games; at last count the division’s broadcast rights were valued at £3bn per season.)

And so began, in earnest, the age of English football capitalism – with the division’s wealth attracting the planet’s best players, and in turn catching the eye of the planet’s richest men. In summer 2003 the Russian oligarch Roman Abramovich was riding in his helicopter over west London when a stadium caught his eye. Within weeks he had taken over as owner of Chelsea, kickstarting an era where England’s football clubs would become akin to a Kensington penthouse: status symbols sold off to the highest bidder.

In the years since, football’s boardrooms have played host to all manner of ego-trippers and asset-strippers, and 17 years on from Abramovich’s arrival, almost every club in the division has a new owner, most of them billionaires and many based abroad. Some of these newcomers have been extravagant benefactors. Some have been responsible businessmen. Some have simply been after a quick buck – and there’s plenty of that to be had.

Crucial to the Premier League’s business model is that the money coming in is prevented, insofar as possible, from going out. Broadcast revenues are paid out to all 20 top-flight clubs, weighted generously towards the ones at the top. There is no obligation for the division to support the leagues beneath it, and so the only money that gets paid downwards is in the form of “parachute payments” to the clubs that have just been relegated from the Premier League, thereby helping them buy their way back in.

It’s tricky, then, for most clubs in the second tier to break through the glass ceiling. For those two, three, even four divisions down? Forget it. To quote Robert Mitchum in the great film noir Out of the Past: “There’s no way to win. Just a way to lose more slowly.”

Those hoping the climb the ladder will often turn in desperation to a sugar daddy – but here, too, they will find little by way of proper regulation. The league’s “fit-and-proper-person test” has become best known for its inability to do what it says on the tin, leading to club after club plunging into financial difficulty when their braggadocious emperors are revealed to have no clothes.

And it’s not just on a business level where these owners fall down. Those who have passed the test include Mike Ashley, whose business practices were recently likened to a “Victorian workhouse” and Thaksin Shinawatra, the former Thai prime minster alleged to have carried out thousands of extrajudicial killings and described by Human Rights Watch as “a human rights abuser of the worst kind”.

The latest overseas investors to make a lunge for a Premier League club are the Saudi royals, who stand accused of repression, torture, arbitrary detention and of sanctioning the murder of a journalist at the state consulate. Their application is widely expected to get the green light.

But it would be wrong to highlight individual owners as if they are the exception rather than the rule. The plights of Macclesfield, Blackpool, Bury, Blackburn, Stockport, Bolton and Wigan have each been blamed on the particular practices of their owners, who in turn became figures of hate – and often deservedly so. But to concentrate on the individuals ignores the systemic reality of these crises.

The Premier League has shown little if any consideration for the impact its lopsided TV deals and runaway commercialism is having on the English game. In 2010, its chief executive Richard Scudamore spoke about financial crises impacting clubs. “Given the amount of central income that is generated by the league, it would be down to absolutely rank, bad management if a club itself was actually to go into administration,” he said, “I don’t think anyone wants the Premier League running football clubs, it’s very much for the owners to run the football clubs.”

A Bleak Future

Inequality has become the defining feature of Britain today. Since the so-called austerity era, child poverty has risen to record levels and homelessness has increased by 250% as financial hardship has blighted the country. Or, at least, a lot of it.

Britain’s super-rich, who had already doubled their money under Blair’s government, are now at the point where the country’s six wealthiest people own as much money as the bottom 13 million. Meanwhile the “big six” high-street banks – Lloyds, Nationwide, RBS, Santander, Barclays and HSBC – have bounced heroically back from the financial crisis, and the catastrophic mismanagement that sparked it, to seize 70% of the mortgage market.

The Premier League’s own also “big six” are faring similarly: recent figures put the combined revenues of Manchester United, Manchester City, Spurs, Chelsea, Arsenal and Liverpool as almost exactly equal to those of the other 86 clubs in the top four divisions put together. This new status quo is not pretty: those clubs hoover up wins at a record rate, sharing out the trophies between them, while the rest of the top division aims merely to tread water.

The myth of competitiveness is sustained by occasional outlier events like Wigan’s FA Cup victory and Leicester’s 5,000/1 title win – but they are fewer and further between, and the mask is starting to slip. Outside the Premier League – and outside the big cities –  where treading water does not pay so lavishly, the spectre of financial oblivion is getting ever more real.

More than a quarter of clubs in the three divisions below the Premier League have faced bankruptcy or winding-up petitions in recent years. This threat will be compounded immensely by the coronavirus crisis, which has robbed smaller clubs of the match-day earnings on which they utterly depend.

The last three English clubs to enter administration are all from the same corner of the country, all within a tiny nine-miles radius. Until Wednesday’s bad news, Wigan’s form had been resplendent and things were looking up. But on Saturday, in their first game since going into administration, a nine-game unbeaten run came to an abrupt end with a galling 3-0 defeat to Brentford. Three days later came an announcement tha 75 members of staff had been laid off.

Clearly for some clubs, on- and off-field matters are not so easy to separate. “Today was a tough day for us,” said their manager. “The one thing we can all guarantee to the supporters is that we will not be lying down and fading away.” The players on the pitch may fight on – but it’s increasingly clear that something around them is indeed fading away.