27th January 2017

Blog Entry – 6th December 2016

Auld Lang Syne

It took a Scotsman to help the world think and position its views about commerce and economics. Adam Smith, one of Fife’s most famous sons and recognized today as the father of modern economics (and upon whose principles we base our views), said ‘No complaint….is more common than that of a scarcity of money.’

It then took an Irishman to help the English position their views about the Scots when George Bernard Shaw said ‘God help England if she had no Scots to think for her.’ In football’s case, it is more that Scotland provides a salient example of what can go wrong should the money supply decline to a wee trickle. England needs to pause and pause long with thought.

Consider this: “A Hibs fan and his pal hand a £50 note to the turnstile operator at Easter Road and say, ‘Two please’. The operator replies: ‘Thank you; would you like a goalie and a striker?’ Hibernian was the first British club to participate in European competition in 1955 and currently sits at the top of Scotland’s second tier. Having endured near-extinction (as did one or two other Scottish footballing leviathans – see below) in the 1990s, they have made little headway in Europe over the last 20 years and suffered relegation on more than one occasion. Perhaps the reasons are as follows…

The halcyon days of Scottish football prominence were those of the 1970s, 80s and early 90s. in 1974, Scotland qualified for the World Cup in West Germany whilst Sir Alf Ramsey’s England sat at home. Scotland then repeated the feat four years later when Ron Greenwood’s England waved goodbye to Ally’s Army as the Scottish team ventured south to Argentina in 1978. Scotland qualified for 5 successive World Cup finals between 1974 and 1990 as opposed to England’s 3.

At club level, Celtic was the first British team to win the European Cup in 1967, Rangers won the Cup Winners’ Cup in 1972 and many Scottish clubs who qualified for European competition did themselves more than a modicum of justice. Dundee United – currently plying their trade in Scotland’s second tier – reached the UEFA cup final in 1987, the European Cup semi-final in 1984 and the UEFA Cup quarter-finals in 1982 and 1983. Meanwhile, Alex Ferguson’s Aberdeen won the European Cup Winners’ Cup in 1983 as well as the European Super Cup and reached the semi-finals of the European Cup Winners’ Cup the following year. Scottish club sides were a formidable force in Europe during the 1980’s.

Such was the talent and prodigiousness of the game over the border, both Scottish players and managers were feted in the English leagues. Jock Stein moved from Celtic to take charge of Leeds United, Billy McNeil from Celtic to Manchester City and most famous of all, Alex Ferguson from Aberdeen to Manchester United.

By return, foreign (we use the term loosely…) players flocked to Scotland in the 80’s and 90’s… Butcher (who was England’s captain at the time of his transfer), Gascoigne, Laudrup, Sutton, Hartson and Larsson. All players who made the move were at the peak of their careers. Indeed, fixtures between English and Scottish clubs in European competitions were billed as ‘Battle of Britain’ games, the most notable of which was Rangers v Leeds United in 1992 in the Champions League with Rangers eventually winning 4-2 on aggregate. Scotland and Scottish clubs could and were competing at the highest levels.

The TV money poured in….and then poured back out again via failed TV rights deals and an element of commercial misjudgment from the game’s administrators… and then the changes came. Once famous clubs such as Rangers, Hearts, Motherwell and Hibs faced severe financial difficulties. Even Celtic found itself economising in the most drastic fashion in 1994 following a disastrous period under Liam Brady’s management. The Bank of Scotland decided, rather parsimoniously, to give the club 24 hours’ notice of the withdrawal of its £5m funding facility. Bankruptcy was therefore imminent. Only a generous benefactor could save the day…

Today, Scotland’s standing in world football is certainly not what it once was nor indeed do the Scottish football clubs achieve the high standards of previous generations. Sassenach – from the Gaelic word for Saxon and referring to non-Gaelic speakers of the southern lowlands rather than those south of the Roman barrier (which incidentially offers the model for a certain recently-elected Scottish-American son – and Aberdeenshire business owner – for keeping his neighbours at bay) – or non-Scots/English players, tend to arrive in the Scottish game at the twilight of their careers. Younger players ‘breaking through’ tend to get the train or the bus south to the English second, third and lower tier clubs with few taking the private jet into the English Premiership.

Indeed, such is Scotland’s lowly position in the footballing talent hierarchy that the country’s third-most supported club, Hearts, very recently lost their manager to MK Dons which currently resides in the lower reaches of League One – the third tier of English football. Would Alex Ferguson have received his command at Manchester United if he was born some 35 years later and was in his early managerial career in today’s game? Highly unlikely, we think. Gone indeed are the days of Bremner, Law and Dalglish.

But could history also repeat itself but south of the border? What would be the outcome if the TV revenues with which the beautiful game in England relies on were ever threatened?  Is the ‘game’ financially strong enough to withstand the winds of change having received incredible sums of money, attracting the best of players and managers from across the globe and generating a fantastic product? Other fantastic products exist in the world: the incredible Apple range; the iconic Coca-Cola brand; companies that pride themselves not only on great products but on financial discipline and principle too.

Strange though it may seem to the football world, companies, even football clubs, need to generate economic profits to survive in the long term. Yes, you can have benefactors for a period, but they can get bored – ask Aston Villa fans. Have the football clubs spent their time wisely whilst benefitting from the windfall of TV wealth; building foundations for businesses that could withstand the winds of change or are they living in stadiums of straw?

Our own report (see here) was the lead story in the Sunday Telegraph Business section and delivers an in-depth insight into this very issue – ‘Football clubs ‘vulnerable’ after relying on TV rights’.  Many journalists, including Charles Sale of the Daily Mail, have additionally and recently reported on the increasing stress levels within certain broadcasters – “Sky’s brutal cost-cutting axe continues to fall on journalists following their £11m-a-match spend on Premier League Rights.” Sky’s depth and breadth of services and broadcasting content means that it should avoid the way of the failed ventures of Setanta and ITV Digital, which caused so much financial damage to the English and Scottish games, but the expectation is that Sky’s senior management team will be sensibly investigating all avenues as to how it can reduce its ongoing cost burden. English clubs should be very wary of this and similar mutterings from BT as to the longer-term financial viability of the UK TV rights deal in its current guise.

Some clubs, we are sure, are plotting their next move. Talks on European and Global super leagues have been rumbling in the background for some time; but how many clubs have the commercial wherewithal or attractiveness or even clout to make it into those leagues if it is to be Europe’s ‘elite’ clubs who will extricate themselves from their ‘local’ counterparts? In our report findings, we describe the  set of circumstances which could meld togther to make this happen but the collegiate outcome of a super league does not apply to every club. There will be casualties.

So, what if a European Super League does not happen? What if the TV revenues stagnate, or even fall? Could the English clubs afford the luxuries of Pogba, Aguero, De Gea, Coutinho and Hazard or would the likes of Klopp and Guardiola gravitate to pastures new? Do the English teams run the risk of isolation given the wider political fallout from Brexit permeating through Europe’s corridors and boulevards of power?

Many may speculate that English players would come to the fore. However, England, as Scotland did in the 90s, has lost more than a generation of home-grown footballers in the face of foreign competition. If the financial picture were to darken, the residual and local talent won’t match the skills of the departing mercenaries as they head back to foreign shores. It takes a long, long time to recover … Scottish club football still struggles to make an impact on the European stage with the occasional exception of Celtic’s Champions League forays into the last 16 teams whilst the current national team is more of a symbolic asset rather than a competitive force. Could English football, the home of the beautiful game, also become another footballing backwater? It does seem highly likely….

Perhaps the joke cruelly applied to Rangers and their demise “the police are investigating whether a pound thrown on the park at Ibrox was a missile or simply another take-over bid” could also be aimed at several very big clubs south of the border if they don’t take heed of the risks ahead.