6.5M Profit!!!!!!!!

[Old Biscuitman]

:shock: a football club making profit, surely not!!

Presumably this doesn't take into account Mr Mad's loan

Surely a club shouldn't make any money and all profit should be returned to the club, whether it be in playing staff, stadium expansion ...

You've put your finger on exactly where football went wrong - and one of the biggest scandals in the game - sadly one that hardly anyone knows about.....

When the FA was set up, as well as gate sharing, they instituted Rule 34, which was the rule which stopped money being taken out of football clubs. Amongst other things, these measures were designed to stop people using the game for excessive personal gain, and to ensure competitiveness between clubs.

In 1983, when Tottenham wanted to float as a plc, they went to the FA and asked for Rule 34 to be dropped. And - amazingly - it was, very quietly and without any objections - and without anyone really noticing or understanding what this would lead to.

So Tottenham became a plc, and lots of other clubs jumped onto the bandwagon and floated - and twenty years later the journalist David Conn discovered the machinations behind getting this rule dropped. (*)

Then the PL was setup and gate sharing also went, and all the good work done in the 1860 which had for over 120 years kept the game fair and competitive was finally swept away to give us the commercialised mess we have today.

(*) Anyone interested in this and the financial governance of football absolutely must read David's master-work - "The Beautiful Game? : Searching the Soul of Football" (2005) ISBN 0224064363

Interesting. Wasn't aware of that. But isn't the basic problem the fact that a football club was allowed to float as a plc in the first place? Once that happens then Rule 34 becomes untenable. One concept of a plc is that it can raise money from public investors who are looking for a return on their investment, ie money is taken out of the organisation.

[Dirk Gently]

:shock: a football club making profit, surely not!!

Presumably this doesn't take into account Mr Mad's loan

Surely a club shouldn't make any money and all profit should be returned to the club, whether it be in playing staff, stadium expansion ...

You've put your finger on exactly where football went wrong - and one of the biggest scandals in the game - sadly one that hardly anyone knows about.....

When the FA was set up, as well as gate sharing, they instituted Rule 34, which was the rule which stopped money being taken out of football clubs. Amongst other things, these measures were designed to stop people using the game for excessive personal gain, and to ensure competitiveness between clubs.

In 1983, when Tottenham wanted to float as a plc, they went to the FA and asked for Rule 34 to be dropped. And - amazingly - it was, very quietly and without any objections - and without anyone really noticing or understanding what this would lead to.

So Tottenham became a plc, and lots of other clubs jumped onto the bandwagon and floated - and twenty years later the journalist David Conn discovered the machinations behind getting this rule dropped. (*)

Then the PL was setup and gate sharing also went, and all the good work done in the 1860 which had for over 120 years kept the game fair and competitive was finally swept away to give us the commercialised mess we have today.

(*) Anyone interested in this and the financial governance of football absolutely must read David's master-work - "The Beautiful Game? : Searching the Soul of Football" (2005) ISBN 0224064363

Interesting. Wasn't aware of that. But isn't the basic problem the fact that a football club was allowed to float as a plc in the first place? Once that happens then Rule 34 becomes untenable. One concept of a plc is that it can raise money from public investors who are looking for a return on their investment, ie money is taken out of the organisation.

Yes - it was Rule 34 that prevented a football club floating as a plc. I'll clarify slightly what I posted earlier - Spurs needed this rule removed before they could float, and in fact found a route to completely by-pass rule 34 - after that the rule was quietly removed without without a whimper of protest.

See the below text from http://www.football-research.org/cg/chap2-Corporate%20Governance.htmwhich gives more details :

... These general changes in the system of corporate governance have been accompanied by two specific changes in the way football is governed. The first of these is the stock market flotation of a number of clubs and the circumvention of the Football Association’s Rule 34. As football became popular towards the end of the 19th century the Football Association foresaw the potential conflict between, on the one hand, the desire of the owners of clubs to extract profit and, on the other hand, the wider community’s interest in the club’s sporting and cultural activities (Conn, 1997). To preserve the sporting and cultural dimension of football, the FA introduced Rule 34 which prevented owners from extracting significant profit from the game by restricting the payment of dividends to five per cent (subsequently increased to fifteen per cent in 1981) of the face value of shares and preventing the payment of directors (Conn, 1997, p. 35). This was designed to ensure that clubs were run as ‘clubs’ rather than businesses. The rule remained an important part of the system of corporate governance of football until 1983 when the FA allowed the rule to be circumvented in the stock market flotation of Tottenham Hotspur.

Rule 34 represented a stumbling block to the stock market flotation of clubs because ownership of shares in a company whose dividend payments would be restricted was an unattractive proposition. If the flotation of Tottenham was to be a success, the club needed to find a way to distribute the club’s profits to shareholders without limit. The football club became a subsidiary of a new holding company which was expressly not subject to the FA’s rules, and which was then floated on the Stock Exchange. The effect was to bypass Rule 34: with the football club a subsidiary of the holding company, the profits of the football club could be transferred to the holding company and then paid out in the form of dividends, without limit. Instead of enforcing Rule 34 and preventing this circumvention, the FA allowed its own rules to be violated. After a number of clubs had floated in this way, the FA abandoned Rule 34 altogether (Brown, 2000).

[Old Biscuitman]

Says a lot about the vision and wisdom of football people at the end of the nineteenth century. Pity we ever ignored them and gave rise to the Glazers and other non-football men who now control so much of the game. But I would not include JM in that dubious category.

[Duke the Dog]

Hmmm, whilst Rule 34 was important for competitiveness, it's removal (or indeed it's inclusion) doesn't prevent a club from being run badly, into debt and then insolvency. Whether caused by personal loans, bank loans or simply not enough cash. Didn't help Newport or Aldershot really did it.

Do most footbal clubs actually make enough money to return a dividend to it's owners/shareholders? I would assume only the top 2 or 3 would do that at most.

I would hazard a guess and say the removal of the wage cap in the sixties was the start of the problems.

[Cookie]

Had the accounts through today and we made a net profit of 6.5 million. More interesting was the turnover went from 17.7 million to 49 million, amazing what a year in the premiership does!!!!!!

Hey SLA Give us the whole story, to which accounting period does this apply?

[JC]

Had the accounts through today and we made a net profit of 6.5 million. More interesting was the turnover went from 17.7 million to 49 million, amazing what a year in the premiership does!!!!!!

Any breakdown included in the figures? Would be interesting to see figures for wages, repaid loans etc broken out from the headline figures.

Is the profit figure after tax?

I have not got the figures in front of me but my recollection is that the wage bill doubled from about £14m to £28m

[Boston Royal]

Paying back a loan doesn't reduce your profit - just like raising money from taking out a new loan doesn't increase your profit. Only interest on a loan is deducted from profit. So that can't explain the huge rise in costs.

[TFF]

This has made the EP today



http://www.getreading.co.uk/news/2019/2 ... e_a_profit

[Royal Rother]

Had the accounts through today and we made a net profit of 6.5 million. More interesting was the turnover went from 17.7 million to 49 million, amazing what a year in the premiership does!!!!!!

[Magnus]

Mods - please merge.

It's unclear why this thread got 8 (eight) exclamation marks whereas the following year a profit of £200k more gone none.