County123456789 wrote:Stan A. Einstein wrote:County123456789 wrote:Stan A. Einstein wrote:George Street-Bridge wrote:None of these points, of course, is one I've made.
FWIW I think a lot of blame lies in leagues being too lax on ownership rules and - not exactly blame - football clubs can and do draw on generations of local affection and goodwill which other dysfunctional businesses can't.
Try answering the question.
If clubs are losing money, year in year out, how do they stay in business?
Comparing football clubs to normal businesses is pointless. Businesses go bust because people try things and for various reasons they do well, do ok, or they fail, with most businesses failing.
Football clubs stay in business because they constantly get bailed out its a simple as that. mainly because for the societal aspect where people will go over and beyond to save football clubs in a way that they wouldnt do for a normal business where it would be pointless to flog a dead horse.
Then there is the effect of the help football clubs get that other business don’t, not least not having to pay volunteers. Not that i would pay a salary to any of our directors but imagine a business where all the managers who run it work for free. And where people who love the business work for free like volunteers do for football clubs.
You only have to look at our football club as a prime example. We like most clubs would go bust over and over again if it wasn’t for being bailed out. In our case over and over again by the likes of les scalding, by the fans on more than one occasion and so on and so on.
Its that simple really and you just cant compare a football club with a normal commercial business.
George,
If the clubs are losing money they can't pay the bills. If you can't pay your bills you go bust. Somehow all these clubs manage to pay their bills. Which if you're losing money you can't do. And to say clubs get bailed out over and over again is total nonsense.
Anybody who has run a business knows that the number of claims you can make to on paper lower your income is huge. I've never run a football club but I was self employed. This is how it works George.
I needed to read the law reports. My newspapers were therefore tax deductible. I needed a mobile phone for work, my mobile phone was tax deductible. If I went of a trip to Trier on an EU course, that too was tax deductible. (I attended a few lectures but mainly had a holiday on the Mozelle. Tax deductible. And even back then 50p on the mile travelled was deductible from my tax.
In over 20 years at the Bar I made a good living, on paper I was just scraping by . Oddly my late father was self employed. We were not rich but had a very comfortable middle class lifestyle. Guess what. I got a full grant to do my first degree because my father's accountant could show a much lower paper income than was the reality. And of course even the accountant who saves you thousands is tax deductible.
My guess is football clubs are pretty much doing the same.
Hello Stan
There are a few flaws in your argument that i hope you don’t mind pointing out. Firstly you keep calling me George and my name is Steve! Secondly I do run a business which is now entering is 37th year so have seen it all from a accountancy viewpoint and what can and can be claimed for
Apologies is I’ve missed the jist of the debate but you seemed to be saying that its a mystery why more clubs don’t go bust compared to a normal business. My answer is that football clubs get bailed out ands saved where normal business wouldn’t. Our own club is an example. Lose money, fans bail it out. Lose money Les bails it out. It’s the same for clubs everywhere at our level. Most football clubs lose money but stay alive because its a labour of love to all involved.
Its quite straightforward and far from nonsense, in my view anyway. Plus I respectfully think you may have a lack of understanding of the difference between accounting principles and cash flow.
Steve,
Forgive me for meeting both your points and George's in the same reply. However I don't agree with your analysis either.
Les Scadding didn't bail us out. What he did was financed the buying of players, which were able to win promotion to the Football League. My view remains that the monies ploughed into Newport County by Lotto Les would have been much better utilized building up a proper infrastructure.
Secondly bailing out over and over again. Well if fans choose to put some money into the club, that is still income for the club. Your argument is totally flawed because if customers are putting money into your business, they are putting money into your business. Broken down your argument seems to be but for the goodwill of supporters clubs would go bust. Which is true, but that applies to every business. Likewise volunteers. I have no doubt volunteers save clubs money but they don't create income. In terms you might lose money if you didn't have volunteers but as you do you are not losing money.
Further and perhaps more contentiously I would argue that if directors of football clubs only used these extra contributions on fixed assets, i.e. infrastructure rather than wasting assets, i.e. inflated wages for players, football in general would be far healthier.
Cash flow is interesting. There is an awful lot of cash swilling about in football. It is why too many clubs have been swindled. I agree with you if the point you are making is that many potentially going concerns fail because of a problem with cashflow, and I agree football clubs don't by and large have that problem. However regardless of cashflow, if a company is losing money, it will go bust. I agree you can lose money in the occasional year, and I agree that a startup may initially run at a loss, but no business can lose money year in year out and survive.
Finally as you run your own business ask yourself these two questions. And this is for you alone your financial circumstances are none of my business. What is the difference between you gross income and your income declared for tax purposes? And more importantly, how much of my expenditure which you claim as tax deductible, would I have to spend anyway if I were not self employed?
Best wishes,
Brendan