Drive the Hawkers out of the Temple!

Mick McCarthy today goes public about the under investigation club Portsmouth trading in players and paying over prices this summer, when under investigation from the authorities. How come that they can do this when on the verge of bankrupcy with an economy in shambles?

According to British Company Law companies can offset trading losses against profits for the preceding three years. I believe this could be one of the reasons why British football attracts multimillionaires to buy football clubs that are deeply in debt. And there are probably other laws internationally that allows investors to benefit on company losses as well.

I am not at all skilled at economics or company law, but I have investigated some into this and there must simply be a reason why these wealthy British and foreign investors buy up football clubs that are clearly on the verge of bankrupcy.

I have seen nothing written about the why in football media or in the financial papers, but I do believe there must be some reason why a club like Portsmouth FC – over their ears in debt – have had four wealthy owners and skilled businessmen taking over the club this season alone.

These investors are no idiots, as the Guardian writes. I don’t understand why the big papers, that own competence in both football matters and economy, don’t investigate and write about this charade and comes up with a reasonable explanation to why this happens.

This is clearly something the authorities and politicians who writes the laws must react to and change. The big losers are the supporters of the clubs – at least in the long run.

A club and company like Portsmouth cannot be allowed to go on for years trading without showing any profits at all – just losses piling up. But as I wrote above probably deducted against profit in other companies of the owners to avoid tax.

This is not fair to the supporters of the club and it is not fair to supporters of clubs that have a sound economy and do not live over their real assets – like Wolves and a very few others. The rouge companies can buy up players to over prices while the sound companies will have to do with the less quality players.

It is a good thing that Mick McCarthy, Brown of Hull and others are reacting to this now and I really hope that Portsmouth as a company will not be allowed to go on with this charade any longer. They have benefitted enough on their gray economy by collecting silverware with players bought for money that really isn’t there or theirs. Time for a change!

Paddythflea

P.S. If you know more about this shady economy stuff, please comment on this and make me and others more enlightened on this matter. All other comments are of course welcome as well. D.S.

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~ by paddytheflea on February 16, 2010.

6 Responses to “Drive the Hawkers out of the Temple!”

  1. Hull are just as much in trouble as the rest of the Premiership they have wages spiraling out of control that is why they had to put the whole squad up for sale earlier in the season. Of course now they have someone who can bail them out and therefore the banks are off there backs.

    • Yes. Despite benefitting from TV-money. They have been very clumpsy economically. And they do not have a better squad than Wolwes and we have paid much, much less for our players. I hope they go down together with Pompey and West Ham or Bolton. Burnley looks to me to be an honest, hard working club with small means. They, like Wolves, deserves to stay up.

  2. Try reading David Conn’s excellent ‘The Football Business’ for a general insight into why rich men buy football clubs (- not specifically foreigners). The answer is, of course, to make themselves even richer. I fear that this is also what motivated Steve Morgan to buy Wolves. Ultimately the F.A. is supposed to protect the interests of the sport as a whole but is clearly failing lamentably in this task.

    • I’m sure it is one of the reasons Steve Morgan bought Wolves, Waterloo. But he has a love for the sport as well. And the way he conducts his business it is not the ‘fast cash’ he is looking for. It is a long term investment. But it is a dirty business.

      Thank you for the tip!

  3. tell me any prem club making a profit apart from arsenal maybe

    • That depends on how you count, graham. Many of the owners do make profits. Otherwise they would be in other businesses. And the rogue owners make very much money. But some owners does not take the earnings out of the club and into their own pockets (or into other businesses of the owner). They invest it directly into the company/club. I like to think that there are still a few of those clubs left. But if the laws don’t change there will only be fortune seekers and disonest owners left in British football.

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