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ROGAN TAYLOR: A FOOTBALL CLUB ISN'T SUPPOSED TO MAKE A PROFIT... OR A LOSS

4:30pm Thursday, 28th January 2010

When the Man Utd fans objected so vigorously to the removal of the words 'football club' from their logo, some might have thought it smacked of a typically conservative reaction from supporters who didn't live in the real world. But those fans weren't some kind of twenty-first century luddites; they knew exactly what the change signalled. The owners no longer wanted Man Utd to be a 'club'.

The common understanding of what a club is makes it quite clear why the logo change was deemed necessary: clubs are defined as 'organisations composed of people who voluntarily meet on a regular basis for a mutual purpose other than educational, religious, charitable, or financial pursuits'. In other words, their raison d'etre is not about making money.

It's a fact that since professional football began few clubs have ever made money - certainly not as profit because any surplus cash arising from activities was automatically ploughed back into the club. After all, what is the core purpose of a professional football club? Not to make money but to gain glory.

But they weren't supposed to accrue debt either, though everyone recognised that, occasionally, well managed debt was a necessity. This week we learned that around half of all European clubs are losing money every year - and about one in five are so heavily leveraged they could go under.

Uefa carried out a financial survey of 650 clubs (details to be published next month) and the General Secretary of Europe's governing body, Gianni Infantino, was at pains to point out that the potential 'domino effect' of collapsing clubs could ruin others too. Clubs are not only related through common participation in leagues and international competitions, they sometimes have complex financial arrangements with each other, usually the result of inter-club player transfers. That means their financial fates are intermingled: if one cannot maintain the agreed payment schedule for a player transfer, the deals the other subsequently makes may become impossible to sustain. That's why the Premier League insisted on Portsmouth clearing its 'football' debts as a priority.

The Uefa survey also showed that over a third of the 650 clubs spend almost three quarters of their income on players' salaries. Isn't this just crazy? This week, Championship team, Crystal Palace went bust having failed to pay their players on time twice so far this season, and face a winding-up order from Her Majesty's Revenue & Customs. The Club will no doubt survive under new owners - but the combination of having to sell players to alleviate debt and the ten point penalty the Football League will exact could send the London club spiralling downwards.

Even the UK Prime Minister, Gordon Brown, felt it necessary this week to signal his concern about the suffocating levels of debt many clubs now carry. The PM - a shareholder of his local Scottish club, Raith Rovers - reminded clubs of their 'responsibilities' to fans and communities. Some people think that the Government itself should be regulating the football clubs to ensure better financial housekeeping.

After all, where's the 'glory' in ceasing to exist?

Dr Rogan Taylor is the Director of the Football Industry Group at the University of Liverpool. He is also a writer and broadcaster, with five football books and numerous radio and TV contributions. He has acted as a special adviser to The FA, The Premier League and Premier League Clubs.

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