Welcome to the transcript of the Esk podcast, Bigger, better and also riskier with  Matt Slater of the Athletic to chat with Bart Huby of LCP Actuaries; a podcast in which we discuss a recent report on football finances  produced and published by Bart’s company LCP, entitled “Bigger, better but also riskier”

Paul: Good morning. Good morning and welcome to a special episode of the Esk podcasts. I have two people with me today. One very familiar, both to me and to probably most of the people that listen to this. 

Matt Slater of the Athletic. Matt, how are you?

Matt Slater: I’m all right. How are things?

Paul: Yep. Not too bad. Thank you. I just continue to improve on the health front and am looking in vain for plumes of white smoke to come out of the chimney at Goodison Park or the Royal Liver buildings as our headquarters are now. 

But I think I’m going to have to wait a bit longer for that. And can I introduce Bart Huby:? Bart is an actuary. And I know, I don’t know Bart Huby:, but I know of Bart Huby: through a mutual friend and, in fact, a former colleague of Bart Huby, another Evertonian, a mad Evertonian, David Lane. So David just wanted to say hello to you. And I’ve mentioned his name because I wouldn’t be speaking to you if it wasn’t for him. So there we are. Bart Huby:, your company, LCP, has done now, I think it’s two reports on sustainability in football. 

And last month, you published your second report. And in it, there were some quite startling figures. I think that the headline or rather the title of the report was bigger, better, but riskier, I think, wasn’t it? 

That’s right. Yeah. Yeah. And which might explain, could be the headline for many football clubs, although the better bit possibly is questionable. Certainly bigger, but certainly riskier. But rather than me waffle on about your report, why don’t you introduce it and then Matt and I can come in and discuss whatever as we get through it. 

So yeah, Matt. Sorry, Bart Huby:, over to you. 

Bart Huby: Okay, thanks, Paul. Yeah, so I said I’m, I’m an actuary. I’m now head of what we call Sports Analytics at LCP. We’re a financial services firm primarily. Most of my career has been working in pensions, which is a highly regulated industry. 

And I think some of the lessons we’ve learned over the 20 years of being regulated by the pensions regulator, I think can apply sensibly to football going forward. So that’s an interesting background for me. 

Last five years or so I’ve still pivoted my career into Sports Analytics using some of those skills. So relatively newcomer to football finance, but within LCP, we’ve done reports last year and then this year looking at the accounts of every all the 92 football clubs from the Premier League down to league two, we’d like to look at National League but the accounts for National League clubs are so thin that you can’t really do any meaningful analysis of them. 

So it’s 92 clubs we’ve looked at. And what we’ve done is taken the the latest available accounts, all accounts are published for pretty well every club for the year to 30th of June. So we have the accounts for the 22/23 season for every club except I think three, I think Reading haven’t published theirs yet, Hartlepool a bit late, Mansfield for some reason, do their accounts on a calendar year basis. 

So the only club who does that, but we’ve got a comprehensive set of accounts. And what we’ve done is look at trends in those accounts over the last three years to see what’s been happening. Personally, I’m a supporter of both Liverpool, which has caused some interesting discussions with our mutual friend David Lane, but also Tranmere Rovers, I’m from the Wirral. 

So I feel comfortable supporting a big team and small team. I think that helps actually give me an insight into the way in which fans of both larger and smaller clubs look at their team’s success on the pitch and their financial security. 

Paul: I take it Tranmere is the big team in this conversation. That’s right. 

Bart Huby: Hopefully one day. And in fact, Tranmere is interesting being a fan of Tranmere because our owner Mark Palios is quite a well -known figure. He used to be a deep exec at the FA. He’s owned Tranmere for several years now and he’s always tried to run the club as strong members of the community in Birkenhead. 

But it’s really tough for Tranmere to compete at the moment because operating sustainably financially means that you’re not able to pay players the wages that some other clubs are paying them and you’re not able to offer the sort of length of contract. 

SomeLeague 2 sides are now offering three year contracts and that makes it really difficult to be competitive if you’re operating sustainably. So that’s a thinking issue which is sort of bubbling under some of those things that we found in doing the analysis. 

Paul: A bit of a contrast, I think, Matt, between Bart’s local team in terms of governance and yours. 

Matt Slater: Yes, yeah, I’m a Southend United fan. Just to fill in some gaps, I write for The Athletic, and I cover, you know, the business of sport, mainly football, and sort of the politics of sport and football too, which means I get to do kind of bad news, basically, rouse and disputes, that sort of thing. 

But takeovers as well. So yes, my club would tick nearly all of my boxes, and I’d be writing about them every day, if they were bigger. So Southend, just for those that aren’t aware, we are now in the National League, very sad, obviously, because we’re not a National League club. 

We’re sleeping giants, relegated three seasons ago, three years ago, I can’t remember now, after about 100 years in the EFL. We’ve been under embargo almost the entire time, we were run by a guy called Ron Martin for 25 years or so, a dreadful owner. 

And the kind of owner that when you support a club like Southend, and you see people moaning about, I don’t know, Fenway Sports Group, because they don’t spend enough money on Liverpool, on Mike Ashley, because I don’t know, he didn’t get Newcastle. 

These guys, well, I think Fenway Sports Group are actually quite good owners, but there are poor owners out there, and actually, it wasn’t a great owner of Newcastle. But to see the sort of endless bleeding about how dreadful he was, and he was the worst, and blah, blah, blah, you’re like, guys, you genuinely have no idea what bad ownership is. 

We’ve been to, I think it was 19 winding up petitions, might be more, as I said, almost constant embargoes, fans, staff unpaid, the stadium literally falling down and dangerous and bits of it disgusting. 

Now that’s bad ownership, where you lose thousands of fans over a period of time, you fall through the divisions, you lose your reputation within the industry, your best young players just go for nothing, because you can’t pay the rent for their housing. 

There are so many sad stories that I can tell you about Southend, but they’re not unique, they’re just not unique. We’ve got a lot of them, and it was a long ownership, it took them a long time to go through, there’s a good happy ending, or the beginning of a happy ending, I hope, that we finally got rid of him. 

We now have new owners, a local consortium, actually led by an Australian, led by someone who’s not local at all, but just sort of wanted to really love his English football, had come over earlier in his career to spend some time in the city, Southend is of course from near London, made a bit of money in IT, and wanted to buy a club and sort of found something, but then has very cleverly built this group of people who really get the club, local people, and they’re calling themselves custodians of Southend United, so already a good start, I think they kind of get it, it’s been really hard for them, they’ve had to take a bit of a leap of faith, because Ron Martin left such an untidy mess behind, there’s still issues around our ground, we were going to have this new ground, you know this 25 year saga, that’s the entire reason that attracted him, like so many of these bad owners, it’s always a property play, it was a property play for him, he wanted to build this new stadium in this greenfield site on the edge of town, loads of houses and retail and hotels and casinos, and you name it, he’s been through all kinds of ideas, there was going to be the largest superstore in the country at one point, well they went out of fashion, so we’ve been through I feel like so many of the stories I write about other clubs, 

Southend have sort of done it, anyway we’re staying at Roots Hall which is our you know much loved but very dilapidated ground, at some point he’s going to release some money to us Ron Martin from this massive property development that is multi -million pound, loads of houses, I can’t remember what he’s up to now, 1400 I think in the Southend, a city now, he’ll make a lot of money there, although he has mortgaged it about 18 times, so God knows how much equity he has left in it, but if he can actually get some of these houses built and nearly everybody in the town, the city wants these houses to be built, he’s gonna make a lot of money, his family will make a lot of money, we’re gonna get some of that if he keeps his word, let’s hope he does, let’s hope the lawyers have done their jobs to redevelop Roots Hall at some point, 

so that’d be great. So yes, there are parallels, Southend, our obvious one is we’ve played many times. I’ve seen Tranmere at Southend and vice versa. We’re one of those Friday night clubs. 

So one of the reasons I support Southend is because I played sports myself on Saturdays and I was attracted to Friday night football. Now the reason Southend played Friday night football is because Southend is full of people that left London after the war and they took their clubs with them, mainly West Ham, but Arsenal and Spurs as well. 

And for a long time, Southend kind of marketed, well, it might be stretching it, but realised it had a lot of Londoners, expat Londoners, if you like, and it shouldn’t try to compete with them. So we’ll go Friday nights under the floodlights, really, really, really good fun in the same way that, you know, Stockport, I’ve done in Manchester, Tranmere obviously, the Mersey side, there are other examples as well. 

And the other little thing that I remember, certainly part of my story for Southend is Jimmy Greaves’ son, Danny Greaves, was affiliated with the club. And that meant because we played on Friday night and because we had Danny Greaves, we always got on Saint &. Greavies on Saturday morning. They’d show our goals and that was great. So we had, you know, as I said, they found a little niche. And then over the years, our relationship with West Ham in particular has been a bit problematic. 

You know, West Ham, their reserves played on our pitch. Again, that was because we were weak financially and we let them. There was a West Ham shop many years ago in the middle of town that isn’t there anymore. 

But this idea of being a sort of satellite type club or, you know, a club in a sort of land of giants and how you do it, you know, do you fiercely become independent and separate? And we don’t want second -teamers, which I sort of sense is sort of happening at Stockport. 

I know a bit more about Stockport when I live in Macclesfield. And so I understand people that support City or United and maybe watch their Macclesfield or Stockport or whatever it is, it could be older, I guess, in other parts of Manchester, Greater Manchester. 

I sort of understand that. And some of the people that support those clubs would never, would never support a bigger club. But then are you sort of cutting off your nose to spot your face? You know, are you leaving a lot of potential fans on the table there? 

And so it’s just it’s always interesting to me how clubs closer to big cities do that. And there’s not a right way, I just think each club has done it so differently. 

Bart Huby: Yeah, and I guess I can only say it’s my personal perspective in one way, and I listened to, you know, the Tranmere podcast and all that, and got perspectives from that. But again, it’s your own perspective, I think that drives a lot of what you think about football. 

I grew up a Liverpool fan because Liverpool won the FA Cup in 1965. That that was imprinted on me, they were the local club, but Tranmere with a club local to where I went to school, Friday night, Friday night football after school was, you know, a really regular memory. 

Mark Paleos was actually on the pitch, playing for Tranmere, so that’s sort of nice to come round to him being the owner now. But now, you know, I love watching Liverpool on the telly, and they have great footballers, but actually, I’m not that bothered about going to watch them in the ground, because it’s a huge crowd, you’re a long way from the pitch. 

I much prefer going to watch games, because I’ve got a group of friends I go with, meet before I have a drink, you don’t have to buy the tickets, pay huge amounts for them, buy them a long time in advance, you can just turn up. 

There’s a much better feel to go into the match day watching Tranmere than there is for Liverpool. And I think that applies, I mean, you see the crowds, lower league crowds, National League. I mean, when I went to watch Tranmere back in the 80s, I think 2,000 was a decent crowd, the equivalent of League One, and now you’re getting that in the National League from many clubs. 

So I think lower league football is hugely popular now, in spite of the big clubs dominating the finances and in spite of all the stuff on TV. I mean, it would be interesting to see the impact of the greater exposure of EFL on TV or on broadcast this season, but one of the remarkable things I think is the popularity of lower league football. 

Matt Slater: 100%. It’s amazing how it’s changed in sort of, I’d say the last five, 10 years. So, you know, I just wrote a story yesterday about Dzone taking on the National League. That’s a global deal. That’s a global streaming deal for fifth and sixth tier football. 

Pretty much every team in the fifth tier now is pro. I think there was one semi pro team last year. You’ve got a handful of teams in the sixth tier National League North and South that remain pro. That’s ridiculous. 

That is absolutely, you know, if you said that to me 10 years or so ago, I’d have just, you know, what? You know, wow. You know, non league football is going fully pro. That’s crazy. And I really noticed it sort of coming out of COVID where people wanted, just wanted to go to football. 

They wanted to go to events and support your local team, having a pint, you know, particularly below National League level. So again, I got some sort of experience of it in Macclesfield where I live. They’ve come through the divisions. 

They had to restart in the ninth tier, eighth tier. They didn’t go up last year, but they’ll be going up. They’ll be trying again. And their gates tripled. Tripled. They couldn’t stand their previous owner, but there was a real sort of release of frustration and positivity as well when they relaunched and money was spent on the ground and winning football. 

You know, that certainly helps. And you can move around the ground. You can have a drink. You know, the prices were a bit cheaper, though he’s putting the prices up, but they’re still considered a bit cheaper than, you know, the Premier League or even Championship football. 

So, you know, I, it’s, it’s, it’s definitely improved. Some of that, of course, is the Wrexham effect, which of course helps. But another local example to me is Buxton. You know, I’ve talked to people around here, Buxton, Buxton was sort of like, what are they, what league? 

Are there some sort of Derbyshire league, some sort of high peak league? Oh, they’re in the National League North. And they’ve, they’ve had this, this rise. And again, there’s a I don’t even call it non-league anymore. 

You know, lower leagues or stuff is, is, is, is really popular. They still don’t make much money. 

Bart Huby:I mean, that’s going to that’s that I think that’s the issue that we’ve sort of identified in our report and I’ll come on to in a minute. But I think one of the other things that makes lower league football, whatever I want to call it, stay much more attractive is the quality of the football pitches, actually, because it means that the quality of the football itself is good. 

And there’s an issue about whether artificial pitches should be allowed. Certainly, United had that problem. But I think, you know, whatever surface they’re playing on, the quality of football is is so much better in part because the players are fitter, et cetera, in part because, you know, they can rely on the ball bouncing in the right place, which 30 years ago, you probably couldn’t. 

Paul: Just on the attraction of lower league football, two comments. Unfortunately, I don’t follow a lower league team. 

MattSlater: Not yet. 

Paul: You stole my line. One, is it a generational thing in the sense that people are age, and I know, Matt, you’re probably considerably younger than Bart and me. 

Is it people of our age looking back at how we remember football to be, or is it actually that they are attracting a much wider audience and a younger audience as well for a more, dare I say, a more authentic football experience? 

Bart Huby: What do you think, I think it’s, I think it’s, it is, for my, again, anecdotal experience, I know quite a lot of relative, you know, youngsters in their early 20s who are passionate about Tranmere Rovers or that sort of team and enjoy the match day experience again.  

It does seem to, it doesn’t, it’s not just a nostalgic thing. And you look at the crowds and there’s, you know, there are a lot of youngsters in there. I mean, I don’t know. It’s still very much a male dominated thing going towards football, but I think that, you know, there are increasingly female supporters in there as well. 

So I don’t think it is. I don’t know, Matt, do you agree? 

Matt Slater: Yeah, I think it varies from club to club. And it’s a bit of both, right. So at Southend United, you know, I joke about this endlessly, but I think we genuinely are quite a big club. Certainly, relatively sweet. 

Bart Huby: I mean I see Tranmere as a big, we should be a big one. 

Matt Slater: So if I say that all the time, right, if you actually look at it objectively, where we have spent where we’ve played most of our football is actually League One, you know, with that, with that sort of level, you know, not mid mid league, mid to lower league one, that’s kind of if you were to sort of average out all our seasons, that’s where we belong. 

In my lifetime, we’ve had two stints in the championship. One was quite a decent stint in the 90s, and we were genuinely okay, one was very short and brief that people don’t even remember because we beat Manchester United once. 

Now, I think it’s a genuine aspiration for Southend United fans, given the growth of the city, and Southend has in time become, I think, more confident and more independent and less attached, if you like, to London. 

There are now two, three generations of Southenders, there’s always been people in Southend, but as a sort of place, it’s bigger. And there’s no reason why when I look around the rest of the EFL, that a place of that size and wealth could not sustain a Championship club, I wouldn’t go any further than that. 

And I and I, you know, I think we’d be a League one yo yo/Championship sort of club. But that should be the aspiration. You know, I’ve been to Wembley three times to Southend once to Cardiff, the Millennium one, you know, playoffs and the LDV or whatever they call it these days, we take a lot that there is this sort of potential there 35 40 ,000, you know, have gone now, of course, a load of them are the people I sort of talked about my first answer, 

They are West Ham fans who live in Southend, there are still fans who live in Southend, or they just went out for the day out. So when I look at the Southend crowd, I see this young group, who have always been there, in fact, they were really organised and getting Ron Martin out that it was led by our young fans, our old fans, people like me and older, got a bit kind of, I wouldn’t say blaso, we just got a bit depressed about it. 

And we got a bit, what can be done, you know, Ron is Ron is we stuck with him, we’re entwined. It was a younger fan that really started protesting, to be honest, and made it uncomfortable for him and got him out. 

So we do have that. I do see, though, that nostalgia piece elsewhere. I do see it at Macclesfield, I’ve certainly seen it, I’ll give you an example, last week, I’ve got young kids and they’re just we’ll go see anything. 

We went to Salford versus Preston friendly. And I, I know it was a friendly, but I was actually quite surprised at how many Man United tops I saw at Salford City. Now that you wouldn’t do that at Southend, you wouldn’t come in a West Ham, Arsenal, Spurs top. 

I don’t think you’d come in a Liverpool top to Tranmere. You wouldn’t know. No, I know it was a friendly again. So it was less, there was never going to be any trouble. But it was strange to me to see people wearing Man United at, you know, at this game. 

And the guy I sat next to, who was an old and old guy, a lovely guy, he told me he was a Man United season ticket holder for sort of 30 odd years. He’d given it up during Covid and now just came to see Salford. 

And he’s telling me stories about how his daughter’s school is where the pitch is now. I think it was because they took some of the school playing fields or whatever to build their new ground, the ground when they did it. 

And, you know, he’s got a real affinity with the area. But he, you know, he clearly is a sort of lapsed Man United fan, but came because, you know, for the reasons, Bart, you pointed out, we were three, four rows from it. 

He’s got a nice seat. He lives around the corner. You know, he’s got a park, his car is much cheaper. You know, those things matter. 

Paul: Interesting, I suppose the people that run football would say this is all great and part of the success of lower league football is because of our contribution to football. Bart, your findings in your report which we’re going to get onto now, do they provide any evidence of big football supporting small football or is it very different? 

Is it more a local driven by the desire of the fans and by, as Matt said, the custodianship of the local owners. 

Bart Huby: Yeah, good questions. I mean, I guess one of the issues is we are looking at football club accounts. So I mean, there’s lots of anecdotal stuff around what’s happening, why it’s happening. But actually, you look at the accounts and they tell you financial numbers, they don’t tell you exactly why things are happening. 

But I think we’ve got some interesting insights by looking at the numbers. So I’ll just go through some of the highlights, if that’s okay. So I think, first of all, football, looking at these accounts, is booming. In many ways, total revenues across all four leagues were up by 11% to over seven billion pounds. 

Nearly half of that is represented by the big six clubs in the Premier League. So there’s a huge amount of money coming into the game right at the top level. And then some of that is is feeding down through the system solidarity payments, through parachute payments, the big debate at the moment about how that’s going to be done going forward with the deal between the Premier League and the EFL still to be agreed, but there is money coming down the pyramid. I think what we’ve found looking at the last set of accounts is that I think it’s always been known that well, for many years that there’s sort of what people call a gambling for promotion culture in the championship clubs have for many years, lost a lot of money in the championship, they’ve had a situation where the wages of players have exceeded the income for almost all clubs. 

So that’s been recognized, but there’s a logic to that because there is the pot of gold at the end of the rainbow if you get promoted, there’s a big incentive to gamble. And there have been casualties from that obviously, Reading at the current club in that situation, but from time to time clubs suffer from that. 

But there is a logic to that. I think what we found is that that level of losses is now extending down further down the pyramid into league one and to an extent in league two, which is a mixed blessing. 

I think, I think there’s lots of investor interest in lower league clubs, which is driving owners to put more money into those clubs. And a lot of the time, that’s via equity and just injections, which is good, because it means those clubs aren’t building a debt. 

But what it does mean is that the level of losses of lower league clubs is going up and up. So some big, obvious, big, big numbers. League one clubs, their losses over the last two years went up from 71 million across the league to 121 million in one year. 

That’s a 70% increase. In league two, they went up from 11 million to 35 million. That’s over 200% increase. So the level of losses at those clubs in the lower leagues is rising hugely. Amazing number, I think, is that the losses for the average league one club in that season was about 5 million around an income level of about 9 million. 

So they’re losing over 50% of their revenues. So I think you can see that the gambling promotion culture is now pretty embedded in league one. A lot of those losses were at two clubs, Ipswich Town and particularly Derby County. 

So the average across the lot is lower, but seven clubs lost over 5 million pounds that year. So that means in order to effectively be competitive to try and get into the playoffs, you’re needing to lose about 5 million. 

Going down to league two, the numbers are smaller, but the overall revenues are smaller. Seven clubs lost over 2 million. The average loss was about 25%. So average loss of 1 .5 million against average income of about 6 million. 

So on the positive side, crowds are up. As we’ve talked about, interest is up. Owner interest is up. People are prepared to, owners are prepared to put in a lot of money to try and get those clubs into a position where they can get promoted. 

But my concern is that this is overheating, that there’s potentially a bubble blowing up. And a lot of these owners don’t have local connections. Many of them are from overseas. If there were to be a tipping point, if it was suddenly not to be the case that, you know, clubs saw what had happened at Wrexham, owners saw what had happened at Wrexham and thought this was a, you know, really exciting way to lose a few million pounds a year. 

If they suddenly thought, actually, you know, I don’t particularly want to go on a Wednesday evening to watch a lowly game of football and lose two or three million pounds a year, you could suddenly have a lot of owners saying, actually, we’ve had enough of this, leaving clubs with big commitments to player salaries, to contracts, and you could have a number of clubs, I think, getting into significant financial difficulty, simply through overextending themselves. I think that’s a distinct concern, I may be, and hopefully I’m being unduly pessimistic, but I think there is a real real issue gradually developing, and I think it’s one of the things that the new independent football regulator will need to look at carefully. 

Any thoughts, Matt? 

Matt Slater: Yeah, I mean, I thought your report was really interesting, really timely, which is why I contacted you about it. And I put it in my last business of football column. I think it was, there were so many bits to pick out. 

And then you’ll see your answer just there. I mean, the things that struck me was that it had come, your report landed, after about two or three in a row, that I wouldn’t say was sort of complacent or optimistic. 

But, perhaps more than a tiny bit. I mean, complacent is too strong, but we’re a bit bit more optimistic. You know, Deloitte put, you know, they’re sort of, they do several reports, but they just did their kind of big overall one where they, Deloitte, they always focus on revenue. 

And that’s, that’s one of the, they’re very good at, you know, they get an early look at that. And they’re very good at that. One of the sort of standard criticisms of their focus is it’s too much on revenue, not enough on, on, on all the outgoings. 

And, but you know, so they made this big point, same as, same as you actually, if to be fair to them, that clubs are losing a lot of money, even at the top end. You know, Premier League losses, I think their headline number was something like a fifth consecutive year of big losses. 

We’ll see 15% worse than year on year, you know, you’re like, Oh my God, what’s going on? 

Bart Huby:: That was our figure. Yeah, that’s it. 

Matt Slater: And I just thought, well, we’re missing a bit of a story here. And then suddenly you go, oh, wow, we have a season dominated by conversations around points deductions. It’s in the numbers, guys. Why are we shocked that the clubs are failing profitability and sustainability rules that you all set, by the way, you agreed on when you make five years of consecutive losses, and the losses are getting worse. 

Yeah, I think you’re going to be up against your own, you know, lost threshold. Where’s the shock? So I thought that was interesting. There was another report, Begbies Traynor who are of course insolvency experts. 

And in the past, some of their reports have been really negative. You’re sort of thinking, well, this is what they do. They deal with distressed clubs. And they actually did this sort of distressed club index and they were saying it’s falling. 

And I thought, well, that is actually chiming with some things I’m hearing. I speak to club executives all the time, that the EFL, there’s an optimism within the EFL, for some of the reasons you outlined in your answer. The TV deal is pretty good. They feel like they weathered COVID well, there was so much panic coming in and during COVID. But we didn’t really lose any clubs. We didn’t, you know, there wasn’t a rash of administrations. 

I’ve mentioned that, you know, the TV deal, the last TV deal was pretty good. The new one’s even better with Sky. A lot of external investment in the EFL, basically a wave of American money. 

So there was a sort of sense that things were okay. So I was like, okay, I’m now seeing their distressed club index going the right direction. That’s fine. But then your report came and it was guys, I mean, I know you might feel better. 

But you basically, the actual numbers aren’t great. And really, they’re just being sustained, they’re being held up by this sort of wave of new money. So I thought that was really interesting. I thought it was timely. 

So the other things I’d just pick out is that so much of our problems within the EFL and lower are just to do with close to 1992 stuff, you know, we’ve never really got over that break, that Premier League break where let’s not forget, it was a breakaway league. 

And they agreed amongst themselves to take a bigger slice of the pie. And that pie, their pie has got bigger and bigger and bigger. And the gap between top flight and everyone else has grown to a chasm that no one even then saw, saw, they would never have predicted how wide it has got, which has created this cliff edge that EFL, Chief Executive Chairman, Rick Parry and Trevor Birch constantly talk about. 

And they are right, it is a cliff edge. It’s not a pyramid. It’s not smooth. It is a sort of Mexican style ziggurat thing. It’s and it causes irrational behavior in the championship in particular. So I don’t need to sort of talk too much about that. 

Everyone is aware of that. They sort of, everyone goes up and they’re all almost overheating. And the ones that make it, you know, it’s a sort of sigh of relief. And they sort of tend to record a profit in their first year or two in the Premier League if they get a second year. 

If they don’t make it, you know, wow, it’s like, can we go again? Or do we have to retrench for a few years? Or do we, do we slide back through the divisions? We’ve seen so many clubs where that’s the case. 

I think what’s interesting is your correct analysis of what’s going on in League One. There’s a cliff edge between League One and Championship as well. There just is. And we have seen, we’re seeing a lot of yo -yo teams, Rotherham, Wycombe, there’s a few others that are in that, in that sort of group, who, what they tend to do is when they go out from League One, they try to do it the right way. 

And they just can’t survive in the Championship because you’re dealing with clubs on parachute payments. You’re basically at a minimum going to a 30 million type budget. And even that is you’re struggling against teams with parachutes around 60, 70 million. 

So it’s a really hard day to compete in. So you have this Championship League One thing. It’s flatter and smoother between League Two and League One. That’s just the way they divvy out the money, the EFL money, and the clubs are of similar sizes. 

But there’s definite tension now, I would say, that League One, so that’s something we need to be wary of, you know, let’s not replicate the Championship again. The positive spin or the good news I try to impart is I think everyone in the EFL is aware of it. 

They’re not blind. They talk about this a lot. So they’re not in denial. There’s one or two clubs that, well, let’s say they’re in denial, but they’re like, yeah, we’re okay. It’s all the other lot. They’re sort of finger pointing and we’d like to speculate to accumulate. 

We want to go for it. There’s a few, there’s always a few. But I think as a group, they’re all very, very wary of the need to be more sustainable. I think in the Deloitte report, the Begbie’s report, I can’t remember if you mentioned it as well. 

Wages to turnover ratio has come down. So in the Championship. Yeah, in the Championship. OK, in the championship then. Yeah, it’s gone from insane to bad. 

Bart Huby:Yeah, 95% of the things I don’t know. 

Matt Slater: Yeah, exactly. And transfer spend has come down as well. I mean, there’s, there’s, again, it’s never really recovered that market since COVID. So there does appear to be an attempt to get on top of costs. 

And like I say, there is more money coming in. You know, they are the championship, the EFL has done this really good TV deal and is doing better commercial deals. They just seem more with it. The number of administrations has fallen. 

And the ones that we’ve had have been really nearly all of them to do with this one wave of external money, Chinese money, leaving the game in a very chaotic way, and being replaced by American money, which does appear to be more long term, more driven by I would say sport. 

I like sport, I want to compete in sport, I’ve made some money, I like it. I get it. Then God knows what a lot of the Chinese investors are doing. Money laundering, Frank Frank, frankly. So or showing off to locals, you know, showing off back in China. 

And so, you know, I see positive bits, I see negative bits. And then of course, the bigger piece stuff, really macro stuff is, there’s a regulator coming. And at some point, the Premier League is going to have to deliver this new deal for football, which will be the deal has been on the table. 

This is the really frustrating thing. The deal has been on the table. Most people in the EFL, they’re okay with it. You know, there’s bits they like, there’s bits that don’t like there’s not such a thing as a free lunch, right? 

The Premier League will give them more money and will share more money. But there are obviously some concessions and strings attached and all that. I remember writing about this at the time. The deal was on the table, I think it was sort of halfway through 2023. 

So maybe sort of third quarter 2023, it would have gone through if the Premier League had ever formally officially made it, you know, I’ve been get backed by their own clubs to offer this deal to the EFL, the EFL would have would have would have recommended it for approval and the clubs would have taken it. 

So it’s there. And I think but I think we’ll that will have 

Bart Huby: I think there’s an issue though, isn’t there, within the EFL between the championship clubs, particularly the big championship clubs and the league one, league two clubs. I think there’s a lot of league one, two league clubs who, the voting power in the FL is almost entirely in the hands of the championship. 

And I think we were speaking on the back of the report to an American owner of a league two club last week, and they’ve been putting in a lot of money for a league two team. And they generally think it’s pretty unsustainable for that level across league one, league two. 

So I think there will be issues with league one, league two. I mean, they were talking about where the league one, league two should split off, potentially from the FL to make sure that they run themselves sustainably. 

I think there’s interesting ideas in there, having salary caps, salary collars. But I mean, that was an American investor. I’ve heard something similar. Yeah. 

Matt Slater: I see almost more similarities between the National League, so fifth tier, fourth tier, third tier. That to me, you know, you’ve got a nice group there of the gap from top to bottom there is not ludicrous. 

It’s manageable. It’s when you get into the championship, things start to get a bit crazy, nearly entirely because of parachute payments. And that, if you think about it, is the most ludicrous sticking plaster just to manage that gap issue. 

So we’ve come up. 

Bart Huby: Would be horrendous as well. It’d be short -term. 

Matt Slater: around us. Yeah, but there is a better way. Right. You, you basically share more money. Yeah. And you remove the cliff edge and the need for parachute payments. But look, yeah, we are turkeys voting for 

Bart Huby: Christmas there. And I think the other concern, I think we expect if you get more money coming down the pyramid, without any, and the regulators, and there’s lots of talk about how you might try and earmark some of that money for infrastructure improvements, rather than simply being spent on play. 

Bart Huby: But if you don’t have that sort of really meaningful constraints, I think you just get that money coming down. And if it’s simply extra money, and so you’re measuring what you can pay on salaries against your income, that will just result in bigger salary rolls and more buses, because I think it’s proportionate. 

So you get more income, you’re losing 25% a year, so you lose 25% of a bigger sum. So I think it’s there’s a lot of, there’s still a lot of complications to be thought through properly in terms of those cost controls. 

Bart Huby: But there are lots of people with good ideas out there. And we’ve got the regulator coming along. So I think there’s a really interesting three or four years ahead of us. And hopefully, the bubble won’t burst in that period. 

Paul: Can I just pick up on fascinating discussion? Thank you both on a couple of points. And I think there’s a case for a Premier League one and a Premier League two, they’re becoming the same entity, whether the Premier League itself would want to do that, because they might see it as dilution of, you know, a very valuable asset is a question. 

But it would certainly, I suppose they would be concerned that it might lose the jeopardy of relegation from the Premier League, which is obviously probably the biggest selling point of the Premier League, certainly internationally now, given that the top end of the league is relatively tied up. 

Where does jeopardy exist? only really exists at the bottom of the league and exists in terms of clubs coming from the championship. Can they stay in the Premier League the first season that they’re there? 

I think I think that’s an interesting point and a point to look at going forward. The point you make about sustainability in leagues one, two and below that, the idea that just putting more money in solves the problems that doesn’t work for me, doesn’t work for me at all, because ultimately, what will happen is most of that money will just pour through into the players as people try and gain a competitive advantage by paying more wages to the players, as happened many years ago in the Premier League. And then if you look at the solutions to that, are the solutions some form of limits on losses or are they, I think as you said, Matt, cost control? Or are they, for example, as is the case, will be the case in the Premier League under the new regulator, a percentage of revenue? 

I think in the lower leagues, and I think actually probably also in the Premier League, what clubs will do if you’re tied to a percentage of revenue, they won’t address the fundamental issue, which I think sits across the whole of football, is that the cost base is too high. 

They look to generate more revenues. And if you are a lower level club that doesn’t have the marketing capability, the brand, the commercial arrangements that the bigger clubs have, the only way you can do that is by increasing costs with those that attend the matches. 

And that’s an easier thing to do for a club than to address the actual real issue, which is, you know, our costs are too high. 

Matt Slater: Yeah, I completely agree. So just pick on that last point, I think at the top end, right, the very top end, that the game is changing, it really is changing. And I talk and I hear from hard pressed fans who are sort of struggling to afford to go to games already. 

And they get very upset about tourist type fans going. And I find myself wanting to be incredibly sympathetic. But just thinking that the type of football you are explaining that the football you are you are pining for at your club has gone. 

If you want to, if you want that back, great, fine. Your team will not compete for titles and might not even be a Premier League club anymore. You know, if that’s the football you want, I’m sorry, you’re all you’re gonna have to drop the divisions. 

Maybe a club does as well. But you and that’s that stuff. Because the only way to make the sums work at the top is more foreign tours, a smaller percentage of season tickets will have more match day more tourists. 

We’ll just we’ll play all year round. We’ll have more sponsors, we’re just gonna, as you say, bring as much maximise revenues as much we can, taking the game away from the sort of romantic idea that you have that the type of football you remember, because that’s the only way to make it pay. 

I think the sensible thing at the top, but certainly the bottom is to just pay players less. And I’m often struck by this. You know, we started off by talking about how the fifth tier has gone pro basically, I wouldn’t say in my lifetime, I think in the last decade. 

So that’s, that’s quite, that’s quite rapid. And I am endlessly because it comes up quite a lot in my sort of current reporting because everyone’s obsessed with multi club models now, which again, is another way that the top clubs are sort of trying to manage this, this sort of juggling act, they’re constantly having to do with how deep the professional pyramid goes elsewhere. 

So in Germany, it’s basically two divisions. In France, it’s kind of two divisions, then you hit semi pro. And that’s quite common around, we are very strange that we’ve had four divisions. And now we basically have five divisions of fully professional footballers. 

Now, part of me thinks that is our USP. That is what, that is the Wrexham effect. That is what is attractive, that’s what makes it attractive. And we should hold on to that. And I do. But if we want to hold on to it, and I think we should, and I also understood, I’m going to come back to your point about Premier League two as well, because it all does all tie in. 

We have to share more, we have to so that the Premier League has to share more. And then everybody has to pay their players less. Everybody. We are not picking on players, they are the stars of the show, but they are just earning too much money. 

It’s unsustainable. 

Bart Huby: So do you mean it because the issue, I think right at the top of the tree and people argue about is if we constrain that, then we may lose our competitiveness for getting the best players in the world and in the Premier League. 

I can see a cost cap or no, Champions League One, League Two definitely a really, really good idea. Cost cap in the Premier League, I think is challenging because you would have to be a soft one. 

And that’s what we’ve been living with with FFP. That was, you know, the UEFA spotted that 10 years ago, they’d be trying to sort of tweak it. What what was there’s this bit of the European Super League project, which, by the way, I hated, obviously, the people sort of often forget and miss, is they they were, that was a sort of cry for help from these guys who are like, why we’ve got these massive clubs, these global brands, why aren’t we making money? Why are we losing money? Let’s have cost controls. Again, in a sort of NFL, US style closed shop, where we can have cost controls. So there is a realisation, even at the very top, that they’re paying too much money for their talent. 

Now, it would require that 

Bart Huby: Yeah, but how do you, you can’t do that. How do you do it? How do you do it? Yeah, no country can do that on its own. 

Matt Slater: Exactly. Which is the problem. I’m not denying it’s a problem. 

Paul: One radical thought I’ve had, and I’ve never really expressed this, is that perhaps when we need to look at the very top, maybe a distribution of equity as part of the reward process, not just income. 

Yeah, maybe share it sharing the value that you’re creating because I think we. 

Matt Slater: we’re heading to a generation now of footballers, certainly at the top end. And again, this starts in the States. And it’s coming over here now. These guys are fabulously wealthy now. And they are actually starting to behave like investors. 

I mean, they’re literally investing. So, you know, LeBron James, Kevin Durant, these massive basketball and major league baseball players first, but it will be NFL players. It’s already happening, Tom Brady, etc. 

So they have made so much money. And they are already investing in tech and sports and fitness and things like that. But they’re buying teams, they’re buying chunks of teams. And so we’re in it. Mbappe is about to buy Cannes. 

I’m aware of a couple English footballers that are sort of thinking about it, you know, they’re not, they’re still playing, but it’s going to happen. It’s going to happen. Now that is slightly different to the idea that you have, you know, the clubs themselves actually reward staff in that way. 

But I think it’s part of the journey towards that. I’m aware that Bolton, I think, have done something quite interesting in recent years, not with players, but with managers and sort of key staff, they’ve been handing out shares. 

Paul: Yeah, you know, if I work for a bank, I have a nice salary, I get a bonus if we do, if my division of the bank does well, and I probably get some options. 

Bart Huby:And the problem with football club stairs is they never pay dividends, so what’s the value of a stair as an income generating thing? 

Paul: If you’re earning 5 .10, sorry, it’s going to cost you 5 .10, 15, 20, 25 million pound a year in income, do you actually need dividend payments? 

Bart Huby: Yeah. I mean, personally, I don’t have much of a concern about Premier League finances. I know Everton, your team has got into a very sticky situation. But I do see that as almost a perfect storm anomaly, that so many things came together at the same time. 

And Everton do not have an existential threat to their existence. I mean, you might get relegated, you might even go down to League One, but you’ve got a fantastic new stadium being about to be finished. 

You’ve got tens of thousands of dedicated fans. There is value in that club. And in five, 10 years’ time, I think you’ll be a top half of the Premier League, whether that’s gone down or gone back up. 

I don’t think that you will be there. Maybe you think I’m being optimistic. But my concerns are much more with the lower end of the championship going down, that those clubs, if they get overextended in terms of their finances, and then get into real problems, then there’s not going to be, you know, they haven’t got that supporter base. 

They haven’t got that income that means that someone will definitely come along and rescue them. And that’s where I think the overheating is. And that’s where I think you do need some sort of cost control via some sort of salary cap, because at the moment, it is overheating. 

Paul: Yeah, I could. 

Matt Slater: What do you think, Paul? Are you optimistic about your club? 

Paul: Well, I’m not optimistic about football generally, to be honest with you. I think, you know, the figures that Bart and his colleagues have produced demonstrate how perilous football is and how it constantly requires a fresh injection of capital from a new willing group of investors. 

And we’ve seen that over the years, haven’t we? You know, first of all, the TV money came in and that was like a form of quantitative easing that pushed asset values up enormously, but nobody really addressed how football clubs were being run. 

Which obviously then led to financial fair play and then profitability and sustainability rules. But again, I personally, I think the biggest issue for football generally, and I really tend to focus on Everton and a little bit on the Premier League, but looking at Bart’s figures, I suppose you could extend this argument much further down the league, is that most football clubs are very, very badly run. 

And why are they very badly run? Because most of the owners have no accountability and governance across the game. And in the case of individual clubs and Everton being the prime example, is exceedingly poor. 

And, you know, if I was a regulator or if I was part of the regulatory body or advising the regulator in any sense, that’s probably the first point that I would start at in terms of how do we make this game more sustainable? 

How do we attract better quality investors? Because I think one of the issues about, and I could rant about this for hours, but one of the issues about poor governance is that it attracts poor investors, because they see an opportunity for them to bring in their poor business practices, and to operate in a manner which in a better regulated environment involved with your pensions background, you would agree with this, 

I’m sure, wouldn’t be permitted in a better regulated environment. And I think the first port of call is, and it will now obviously be a government led body, is to create better regulation. And one of those regulations is not just the financial aspect, i .e. 

putting, you know, limits on costs or putting limits on losses. The fact that losses are themselves permissible and it’s allowable to lose 105 million pounds over three years is ludicrous to me, but that’s an entirely different argument. 

I would start with governance and I would really drill down on how clubs are run and who runs those clubs, and particularly with a view as to, Matt, one of the things that you first talked about in terms of Southend, the custodial element of running a football club, because we’re all football supporters because football is really important to us. 

And that’s true of all football supporters, as evidenced by the earlier part of our conversation, regardless of whether you’re in the Premier League or you’re in the seventh division of English football. 

And perhaps that’s one of the differences between English football and say, for example, German football, where football itself has such a cultural importance and a societal and local importance in England, in particular, equally true, I suppose, in Scotland and Wales. 

It is such an important asset and I don’t think it can be allowed for many, many reasons to continue to be run in a slapdash manner that has been by people who in other industries wouldn’t be permitted to operate. 

Bart Huby:Yeah, so I just picked up on it. I think Mark Peleos at Tranmere, he refers to himself as a custodian for the club, not an owner. And I think he genuinely operates in that way. Tranmere are a member of a group called Fair Game, which is a group of about 35 lower league clubs who are campaigning for better governance. 

And we’ve worked with them a bit in helping them particularly visualize what they’ve called the Fair Game Index. And their proposal, which I think is really powerful, is that part of the broadcasting revenues that come down from the Premier League would be distributed to clubs based on how they score on a range of metrics. 

And those metrics will be independently assessed by expert organizations looking at financial sustainability and governance. So if you have good governance in place, if you have a financial sustainable plan, potentially if you do good things like environmental sustainability, policy, fan engagement, equality, you will get more money. 

So that would be an incentive that helped cover the costs that you’re doing the right thing, because it does cost money to have good governance and to do some of these things. And it would incentivize clubs and reward them for doing that. 

I think that’s a really powerful thing. It’s not in the football governance bill. It is a recommendation in our report. Because I think one of the things we’ve thought about, if more money comes down through the New Deal between the Premier League and the FL to those clubs, and there’s no real incentive for the clubs to spend that money sensibly, it will go on player wages, be clubs gambling for promotion. 

So I think it’s a really powerful idea that Fair Game have come up with. It would need tweaking. It’s not perfect in their proposal, I don’t think, but they’re very powerful. And that’s something that we’re pushing for in our own way. 

It will be interesting to see if the football governance bill under a Labour government will be amended in any ways along those lines. There was certainly nothing like that in the original version under the previous government. 

Paul: Yeah, absolutely. I mean, I know Niall (CEO, Fair Game) and his experiences at Wimbledon. 

Bart Huby: Yeah, they score very highly in our sustainability index. They’re an amazing example. There are clubs who do stuff well and are sustainable and actually do reasonably well on the pitch. But Wimbledon are very unlikely to get promoted, I think. 

You know, when there are other clubs losing many millions a year gambling for promotion. So, you know, to give a level playing field for clubs like Tranmere and Wimbledon, you need those sorts of controls. 

Paul: Absolutely. I’m conscious of time, one point that we haven’t discussed, which I think just for five, 10 minutes, just just to finish off is football club valuations. How do you value a football club as evidenced by your figures seem to constantly lose money and constantly require shareholder intervention? 

Matt Slater: Well, I’ll have a go. I’ve written about this a little bit. So this is a topic of much debate in the football finance world. Broadly speaking, it’s a multiple of revenue. There are other equations you can use, other formulas you can use, but broadly speaking, that’s where it starts. 

So that’s pretty straightforward, right? You find the rate from you and you multiply. I mean, you multiply. Now, of course, how much you multiply you buy. So that’s the thing. Now, a lot of people kind of look at US sport, which is completely different, but we’ll just start there. 

Close shops, strict cost control, revenue sharing, a lot of the stuff we’ve discussed. And therefore, there is a sort of starting assumption in US North American sport, that you don’t lose money, right? 

It is a business. We’re all going to make some money here. The players are going to make some money. We’re going to make some money. We’re all good. We’re going to have, we’re going to design competitive balance with the draft, tougher schedules for good teams, blah, blah, blah. 

There’s lots of levers being pulled to create the competitive tension that we have at the top of the title race, but the race for Europe, and of course, with relegation, right? So there’s just a completely different way of doing it. 

But if we just look at those US North American revenue multiples, the most successful league is the NFL. So NFL franchises are going for about six, eight, some of them even 10 times. It’s probably about eight to 10 is probably the range now for NFL franchises of their revenue. 

And their revenues are all high. So therefore, we’re getting, we’ve had a bit of a, I wouldn’t say a wave, but we’ve had quite a few after years, NFL franchises, that’s the other thing. They are like family businesses that once you’ve got one, there aren’t, you know, and there’s a scarcity value, of course, there’s only 32 franchises, you hold on to them. 

So you have these families hold on to them for a bit. We’ve actually had a little bit of a turnover, what the Washington team, Denver, they went, so they’ve gone for Man United style prices, five, six billion, et cetera, on these, on these big multiples. 

Then you go down maybe to the NBA, which is sort of the kind of, well, a lot of new money is in the States, a lot of IT, a lot of California money, it’s more global, it’s more interesting than the NFL. The TV deal isn’t as good. 

They’ve just, they’ve actually just done quite a good TV deal. It’s multiples more like sort of, let’s say, five to seven, just the sort of tier below. And that’s kind of where baseball is as well. The really big franchises and there’s smaller market teams. 

So they’re all going at like sort of six ish NHL teams, sort of the fourth of the fourth sports, almost like MLS now five, six, five, four times multiples. So that’s what’s going on in North America. 

And you’ve got this wave of money coming into European football and looking at European football and going, well, what multiple should we apply to your revenues? And they’re going, well, you’re all losing money. 

You’ve got this terrible revenue destroying thing called relegation. So there’s no way I’m multiplying your revenues by four or five times. I’m going to multiply by one, one and a half times, two, maybe. 

And that has been where European football has been for a while. What’s happened in the last few years is people have worked out that for the really big clubs, relegation isn’t an issue. So we can be a bit more confident. 

They are super global brands. So when we look at a managed United at Chelsea, you know, two teams that have changed hands, basically, we can be a bit more North American in our application of a revenue multiple by United, you know, there are, I’d say almost like NBA, ML, Major League Baseball levels now five, five to six times revenue. 

They’re not NFL teams yet because they don’t share revenue. They don’t have strict cost control and they don’t have, you know, they’ve got, they’ve got good TV deals, but they don’t have, I mean, the US NFL deal is ridiculous. 

So, so that’s where we’re at. And there’s, it’s definitely an art. And I talked to people who go, yeah, but. got a really big fan base. So we should definitely think about that. We should definitely think about how many people come through the door. 

We should definitely look at their maybe social media following. They’ve been really badly run. So the person that comes in can run them properly. And there’s a lot of residual value there that’s just not being realized at the moment. 

Other people just fall in love with certain clubs. Other people get obsessed about things like postcodes. Is there a premium on teams in the Southeast? A lot of American owners that do want to be near London. 

A lot of Gulf money likes Capitals. They like cities. So there’s various sort of things you can throw into the mix. Other people like that they’ve got a really good academy. So there’s a difference between North American and European sport. 

You can do this player trading model. If you have a great footprint and a real proven track record of developing talent, I’m going to maybe value that club a bit better because what I want to do is trade players. 

That’s how I’m going to survive. So I’ve said a lot there. Basically, it starts with a revenue multiple. Then there’s a conversation about where European football is in terms of the health and how much you multiply the revenue by. 

And then the Premier League would be at the top of that. And then maybe, you know, Real, Barca, the handful of clubs, super clubs from the other big five leagues would be there. Then there’s just a big drop. 

And I think once you sort of get below the Premier League, it’s one or two times revenue. You know, French clubs are going for one and a half times revenue. League league league earn clubs are going for, you know, small, tiny revenue. 

Seria A, once you get below the sort of top half, it’s one and a half. So that’s what that’s where we’re at. That’s broadly speaking, how you value a club. 

Paul: Bas, I can see you nodding away there. I’ve got a couple of comments, which I’ll come to in a minute. 

Bart Huby: Yeah, I mean, I’d say, I mean, coming from a sort of financial services background, you know, you look at valuing businesses based on a multiple of profits. And when, I think only 13 of the 92 clubs made a profit in the year we looked at, you know, what are you valuing? 

And it is all of the, it’s a combination of the factors that Matt’s thoughts about that the potential to actually grow the business, the potential for investing in infrastructure, turning the club into, you know, generating more income from advertising, actually turning the facilities into something that’s used, not just on Matt’s days, once a fortnight, there’s lots of ways of increasing income if you’re a good business person, but often it comes down to supply and demand, if you’ve got someone who really wants to buy into a club, and someone’s an unwilling seller, then you’ll get quite a big multiple, if it’s the other way around, you’ll get a very low multiple. 

And I think supply and demand, you know, every individual club is unique. And, you know, the number of willing investors out there is quite small. But if you get a couple bit like buying an unusual property, house property, you know, it is, it is very dependent on somebody wanting to buy the club. 

But you still need to do proper diligence if you’re a potential owner, and make sure that there aren’t any other stories hidden under the surface. 

Paul: Absolutely. Funnily enough, I did an article on it a couple of days ago. You’re absolutely right. If you take the Forbes valuation, and I don’t quite agree with their methodology, United are trading at eight times turnover at the moment, Liverpool’s 7 .5. 

When you look at it, it’s obvious that those clubs that qualify for European football are at the highest multiples. And then there’s quite a drop off when you get to the likes of Tottenham, Chelsea, Arsenal, for example, who are competing for the third and fourth, well, maybe the fourth Champions League spot, that multiple drops down to four. 

And then if you look at the mid-table clubs, of which I would probably include Everton, which may be slightly optimistic, but Villa, Fulham Palace, okay, London clubs, Brighton, even, all on multiples of three times income. 

Sorry, three times revenue, not three times operating income. And it just seems an extraordinary figure to me. I know I’ve had conversations with would -be investors in or and indeed some sellers in the championship. 

And when they’re looking at, you know, 100 million pound valuations for clubs that are never going to turn a profit, and they’re going to need the types of figures that you mentioned earlier, but, you know, 5, 10, 15 million pounds worth of capital injections each year, you just wonder where these figures are coming from. 

And I get always people, you know, auctions wouldn’t exist for art if people didn’t just want to buy objects that are attractive to them. But it just seems extraordinary to me that without all of the things that we talked about previously about better governance, better regulation, etc, how people can possibly expect to achieve these valuations. 

And, you know, if I can just finish on, in particular, my own club, Forbes say that a valuation, you know, around about 600 million pound, which is slightly more than three times current revenues. We’re in a situation whereby because of bad governance and because of possibly the issues, and you used the expression due diligence, some of the issues that due diligence is showing would be investors, is that, you know, we’re an owner who probably can’t get the club away at maybe even 20 or 30 or 40% of its current revenues. 

Matt Slater: Well, the thing I just had there, it seems to sort of confuse many fans, and I get it, it can be quite confusing, is when people talk about valuations of clubs, they’re always talking about enterprise values, right? 

So you have to count the debt, okay? And that’s the bit that I think sort of sometimes, oh, hold on a minute, why have they, well, that’s because they didn’t have hundreds of millions of secure debt to worry about, that as a buyer, you assume, right? 

It comes with the club, I’m afraid. So I think Everton are an egregious example of this, right? So how much is Everton worth? Everyone can go, well, you know, they’re probably sort of that, as you say, in that middle pack, and they’ve got this wonderful stadium, so that’s a plus. 

They’ve got this big fan base, that’s a plus. They’ve got history and tradition, that’s a plus. They’re in the right league. There’s lots going for Everton. Unfortunately, they’ve been really badly run, as you write on a weekly basis. 

So their losses are bad. So that’s something that any new owner coming in will be like, well, hold on a minute, how do I turn this tanker around? And by the way, we’ve also been fighting at the wrong level of the table. 

So that’s something else for me to worry about. But I immediately walk in and I’m dealing with debt, debt that’s been run up on the business. So that, you know, how much Everton, how much the Everton shares worth, I think we’ve been in one pound territory for a while, because even optimistic people are looking at it and going, well, it’s Everton’s value that there’s a sort of range, of course there’s a range, but it’s even a top end, top end of the range is kind of where Everton are in their debt position with the other bits, you know, the stadium and the losses and all that. So that’s tricky. So the only way really for an Everton to change hands is to immediately walk in and do a deal with the people you owe money to and say to them, you’re not getting it all back. 

So that’s a complexity. That is why Everton have been for sale for two and a bit years. That’s why four, I count, takeovers have collapsed, because it’s complicated. 

Bart Huby: got the legal claim against issues as well and then just 

Matt Slater: Just my final point is scarcity value obviously is great, right? So that’s what drives, certainly drives it in the States. And if you look over the last 10, 20, 30 years, these investments have been great

That’s why, that’s why they’re going up in value, the asset rises in value. And we’ve seen that here in the UK as well. And that is because people want to be involved in sport for whatever reason it is, someone’s giving something back. 

It could be a polishing of their reputation, you know, reputation, laundry, it could be money, laundry, it could be about property, like, oh, there’s loads of reasons. You know, football, sport is fun. 

Yeah, people that sort of I’ve made a fortune in my, in one sphere, I reckon I can do it better than that a lot. They’re just competitive people. There’s loads of reasons why people want sports teams. 

And that’s what’s, you know, made the market frothy and buoyed it all up. But there’s a bit of an issue at the moment, and it’s not helping Everton. There isn’t a scarcity value in the Premier League. There are half a dozen clubs for sale. 

And dip into the EFL, which is where a lot of North American money is looking at the moment, because they’re looking at recs. And all that was fun, we’ll make a little TV program out of it that we haven’t got at home, the snakes and ladders, the jeopardy of that’s, I’m willing to have a go at that. 

So Everton are up for sale at a time where you can buy Brentford, London address, new stadium done, proven track record of developing players. Okay, clearly not. Clearly, I’m not pretending they’re as big. 

But there’s some attraction, attractive things about Brentford. You can buy a big stake in West Ham. 25% of the clubs for sale at the moment, the David Gold’s shares, you can buy Wolves, though they deny it, I don’t know why they deny it, but they’ve been for sale for about 18 months. 

 Again, that’s part of China’s exit from European football. There’s a big John Textor’s 45% Palace for sale, really tough to sell a big minority position like that, as he’s discovering Spurs have been unofficially for sale. and now semi officially for sale for a long time, they’ve got a big, big valuation, they see themselves in that very top bracket, mainly because of the stadium and the address. So you know, they’re not, they’re not desperate by any stretch of the imagination, but they’re for sale. 

I know I’m missing a couple as well. But you know, they’re they’re the scarcity value isn’t quite there. And that’s, I think, a bit of a problem forever. So 

Paul: Yeah, for sure. And Gents, I’m conscious of time. We’d be sure, I’m sure we could talk for hours more on each of each of the subjects and the subsequent points that we raised, but probably need to give our listeners a break, if not ourselves. 

But thank you so much for joining us. And thank you for your report. If you don’t mind, I will stick a link of your report into the podcast itself. And Matt, as always, thank you for your contributions. 

Always, really interesting to hear your views. And if there’s noise in the background, apologies, because there’s some building work going on, which I couldn’t reschedule, but apologies for that. But Gentlemen, thank you. 

Thank you both very much. Really interesting times. And perhaps maybe in maybe six months time, we should pick this up again and talk about some of the things that have happened in the last six months and whether anything has really changed and whether it remains bigger, better and more risky. 

Bart Huby: And see where the regulator’s got to, that could be interesting as well. And see what, sorry? Where the legislature and the football governance bill, the new regulator, all of that, all of the progress. 

Paul: And also, let’s see where Tranmere, Southend, and Everton are. I’m not going to talk about that other club that you mentioned, Bart, but there we go. 

Bart Huby: Hope springs eternal, doesn’t it? I mean, you know, I’ve been a little bit pessimistic about, you know, time here because we can’t pay the wages, but, you know, a good run, we’ve got a good manager, you know, could be on, we could be up there, hopefully. 

indeed gents thank you so much for your time and thank you to everybody for listening and yeah we’ll we’ll speaking again very soon.

Thank you