WHEN you run a professional sports club fighting against the tide of an economic downturn, even a Sunday evening in front of the television is not necessarily spent relaxing.
Paul Blake, the owner of the Newcastle Eagles, takes up the story. “Oldham-Liverpool was a great game – a really fantastic FA Cup match.
“But what struck me was when the manager Paul Dickov said afterwards that some of his players were on no more than £150 a week.
“Now that is League One in the Football League and, while it is not at the Premier League levels, there are revenue streams open to football.
“It tells you everything about the kind of margins we’re operating in here.”
Another tale permed from the world of football proves just as illuminating. In 2010-11, the accounts of four Premier League clubs showed a wage bill that exceeded their entire turnover.
One of those clubs was Queens Park Rangers, who have just signed one-time Newcastle United target Loïc Rémy on the kind of money that made Mike Ashley blush. With a maximum capacity at Loftus Road of 18,360, it is difficult to see how those sums stack up. It seems like the economics of the madhouse.
When Blake opens the Eagles’ books for the benefit of The Journal, it throws into sharp focus just how crazy Tony Fernandes’ business model is.
“We won four trophies last year but we froze the wage budget. The team budget last year was slightly less than it was the year before,” he explains.
“It probably doesn’t make much sense that the more you win, the less your wage budget is, but we sort of have to ignore that. The most important thing is that the team budget doesn’t go over a certain percentage of turnover.
“At the moment, the wage budget is 50% of turnover. Even the NBA is looking at a figure of 55%, but that works for us, because we have the cost of venue hire as well – which not every club has.
“If we go over 60 to 70%, we lose money. A significant amount of money. The 50% figure allows us to break even, so when I see football clubs up at 80, 90 or 100% of their turnover I have no idea how that works. I suspect it doesn’t.”
It turns out that for Blake, the secret to keeping a professional club thriving in the harshest economic climate seen for nearly a century is, well, not so secret after all.
First of all, cut your cloth according to the money you make. Blake likens a business bank account to a personal bank account, and says that every penny spent has to be accounted for. The suspicion is that for many clubs, it can sometimes be seen as someone else’s money.
