The four basic principles of how to run a football club
The former chairman of Southend United says for too long football clubs have not stuck to workable and dependable business strategies
A football club is different from any other business entity. The stakeholders, in this case are the fans. The fans’ investment is their support, while their return comes in the form of the emotional gratification all football fans desire, be it through chasing promotion, surviving relegation or a cup run. In order to guarantee this return, all a football club needs to do is exist. While sounding straightforward, Southend United are one of a number of clubs whose very existence has been threatened, and whose future is only guaranteed by the goodwill or otherwise of the judiciary. Without the existence of the club, the fans will not receive the return their investment deserves.
Despite this clear difference, in order to guarantee the future of all football clubs, the worlds of football and business have to work together. For too long, football clubs have not followed the basic principles of running any successful business. When I was chairman of Southend United, I applied four basic principles that I still use today in varying guises to run a successful business.
Firstly, employ a manager who knows what he is doing. Secondly, unless absolutely necessary, do not sack him — continuity breeds success and it allows a good manager to buy into and develop an idea. Thirdly, use all income generated to run the club — players need to be paid fairly and on time, while bills (in particular local businesses, and Southend United’s current nemesis, HMRC) must also be paid promptly. Fourthly, to generate further income, assets must be made to “sweat”. In the case of the football club this, for example, includes ensuring the most is made through shirt sponsorship opportunities and corporate sales (all, of course, while ensuring all fans who want to support the club are not priced out of doing so).
Above and beyond these four principles, there is a responsibility on the shoulders of directors (a responsibility that in recent times many have avoided) to ensure that any income the club generates after compliance with principle three, is re-invested in the team. Too many directors have used this income to finance their own external, non-football-related debts.
The Football Association’s “fit and proper persons test” for ownership does not go far enough to guarantee such basic responsibilities are ongoing. Further, the directors must also be in a position to fund any additional player purchases, repayable on an interest free basis, and not to the detriment of continued compliance of principle three, should the manager make a good case for that investment.
Beyond successful management of club financial affairs by directors, there needs to be assistance from the Football League to guarantee the long-term survival of all clubs.
Firstly, I would remove the existing rules governing the transfer window, providing a continuing transfer market from the end of the season to the last weekend in March. The implementation of transfer windows has all but destroyed the genuine transfer market that existed in the lower levels of the game. While I recognise these rules were implemented to reward higher quality coaching and team-play, at the lower level of the professional game, a continuing transfer window ensured that clubs could operate on a level playing field when investing in their teams.
Secondly, and perhaps more radically, I would introduce a standard form Football League player contract, guaranteeing players a certain wage, depending on the division they play in, reflecting the difference between competition and resulting club revenue. Any additional revenue the club receives (be that from television contracts or gate receipts) can be redistributed to the players through bonuses.
The majority of clubs have suffered financial problems as a result of relegation, meaning that often they are paying Premier League level wages whilst competing in the second or third tier. If the level of player wages were contractually guaranteed dependent on the division in which clubs compete, clubs would instantly be placed on a sounder financial footing. The players and the PFA would need to be a key partner in this. If the players brought into this idea to ensure the long-term survival of all clubs, they would of course guarantee their own personal income.
These two measures, coupled with sound management principles would assist in guaranteeing the future existence of all clubs, thus providing fans with the return on their emotional investment — namely, a club and a team to support.
Mark Rubin is a lifelong Southend United fan. His family owned the club from 1967 to 1983. He was vice-chairman for three years and chairman from 1982-83. During that time, the club was regularly ranked in the top 15 of the wealthiest football clubs in the league. He is a major shareholder and chief executive of a publicly listed property investment company.
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