Don’t Let Your Stars Hold You To Ransom

Don’t Let Your Stars Hold You To Ransom

Manchester United’s parent company, Red Football Joint Venture Limited, reported a loss of £109m. The company’s previous accounts, for the year up to June 2009, had posted a pre-tax profit of £21.6m, mainly due to the £81m sale of Cristiano Ronaldo to Real Madrid.

We’re often far more familiar with what the stars of teams are paid (Wayne Rooney £250k per week), as opposed to the profits or increasingly so, losses that these Premiership Clubs make.

It’s easy for someone not familiar with football as a business, to presume that such a club must be generating hundreds of millions of pounds profit a year, to be able to afford these extortionate salaries for players. But they’re not generating that level of profit. It now is clear that many are even making a loss. And big ones.

They are paying large salaries to their stars, which has led to an ongoing increase in the costs of ticket prices, shirts and merchandise for the fans.

I imagine fans feel very happy about the cost of their love affair that they have with the club!

Matches are predominantly only available on subscription TV, and keen fans have to pay further amounts to get a Sky Package. The fans and the club shareholders are the losers. The only ones that really seem to win, are the owners who manage to buy and flip the company on to another owner within a few years, at an inflated price. Oh and of course the other beneficiaries are the stars of the company, who are paid millions of pounds each year.

I predict that we will see a number premiership football companies go bust in the next five years and that the bubble that is football players’ salaries will burst. There will be strong negative media coverage of the greed of the players and the stupidity of the clubs to allow things to get to this stage. It will be the ordinary loyal supporters who have followed their teams since childhood, who will lose out.

But even now, there is something that fans could be doing about it. And some have taken action. That’s why I love Football Club United of Manchester. It would be interesting to see what the clubs would look like, if consortiums of fans owned the clubs in the Premiership. I’m sure we’d see a change in the star salaries then.

You may be the leader of an organisation where it’s culturally acceptable to pay an eye-popping amount to your stars. Before you know it, a culture has been formed, and an expectation has been created. Perhaps even one day, the bubble will burst for you. People defend such salaries saying they are paid what other people in their sector are paid, and they deserve it based on their performance. But the sector can seriously get it wrong.

Don’t be taken to ransom by your stars; instead be wise with your talent.

And as you move to make changes, make sure you lead by example. It may just cost you your company and livelihood if you don’t.

There’s a saying in football that no player is bigger than the team. That’s not true with United and Rooney. Rooney made £8.3m this year, United lost £109m.

Let no star be bigger than your business; however brightly they shine. Oh and by the way, that act of prudence should also be applied, if the shining star happens to be you.